Inflation is a variable factor in the UK food and drinks industry, but when it happens, how does it affect brands and consumers alike? Recently, inflation has been on the rise across most food and drinks due to the uncertain time that Brexit brings for businesses who trade overseas.
Following the last 2008 crisis in the market, the big four supermarkets (Tesco, Sainsbury’s, Asda and Morrisons) reacted by increasing prices for consumers which left customers unhappy. Since 2008, supermarkets have learnt from their mistakes and as inflation increases again, the big four have plans in place to ensure both British brands and the supermarkets thrive during the lead-up to Brexit.
Previously, when prices increased for importation due to inflation, supermarkets passed these price increases to the customers by hiking prices across branded products, but this time supermarkets have adopted a range of tactics in tandem with moves from British brands to keep the effect of inflation away from consumers.
According to the Top Products 2017 Survey from The Grocer Magazine, the measures implemented by supermarkets include refining suppliers by getting more products from one place to cut costs and promoting own label products to help consumers save money and supermarkets sustain profitability.
Brands have also adopted some money-saving techniques in tandem with supermarkets to help their brand survive the costs of inflation and consumers not foot the bill. These include reducing pack sizes but maintaining the same price and reducing promotional campaigns on TV and in-store to focus campaigns around upcoming events such as the 2018 World Cup instead.
Being savvier about where money is being spent has helped brands and supermarkets alike in the uncertain market that surrounds Brexit. With increasing costs, companies in the food and drink industry are becoming warier of passing on costs to consumers. We have highlighted some of the biggest areas of the industry to show you how they’re dealing with the changing market trends in the lead up to Brexit.
The war on sugar seems to have affected the industry, especially in a market where changes have forced chocolate to the back of the queue. Impulse counters have shifted from chocolate to healthier snacks, however the chocolate brands are embracing ‘Shrinkflation’ and capitalising on the idea of ‘big nights in’ to drive sales of share bags.
Biscuits have also suffered in the face of Brexit, but the big three biscuit brands (Pladis, Mondelez and Burton’s) have all adapted to the increasing costs by producing thin versions of their biscuits, reducing biscuit size and packets to keeps costs down for the consumer. They have also focused promotions on shared packets of biscuits aimed at the biggest USP for the snack industry at the moment – the ‘big night in ‘.
The confectionery industry has taken similar measures to reduce costs for consumers, despite facing initial losses following the Brexit vote, brands have found ways through launching new products made with natural sweetener as opposed to sugar and reducing pack sizes to keep costs down and business going.
The snacks industry, particularly crisps have seen a rise in general with certain brands suffering, however the big brands have also made changes to ensure profits don’t fall and business continues to go. The big focus for snacks is the ‘big night in’ with the 2018 World Cup on the horizon and the Commonwealth Games which will be great for promotional opportunities. Own label snacks have also been on the rise helping the sector to continue to grow.
The war on sugar hasn’t been all bad news for the drinks industry, with consumers choosing healthier options, brands like Innocent and Tropicana have topped the list in the sector for 2017. With a huge focus on health and wellbeing and consumers wanting more from, the healthy drinks market has increased.
Smylies are privileged to be working with some of the UK’s biggest brands and exporting their goods around the world to popular expat destinations and international markets. While the inflation prices are affecting the industry across the board, Smylies are proud to distribute British products across the globe.
For more information on the services provided by Smylies for the food and drink industry, visit our Food and Drink Exporter page to see all the brands we work with and services we offer.
To enquire about getting your brand exported to countries worldwide, or stocking some of the amazing brands we distribute in your wholesale or retail business, you can get in touch with Smylies online or call us direct on +44 (0) 151 653 3335.