Recession packaging – why size matters

18.06.12

A look at recession strategies for FMCG companies such as Nestlé, Heinz and Unilever…

Euro consumers feeling the pinch
Euro consumers feeling the pinch

Changing consumer shopping habits as a result of the recession have prompted a number of renowned FMCG brands to tweak sales tactics in Europe. To make their goods more relevant to the cash-strapped shopper, giants such as Nestlé, Heinz and Unilever have started adopting strategies previously only used in emerging markets.

Consumer have bean counting the pennies
Consumer have bean counting the pennies

One such strategy includes repackaging some of their most successful brands into smaller packs that sell at lower price points. In France for example, Nestlé is offering single-sachets of Nescafé instant coffee – each once priced at around 10 cents. Heinz has adopted a slightly different tactic; offering both smaller and larger formats for Tomato Ketchup at price points that reflect consumers’ ‘changing definitions of value’.

Another strategy has been to offer products that are simply cheaper to produce. Nestlé has started circulating instant noodles on the Continent, despite originally being developed for the Asian market. So far, the noodles have proven a hit with recession shoppers.

Consumers are taking stock of prices
Consumers are taking stock of prices

In a similar vein, Unilever’s Knorr brand is rolling out a new ‘Economica’ bouillon cube, priced at 60% less than the standard cube.  For hair and personal care products, the company is also ensuring key lines are sold at the psychologically appealing price point of €1.

Such moves are deemed critical given the economic environment in Europe, where one in five people in Spain and Greece alone are living beneath the poverty line.

A move back to basics
A move back to basics

In addition, the increasing popularity of supermarket Own Labels cannot be ignored. Indeed, in recent months, supermarkets have responded to consumer bargain-hunting by upping their OL ante. French giant Carrefour recently introduced more than 1,000 new products under their name, whilst in the UK the likes of Tesco and M&S have rolled out basic lines catering to everyday consumer needs.

The result is there is an increasing threat to consumer brand loyalty, and subsequently brands are having to innovate their brand accordingly.

It
It’s (still) got to be Heinz

Heinz Tomato Ketchup provides a good example of how brands can overcome the recession struggle. Through increased innovation (the richest for the brand in a decade) and marketing activity, the ketchup giant is staying afloat in Europe:  “Retailer brands are not growing across Europe in the ketchup category and of course, that’s in stark contrast with virtually all other categories in Europe” said CEO for Heinz Europe, David Moran. Proof perhaps, that now is not the time to rest on ones packaging laurels.