FreshIncite February 2016

What We’re Seeing

Multi-buy promotions on the way outTop

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UK supermarket Sainsbury’s has declared it will phase out multi-buy promotions (like ‘buy one get one free’) by August, to be replaced instead by lower regular pricing.

The UK’s second-largest retailer said multi-buys were out of step with consumers’ modern higher frequency, lower volume shopping habits. Promotions that encourage consumers to buy more than they need are increasingly being seen in the UK as a cause of waste at home. Sainsbury’s move follows a similar decision by Asda in 2012. Consumers’ rising aversion to at-home waste is driving a shift to smaller portions in many categories.

While that underlying consumer driver of Sainsbury’s move is echoed in the Australian market, a similar retailer aversion to multi-buy promotions hasn’t so far played out here.

In 2015, multi-buy retailer promotions jumped up to 14% of total adverts for fresh fruits and vegetables, according to Freshlogic’s Adwatch™ retail promotion data. That’s nearly double the annual 7-8% share of total ads in 2012 to 2014. Multi-buy promotions’ share of total promotional activity has climbed steadily for the past 4 years in the Australian market, now representing 9% of all grocery adverts.

If Australian retailers make a U-turn and follow this UK example, what could that mean for products that lean heavily on multi-buy promotions

The Food Consumer

Australian farmers benefit from increasing demand for beef in China Top

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The changing diet preferences of China’s middle class have stimulated huge increases in Australian beef sales. MLA data indicates beef sales to China have surged six-fold in the last three years, moving to A$917m in 2015.

This demand reflects changes in the traditionally pork-based Chinese diet, combined with an inability to meet beef demand with local supply. Australia’s reputation for food quality and safety appears to have enabled our exporters to capitalise on the opportunity.

The markets available to Australian beef have been expanded, and this success into China has impacted the domestic market with higher pricing. This begs the question of whether similar impacts can be expanded to other food categories, where success in export markets may provide growth and expand the range of distribution options and lift the values received in local markets.  

The scale of increased beef sales into China confirms the upside of export market growth, and also signals that this growth has potential to impact domestic market dynamics.  

Retail

Garden variety roses for Valentine’s DayTop

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Garden variety’ old English style roses and other flowers have lifted in popularity in the US. The shift in demand is described as a preference for flowers that look like they originate from an English cottage garden, rather than long-stem roses that look like they came off a production line.

These products do present as classic heirloom and heritage varieties, but they’ve actually been specially bred for the cut flower market. They’re earning a substantial premium over standard roses, with up to US$125 being paid for a dozen roses this past Valentine’s Day.

This success is undoubtedly based on an appealing and different new product, however the strength of the premium paid is another signal about how much consumers welcome positive stories about the origin of what they are buying.

The strength of this interest is confirmed in the Freshlogic Mealpulse™ consumer panel responses, where the number of food consumers who state a willingness to pay a premium for local product has continued to increase to now reach 44%.

The provenance premium is not limited to food products. 

There's more!

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Freshincite is a publication prepared by Freshlogic

Freshlogic is a specialised provider of food market insights and analysis, with deep expertise in the dynamics of fresh foods. We deliver a range of services to industry and corporate clients, which aim to interpret market and supply chain conditions, or address challenges faced in food supply chains associated with changes in the preferences of consumers, supply dynamics, and economic settings.

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