Yellow fats
It seems like nothing quite beats the taste of butter. For some years now, butter has gained ground in the yellow fats market. A shift in consumer focus towards calorie counting and broader health issues such as natural products have helped boost sales of butter. Even Flora, jumped on to the butter band wagon last year with a high profile campaign promoting its Flora buttery taste variant.
And the nation’s love of butter looks set continue. Just five years ago, spreads dominated yellow fats sales, accounting for almost 60% (57%) of sector sales, by 2014, sales of butter and spreads are likely to be almost equal, as the nation continues to indulge in one of life’s little luxuries.
Last year we splashed out on as much as £1,190 million worth of yellow fats, up 8% on 2008 and 40% on 2014. Sales increases were largely driven by price inflation. Notably slower growth of 17% in current terms is forecast between 2009-14, with sales set to reach £1,391 million in 2014. The slowing PDI growth rates and easing of cost price inflation are expected to dampen value growth in the yellow fats market.
Despite the slowdown in the market, there are some positive signs for the yellow fats sector. During the economic downturn, the return to familiar foods (including bread) and rise in home cooking (including packed lunches) are expected to provide a small boost to sales of yellow fats. However, the slow downward long-term trend in yellow fats volume consumption is likely to continue over the longer term, given ongoing focus on healthy eating and changing eating habits.
in terms of distribution, the grocery multiples dominate sales of yellow fats,reflecting the predictability of yellow fats consumption and the grocers’ strength across wider food retailing.
At 16%, own-label takes a low share in the market, although it has gained ground a little in the economic downturn and during the recent period of price inflation. The major grocers’ expansion into convenience retailing is estimated to have helped them gain share from the independents and symbol groups in ‘distress’ purchases of yellow fats.The major grocers are also typically able to offer lower prices on branded products, as well as often undercutting these with their own-label alternatives. Today, multiple grocers and Co-ops account for 94% of value sales.
The rise in the number of over-54s, who are core yellow fats consumers, should be good news for the market. Yet older adults are the most likely to cut back their fat intake for health reasons.
In terms of attitudes towards yellow fats. Perceptions of both butter and spreads seem to lag behind their genuine qualities in areas like taste and naturalness, suggesting the need to communicate them to users more strongly.
Attitudes towards yellow fats seem broadly related to age, with less engagement but high brand loyalty among younger consumers, and health concerns rising with age. More than one in three has cut back on eating butter for health reasons, and nearly one in five on spreads, suggesting that health messages focused on the dangers of eating a high-fat diet have made an impact.
By age, usage of butter and spreads is weighted towards older and less affluent consumers, although butter has done more to attract a younger constituency than spreads.
Household cleaning products
The market for household cleaning products is suffering. Tighter household budgets have seen market sales decline as total sales are expected to fall to £540 million in 2009 compared to £552 million in 2008. Indeed, over the past 12 months alone, as many as 9 million adults claim that they have cut back on spending on household cleaning products.
As purse strings tighten and advertising budgets are cut, heavy price promotions and extra product offers at the point of sale are being used by the big brands to try to deter consumers from buying own-label cleaning products.
As well as budgetery issues, social issues are impacting the cleaning market. The average amount of time spent cleaning has dropped due to the increase in the number of women who work outside the home as well as a general trend to prioritise leisure activities. This has led to a ‘little and often’ approach with more people spending around 1-1.5 hours on chores – enabling them to keep their home looking respectable, but not giving enough time for ‘deep cleaning’ on a regular basis.
As a result, the all purpose kitchen cleaner sector has continued to grow as consumers look for products which enable cleaning to be done as quickly as possible. Innovation levels are high in the market as manufacturers vie to produce the most effective product and to add value by increasing the tasks a product can do.
In terms of distribution, grocery multiples continue to account for the majority of household cleaning purchases (71%) although the value for money outlet, Wilkinsons, is increasing in popularity. The value share of grocery multiples has been eroded in 2009 by increased purchasing levels of lower-priced own-label products.
Cleaning products sold in outlets other than grocery multiples are less likely to be own-label and thus the average price paid has been maintained to a greater extent. However, sales have dropped significantly among independent grocers and convenience stores.
The internet offers the opportunity for manufacturers to sell to consumers direct. Procter & Gamble has been experimenting with this concept in the US and its recent purchase of a stake in Ocado may signal its intention to do the same in the UK.
The fact that household cleaning products are bought because they are needed rather than because they are desired means that what they can do is the key to purchase for the vast majority of consumers. According to exclusive consumer research, around two thirds of Brits say that they look for ‘something that works’. Fear of germs is also apparent with almost four in ten mentioning that ‘It is important that it kills all germs’.
Some 24 million people are price-conscious to some degree. However, the general importance attached to performance means that even among the Price Conscious consumer sub-group, the number looking for special offers far exceeds those that look for cheapest price.
Towards the future, the current economic situation, combined with high penetration and the extremely mature market, means that little growth can be expected while present conditions continue. As more consumers shop for special offers, value sales will struggle to achieve growth.
As the number of women going out to work continues to see an upward trend (notwithstanding a slight decline in light of the recent recession), this will have a negative impact on the time that people spend on housework and the types of products that they buy to clean the house. However, this will also be balanced by the number of people at the family lifestage with those from larger households being considerably higher volume users of household cleaning products.
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