Shopper Digest: Premium brands on inflation for growth

Total take-home spend has taken a hit in volume as basket sizes continue to shrink due to inflationary pressures and increased shopper mobility. Grocery shopping is unlikely to return to pre-Covid levels, while the Food & Beverage industry has benefited from an increase in out-of-home expenditure. With this in mind, shoppers are reacting to these price increases by switching to more affordable products. This trend is prevalent in the Food categories, affecting households from all income groups. Does this mean premium brands are being “priced out” from this market? Today, we are going to share a case study on how premium brands can identify sources of growth in these current conditions.

Brand A has suffered a double-digit volume decline after a few rounds of price increases. In fact, Brand A's rate of price increase is the fastest among its direct competitors. Due to this pricing factor, Brand A is losing its competitive edge, as its shopper base and basket size are reducing and shrinking, respectively. Therefore, Brand A wanted to learn the potential areas in which they can focus to turn around their business and leverage inflation to drive growth.

Next, we conducted a source of volume loss analysis for Brand A. There were no surprises, as Brand A is declining across all four measures (losing market buyers, being dropped from repertoire, reduced purchasing, and switching to competitors). In addition to switching to its major competitors, Brand A is also losing to smaller brands, which is evident within both low- and mid-income households.

Finally, it is imperative for Brand A to understand the demographic profile that has contributed to these losses. This will enable Brand A to identify and target specific demographics to regain its business. While Brand A has enjoyed some growth in certain demographics, it needs to recover within its main demographics: Malays, Families with Teens, North and Central, and below £5k households. We have also recommended that Brand A focus on its main pack size in Modern Trade retailers like 99 Speedmart, Econsave, and Mydin to win back its main demographics.

While Brand A has identified the demographics for its source of volume loss, it can strengthen its business turnaround plan by driving a bigger basket size through creating new occasions, understanding the impact of price increases on its brand, driving growth by maximizing promotions incrementality, and ensuring category relevance during these inflationary times.

In Worldpanel, we analyse shopper behaviour to understand the role of your brand in driving category growth. Through consistent tracking, we can understand the gaps and opportunities to target specific shopper demographics in the category. You can then identify the best practices to drive growth by optimising your marketing budget.

Source: P11’2023 Peninsular Malaysia Household Purchase - Kantar Malaysia, Worldpanel Division