Home News Features All hail the mighty PMP

    All hail the mighty PMP

    All hail the mighty PMP

    At Asian Trader we have been blowing the trumpet for PMPs for a long while. Not only are they a very timely way to merchandise products as inflation rages on and household budgets tighten, but they are also a specifically convenience channel tool that gives independents an edge to compete with the multiples – not only on price, but on convenience, choice and impulse.

    It was noticeable last year that the traditional PMP price points – £1 being typical in snacks, for example – were under stress, and the decision of some producers to maintain pack size while increasing the price point to £1.15 was observed very closely.

    As it was, consumers seemed happy with or at least understanding of the price rise, which was inevitable. Paradoxically, the open and signposted increase in prices for some PMPs communicated most strongly an ongoing element of trust between retailer and consumer. Many products in big stores had crept up in price by a sneaky 50 per cent or more, but such gouging had gone unannounced. Under those circumstances, a price-point rise in a PMP that announced it in bold, so to speak, was by far preferable.

    All hail the mighty PMP

    “With the cost-of-living crisis forcing consumers to be even more savvy when shopping, offering value and delivering a strong, engaging message that provides shoppers with ‘value-confidence’ is more important than ever,” says Courtney Lewis, Customer Director for independent, convenience and wholesale at Premier Foods.

    The shopper understands real world conditions and does not expect to be treated like an infant and lied to, and in that respect, a rise in the price of a PMP is preferable to another strategy followed by some suppliers, where the pack size is reduced instead of the RRP increased – shrinkflation, in other words.

    “It seems in general the consumer would rather pay a bit more for the same size product – we suspect that consumers have noticed decreasing pack sizes for some time to the point that many products are now disappointing them because they contain so much less than in the past,” noted Sarah Coleman, Director of Communications at TWC. “There is an acceptance that prices are rising across the board and therefore now is a good time to raise prices – within reason.”

    TWC’s Tom Fender believes that PMPs can even be the convenience equivalent of the supermarket chains’ clubcard, saying that trusted price mark can drive equivalent loyalty and footfall – so long as the retailer and wholesaler margin is maintained.

    A TWC survey revealed that 80 per cent of independent retailers “are stocking PMPs in most major categories in their stores, and 85 per cent think that PMPs demonstrate good value for money. More than half said that PMPs allow them to compete on price with other stores, suggesting that a well-placed price mark can match the appeal of the ClubCard discount of nearby rivals such as Tesco Express,” he revealed,

    Fender added that up to 80 per cent of the retailers surveyed said their customers would still buy PMPs if the price increased, indicating that the reassurance of the price mark is just as important than the price itself.

    Importantly, he added that the largest section of consumer respondents would prefer to retain the same pack size and take a price increase.“Just 23 per cent wanted a pack size reduction to maintain the same price point.” That appears to be definitive confirmation that shrinkflation is not what shoppers want.

    All over the store

    PMPs work in any category in convenience. Shoppers will pay a little more, but they need to know they are getting the best deal, and PMPs announce this in big neon letters on the packs themselves – it is the supplier’s honour that is on display, in association with the retailer’s good faith. It constitutes a very personalised transaction between retailer and shopper.

    “PMPs have seen significant growth in the last number of years, with the format expected to continue increasing in both relevance and popularity. Not only do PMPs offer consumers great value for money, but the clear pricing also gives them assurance that they are not being over-charged,” says Matt Collins, Trading Director at KP Snacks.

    Evidence of consumer price sensitivity comes as research by Pricer revealed that of 1,000 UK shoppers surveyed, 92 per cent said they are now price conscious, rising by +33 percentage points since 2021 before the cost-of-living crisis began, and increasing to 94 per cent of Millennials and 96 per cent of Gen Z. “Almost nine in ten (87 per cent) say they now actively seek out more deals and discounts when shopping for groceries – up from 60 per cent in 2021, a +27 percentage point increase – and rising to 92 per cent of female shoppers.  Meanwhile, 72 per cent of UK shoppers now seek out the cheapest prices on the grocery items they buy,” said Peter Ward, Pricer’s Country Manager for UK & Ireland.

    All hail the mighty PMPBritvic’s Retail Commercial Director, Ben Parker, says PMPs continue to play a strong role within soft drinks, “offering the reassurance of value to shoppers which in turn creates confidence in local retailers and how they price their products.”  He says that 66.9 per cent of sales in the convenience channel now go through as PMP, an increase from 66.0 per cent in 2021 [IRI] and recommends stocking market-leading brands in a variety of price-marked pack formats to cater to multiple soft drink occasions and signpost value to their shoppers.

    “Pepsi MAX six-pack price-marked packs, for example, will give these shoppers an easier way to buy into the soft drinks category in a multipack format. The squash category also providesa great value offering for families. For example, Robinsons, the squash brand leader in the convenience channel, offers a 900ml price-marked bottle at £1.49, creating a cost-effective solution to family shoppers at just 6p per serve.”

    Robinsons ready-to-drink is available in a 500ml bottle at a £1 price-marked pack, and across the range the profit on return percentage (POR per cent) will be maintained so that as the price-marked packs increase in price, the cash margin grows, Parker adds. During 2022, Britvic also launched Rockstar Juiced El-Mango and Tropical Punch, in a price-marked-pack can format at £1.29

    Parker says that Britvic is looking to increase the price-marked pack in line with inflationary pressures as well as the POR per cent, to create more shared margin and an even stronger translation to cash margin.

    Ross Davison, Head of Convenience at Kepak (Rustlers) agreesthe current pressure on household budgets will undoubtedly be putting this under greater scrutiny. “One in six are already shopping less in convenience stores in the last six months, with the number of those prepared to pay more for products vs in a supermarket falling,” he notes.

    “Two thirds of the population believe it is important to make savings on their grocery bills [Nielsen], but 69 per cent of consumers plan to shop at many stores to take advantage of offers with 60 per cent actively looking out for and trying to buy products when on promotions, creating an opportunity for convenience retailers to appeal to shoppers. P

    That means PMPs continue to provide a vital reassurance of value.”With all of Rustlers’ best sellers available in this format, however, value isn’t just confined to the price of a single product. Product promotions also highlight good value and drive impulse purchase, such as an on-pack promotion giving shoppers something extra.”

    The PMP range from Rustlers already includes the brand’s Core range of bestselling products, the Quarter Pounder, BBQ Rib, All Day Breakfast Sausage Muffin, Southern Fried Chicken Sub and the Twin Cheeseburger.

    PMP royalty

    Snacks along with soft drinks have long been the kings of PMP, which work superbly on the most impulsive categories. Worth £299m in CSN, Matt Collins says that PMPs are popular with retailers and consumers alike, with 40 per cent of snack shoppers saying they are more likely to buy a product in PMP format.

    “At KP Snacks, we help retailers by ensuring we offer the right product range in the right formats, boosted with the right promotions and in-store merchandising. Worth £87.9m and growing in value at +29.4 per cent, KP Snacks’ portfolio of large format PMPs is extensive, designed to excite shoppers and drive impulsive purchases for retailers,” says Collins.

    “Convenience shoppers worry that they will pay more for shopping locally and PMPs give them confidence that they are not being ripped off,” agrees Matt Smith, Marketing Director for Tayto Group. “That’s why PMPs have increased to 75 per cent of snacks sales in Symbols & Indies.”

    All hail the mighty PMP

    KP offers a comprehensive range of PMP offers from across its brands. Space Raiders is sold in a 40p format, and Skips, Discos, and Wheat Crunchiesare available as 50p PMPs.

    Collins notes that category leaders and large brands will become even more important and that 42 per cent of CSN sales go through the top five brands such as McCoy’s and Hula Hoops Big Hoops. KP Snacks’ Big Hoops BBQ Beef is the no.1 fastest selling PMP in impulse market. And the McCoy’s PMP range is growing at +41.6 per cent. McCoy’s Epic Eats launched recently in Nacho Cheese and Spicy Salsa, available as a £1.25 PMP.

    Last year’s new Nik Naks Scampi ‘N’ Lemon arrived as a large PMP and has been joined by KP Mini Chips Salt & Vinegar £1.25 PMP and KP Mini Chips Beef £1.25 PMP. popchipsare now in PMP format, available in Barbeque and Sour Cream & Onion flavours.

    At pladis, CMO for UK&I, Aslı Özen Turhan, explains that despite only making up 12 per cent of SKUs in convenience stores, PMPs represent a huge three quarters of sales in the channel [Nielsen].”So stocking up on popular products in this format, such as our Flipz brand or range of Jacob’s Mini Cheddars PMPs, is crucial to turning profit at a time when shoppers are savvier than ever before.”

    Aslı says that the Jacob’s Mini Cheddars PMPs line-up is already worth £3M and counting in the convenience channel, and they join PMPs across a range of bestselling pladis biscuits, including McVitie’s Chocolate Digestives and McVitie’s Chocolate Hobnobs.

    “In terms of general advice, we’d encourage independent retailers to invest time in merchandising their snacking fixtures in the best way possible,” she adds.“An attractive display with a range of the bestselling PMPs and popular NPD – placed at shopper eye level and located in high footfall areas – will have a strong influence on shopper purchasing decisions.”

    All hail the mighty PMP

    The Pareto principle also holds for biscuits, observes Aslı, revealing that 80 per cent of biscuit sales in convenience come from just six per cent of products. “We’re incredibly proud of the fact that McVitie’s accounts for six of the top 10 includingMcVitie’s Milk Chocolate Digestives, McVitie’s Milk Chocolate Hobnobs, McVitie’s Original Digestives, McVitie’s Rich Tea, McVitie’s Jaffa Cakes and McVitie’s Dark Chocolate Digestives [Nielsen]. It is an unmissable and crunchy £251M sales opportunity.

    Tayto’s Matt Smith is also very enthusiastic about the opportunity for PMPs.

    “In Crisps & Snacks, £1 PMPs are a must-stock!” he enthuses, explaining that they have been the main driver of category growth – growing more than twice as fast as the market.

    “Inflation pressure is forcing many other brands to move above the all-important £1 price-point, but Golden Wonder is committed to putting consumers and retailers first.”

    He says that having surveyed both retailers and consumers, it was clear how important the £1 price-point was to both. “In the current climate, consumers are feeling the pinch and independent retailers need to showcase great value for money. Instead of raising the headline price of our £1 PMPs, we’ve decided to stick to £1. Our new range has recently rolled out and demonstrates Golden Wonder’s commitment to delivering great consumer value whilst offering strong retailer margins.”

    All hail the mighty PMP

    This commitment to £1 has been instrumental in Golden Wonder’s success with its £1 PMP Snacks range outperforming the market (+22.6 per cent vs +9.9 per cent) and Transform-A-Snack being the star performer (+42 per cent).

    “In impulse snacks,” says Matt, “value for money is essential. Your entry price-point must shout great value. Our 35p Fun Snacks range, that includes Tangy Toms, Spicy Bikers, Awesome Oinks and Strikers, is delivering 16 per cent YoY growth. Its success is underpinned by the added value of two for 60p on-pack promotion. With a redemption rate of 80 per cent, this offer is great news for the consumer – and independent retailers – especially in a cost-of-living crisis!”

    Tasty prices

    PMPs are not only for impulse buys such as snacks. Regular meal occasions, such as breakfast and lunch, are also prime opportunities to make book on PMP tactics. Convenience is still the number one need-state at breakfast, for example: “Throughout all the turmoil of the last 18 months, this has been consistent,” says Darryl Burgess, Head of Sales for Weetabix. “No matter what your morning routine looks like you want it to be easier.” Hence Weetabix’s successful On The Go drinks.

    Last year’s Weetabix OnThe Go Caffé Latte launch introduced new shoppers to the dairy coffee drinks category, offering a two-for-one coffee and breakfast whilst travelling.

    “In the spring, we brought back our £1.29 PMP offer by popular demand across the 250ml core range,” he says. “We know that once trialled, we generate strong repeat sales with shoppers loving the great taste and smoothness of the drink – we therefore wanted to ensure people could pick-up an easy breakfast option at an affordable price.”

    Weetabix On The Go remains the UK’s No. 1 breakfast drink, a £10m brand with a 60 per cent share of the breakfast drinks sector – the company has plans to grow bigger in 2023. Within the impulse channel, the brand is worth £2.1m and accounts for 85 per cent of breakfast drink sales.

    “We continue to invest in the category, with popular NPD such as Weetabix Melts, available as a £2.99 PMP,” adds Burgess.

    He stresses that with cost pressures throughout the industry continuing, cereal has a huge advantage compared to other breakfast options, being by far the cheapest solution – offering affordability, convenience, and great taste in a bowl.

    All hail the mighty PMP

    At lunchtime PMPs also shine. Premier Foods’ Courtney Lewis says that Batchelors is supporting wholesale and convenience retailers with the introduction of PMPs across its Super Noodle and Pasta pots range.

    The packs feature an 89p recommended retail price-marked flash, and he says this is vital in a testing time for consumers, where value for money is the strongest indicator that a shopper will recommend a store [Lumina].

    “This presents an opportunity for retailers in the convenience sector to appeal to a wider demographic by offeringgreat value, particularly with 80 per cent of shoppers using a variety of shopping techniques to cut back on costs and save money [PF AAA research].

    “We expect our price-marked packs to help retailers drive sales by engaging shoppers through a strong value message on-shelf which in turn will help convert more impulse purchases and increase basket spend. By having a value price point captured on the pack we have also made this simple for Retailers to execute.”

    Lewis sees significant added value throughout the convenience supply chain thanks to PMPs.“By stimulating increased purchase volume from consumers, we expect that retailers will sell through more volume, resulting in increased sales for them, and in turn, for wholesalers.”

    This certainly is the case with confectionery. Informally, we have been noticing more and more PMP candy packs on shelves for quite a time now, and it is apparently having a lip-smacking effect on the category.

    All hail the mighty PMP

    Clare Newton, who is Trade Marketing Executive at Swizzels, confirms this is so: “We’ve found that stocking on a full range of products within a specific ‘product family’ and ensuring PMPs are a core feature of any product range influences consumers’ willingness to make an impulse purchase within the category,” she reveals.

    “By ensuring this, consumers are given an enhanced feeling of control over their spending and the full knowledge that the price they see on pack will be the price they pay at the checkout, which proves particularly valuable during tough economic times.

    PMPS help to work the magic. Newton says that despite 53 per cent of consumers reducing their spending to pay their bills [TWC Trends Summer Edition 2022], sales of sugar confectionery remain largely unaffected.

    “The category has continued to grow 10.3 per cent over the last year [IRI]. We’ve found that the popularity of convenient snacking, along with a desire for innovation which can be seen within our vegan range, is positively impacting sales and boosting the confectionery market.”

    Add to this the extra demand due to the fact that vegan sugar confectionery is becoming increasingly popular (as vegan options move beyond the established categories of meat and dairy alternatives), she says, and that innovation within the vegan sugar confectionery category becomes a strong driver to entice consumers to try out vegan products and keep them coming back for more.

    “Swizzels continues to incorporate consumers’ favourite flavour and texture trends within our NPD and is building on the classic flavours that the nation loves, but with an added twist.

    Swizzels will be launching a Minions Sherbet Dip in May (continuing the hugely successful franchise hook-up with the Despicable Me movies) offeringthree new flavours: Fizzy Orange, Sour Apple and Tangy Berry.

    “Additionally,” says Newton, “we’re urging retailers, cash & carry and wholesalers to stock up on Marvellous Mallows, as the mallow category continues to increase its existing worth of £24.4m [IRI, Sugar Confectionery category, Value Sales]. By maintaining a £1 price point, we aim to ensure our Drumstick-flavoured mallows remain a fast-moving and profitable product.”

    Grow your PMPs

    Clearly the field of PMPs is a fertile one, and the evidence of demand inelasticity despite necessary small price increments due to inflation, looks to be a much more popular strategy with consumers than the sneakier shrinkflation option.

    “The cost-of-living crisis is top of consumers’ minds, as highlighted in a survey by Tayto Group, where 95 per cent of consumers were concerned about the cost of groceries with almost 40 per cent being very or extremely concerned,” says Matt Smith.

    “One way consumers are economising is to save petrol by shopping locally. This provides an opportunity for independent retailers to become the go-to place to purchase drinks and snacks for lunch or on the way home for a big night in. But only if shoppers believe they are getting good value for money. PMPs are a proven way for independent retailers to demonstrategreat value and so, in a cost-of-living crisis, it’s no surprise that 57 per cent say that PMP snacks are more important than ever.”

    Inflation may go (we hope), but PMPs are certainly here to stay.