PMPs to define 2021

PMPs, like the convenience channel itself, have emerged over the past year of pandemic and lockdown as hero phenomena. They were always important – the “special sauce” of convenience, if you like– but as Covid restrictions grind on and the longer-term economic consequences start to reveal themselves, the value and attraction embodied in PMPs is about to become paramount in consumers’ lives. It’s well worth getting on top of the situation if you want to maximise your revenue in hard times.

“With PMPs it’s all about dictating the margins,” says Hardeep Chahal of Costcutter, Wallasey. “The margins aren’t great, but it shifts volume and everyone likes some value for money.”

Here, experts from some of the top brands give you the lowdown and best advice on how best to stock and boost your PMP profile.

PMPs often sacrifice an element of margin, but don’t let that put you off. The two crucial uplifts from stocking more PMPs than you might usually are these: greater volume of sales for the SKU itself, offsetting any margin loss; and greater footfall into the store, so that other sales occur that otherwise might not have done.

PMPs can bring customers in, and deepen the basket – and they work best with just the kinds of SKUs that customers pop into convenience stores for: alcohol and soft drinks, tobacco, confectionery, snacks, biscuits and cakes. Supermarkets can highlight discounts and BOGOFs, but they don’t have the same in-your-face immediacy, the same product promise of instant satisfaction, that the world of convenience PMP offers.

“PMPs are now chosen by seven out of 10 impulse shoppers over non price-marked,” says Mark Tanner, Head of Wholesale and Independents at Carabao Energy Drink UK&I. “More manufacturers are therefore price-marking their products and independent retailers are increasingly understanding the importance of PMPs.”

PMPs refresh the parts other offers cannot reach – they are part of your in-store theatre, so use them to entertain and sell.

“A well-merchandised PMP display with paired products will always encourage incremental purchases and help drive profits,” says Scott Snell, Vice President of Customer at pladis UK & Ireland. “Locating this in high footfall areas at the front of store will help draw shoppers’ attention to the fixture, increasing impulse sales. The appearance of a display is often underestimated in terms of the influence it has on shopper purchasing decisions.”

A certain ambience

Being an impulse channel means that many customers enter the store with a sharp appetite. They might not know exactly what they are looking for, but their minds are on the alert for the perfect thing to jump out at them.

Sometimes it’s pantry-based nibbles for home consumption and not walk-down-the street munching: in other words, the great British tea break, elevenses or even a hot snack or light meal. Convenience is in a great position to satisfy these needs in PMP form, much better so than even a large, well-stocked supermarket, if the PMPs are visible, priced right (this is where you can rely on the manufacturer’s expertise) and at displayed where they count -preferably at eye-level for maximum impact.

Burton’s Biscuit Company – the other, more longstanding BBC – is a perfect case study for marketing the essential elevenses elements.

“The market for price-marked packs remains hugely important in driving the impulse sector,”says Kate Needham, the firm’s Marketing Director. “Burton’s Biscuit Company recognises the important role that PMPs play in offering shoppers’ reassurance when it comes to value, and we will continue to support the sector with bestselling products.”

Burton’s has been selling so many biscuits during lockdown that there has been an actual shortage of Jammy Dodgers, thankfully a situation that is now under control. It’s worthwhile reviewing the range of carefully curated PMP packs on offer from Burton’s because you should probably be stocking most of them for maximum sales, and the range is a perfect illustration that we have heard from many companies that the £1 PMP is an absolute charm – not least because it’s a single coin most people have in their pocket or purse and can flip out instantly.

Needham outlines the BBC’s biggest PMP hitters as these:

• Jammie Dodgers Raspberry (89P PMP)
• Wagon Wheels Original (£1 PMP)
• Wagon Wheels Jammie (£1 PMP)
• Maryland Choc Chip (£1 PMP)
• Maryland Double Choc (£1 PMP)
• Maryland Hazelnut (£1 PMP)
• Maryland Choc Chip & Coconut (£1 PMP) – NEW
• Maryland Big & Chunky (£1.39 PMP)

Burton’s rolled out the new £1 200g PMP range last year (see our interview with MD Simon Browne in the 14 August issue), replacing their 99p 136g PMPs. Needhamreiterates that the change “offers shoppers even better value for money and driving impulse sales in stores.” The company also expanded its range of price-marked Maryland Cookies, “the nation’s favourite cookie”, with the launch of Maryland Choc Chip and Coconut – available exclusively to the convenience channel.

And I would certainly sip a cup of tea with my cookie: It is important not to forget the effect that PMP offers can also have on beverage sales. Don’t assume that just because teabags or coffee grounds aren’t instantly drinkable that they are out of range of impulse.

Helen Boulter, Multi Sector Sales Controller at Taylors of Harrogate, emphasises that COVID-19 has impacted the hot drinks category in a number of ways. But most notably, shoppers have realised the benefits of shopping locally. “As a result,” she says, “convenience and independent stores have seen increased footfall, and this change in shopper behavior appears to be here to stay. Independent and convenience stores can encourage this behavior by ensuring customer demand is met. This not only includes ensuring customers’ favourite products are available, but as we enter into a recession, shoppers will be increasingly conscious of value. As a result of this, we expect to see demand for PMPs grow, especially on essential and everyday categories such as standard black tea and decaf.”

According to IRI (Value Sales, 52 w/e 7th Nov 2020) Yorkshire Tea is the UK’s top-selling brew and Boulter says that Taylors’ PMPs can “help independent and convenience stores communicate value on one of their customers’ favourite products, and can help to overcome the perception that convenience stores are more expensive than supermarkets.”Indeed, PMPs are a major weapon in the arsenal of independents to out-compete supermarkets.

Scott Snell points out that, “With Britons spending more time indoors, shoppers have enjoyed more hot drinks moments and – with continued working from home – we see this trend continuing throughout 2021. Whether it’s enjoying a cup of coffee or tea, biscuits that complement these occasions have benefitted from a sales uplift. So, retailers would be wise to maintain availability of our core bestsellers – including McVitie’s Digestives and McVitie’s Hobnobs (+35 per cent) – in PMP format.”

Continuing the ambient theme, the light or hot meal option is also increasingly well-served by PMP offers, and this coincides with the growth of food-to-go across convenience, nowhere more so in the DIY microwave area – where Rustlers excels.

Monisha Singh, Shopper Marketing Manager at Kepak Consumer Foods, says that Rustlers PMPs hold a great appeal for convenience shoppers, especially under current conditions.

“During the initial stockpiling and subsequent lockdown periods which coincided with the large scale rebrand of Rustlers (worth £112m), shoppers sought meal options from trusted brands; prioritising familiarity, convenience, value for money and long shelf life – qualities synonymous with our products,” says Singh.“PMP’s played a vital role during this period, offering transparency and reassuring shoppers the market-leading products they are purchasing aren’t overpriced.”

Quality and value make sense to impulse shoppers, and Kepak stresses in its marketing for Rustlers the fact that their skus are made with 100% British and Irish Beef, offering value for money at accessible price points, and as Singh stresses, “helping to attract new customers and encouraging repeat purchase from brand loyalists and impulse shoppers.”

She also points out that PMPs can result in “increase basket spend at a time when visits to convenience stores are becoming more prevalent.” (Basket spend in convenience was up 11 per cent in the final quarter of 2020 according to PayPoint One.)

Kepak recognise PMPs“remain hugely important within the impulse sector and continue to support retailers by making all our top-selling SKUs available in price-marked packs,” says Singh, and outlines the core products to always have in stock:

• Rustlers Quarter Pounder, £2 PMP: The No.1 selling micro-snacking product in impulse, selling seven every minute, meeting shopper demand for a classic burger solution.
• Rustlers All Day Breakfast Sausage Muffin, £1.75 PMP: The first dedicated breakfast product in the Rustlers range, it has quickly become one of Rustlers’ top-selling products worth £11.6m – over £2m in the impulse channel.
• Rustlers Southern Fried Chicken Sub, £2 PMP: The bestselling chicken product in the micro-snacking market makes it a must stock line. Ideal as a lunchtime option, it helps the channel compete with popular high street foodservice options in the booming food-to-go arena.
• Rustlers BBQ Rib, £2 PMP: The No.1 pork product in impulse, the BBQ Rib is worth £2.4m in the impulse channel and in +5 per cent growth YoY.

“With Rustlers catering to the food-to-go, meal for tonight and top up shopper missions, secondary sitings of Rustlers PMPs, perhaps in a meal deal offering close to the entrance, can also help retailers boost impulse sales,” concludes Singh, and Vinay Mistry – Nisa Local Moor Lane, in Preston, concurs: “Rustlers PMPs have always sold really well and being such a well-known brand, it acts as a bit of a beacon in the chiller. The range certainly delivers against expectations and it’s no wonder they’re one of my most popular chilled lines.”

Let’s drink to PMPs

Drinks PMPs are perhaps the most obvious of all, but within the category they can be split into soft drinks, energy drinks and, now increasingly, alcoholic drinks. Beer has had an element of PMP for some time, but it appears as if spirits are beginning to be seen as the sort of SKUs that could also increase sales via a PMP offer.

Jägermeister was a pioneer in that respect, as Mast-Jaegermeister UK Category and Brand Manager Giles Mountford, explains.

“For Jägermeister, PMPs are in growth,” he says. “In fact, we are seeing positive growth across our range of price marked packs including our 20cl, 35cl and 50cl. This year, we introduced our 20cl PMP, but we have had our 35cl and 50cl PMPs as part of our portfolio for some time now.”

He says he has seen these products grow significantly during 2020. “This spike in growth can be largely attributed to the pandemic and more consumers purchasing spirits for at-home consumption,” Mountford says – and as we have seen, this trend is imagined to continue even when lockdown ends.

“Our 20cl is competitively priced at £6.79 and outperformed our 70cl bottle of Jägermeister in impulse,” says Mountford. “The Jägermeister 50cl (£14.99) PMP grew nearly 25 per cent in value and the Jägermeister 35cl (£10.99) has increased 72 per cent in value.”

He believes that PMPs communicate value and give confidence to consumers in the price they are paying, “which is especially important now as many are keeping a close eye on what they are spending,” and that “stocking PMPs is a great way for retailers to drive sales and it will remain a key focus for our off-trade business in 2021.”

Mountford has noticed how consumers are shopping locally and trying to limit the number of times they visit a larger shop. He says this can be to the advantage of independents if they are stocking a range of PMPs from popular brands. “It’s important to have these products visible on the shelf or behind the counter to drive purchase.” His pro tip? “This can be particularly important during peak sales periods, such as Thursday through Saturday.”

Now Proximo, which distils the UK’s most popular Tequila brand, Jose Cuervo® (along with Bushmills® Irish Whiskey, The Kraken Black Spiced Rum, and  Boodles® British Gin along with many other brands), has launched its first ever PMP for convenience stores in the UK, with the aim of driving both consumer confidence and retailer value.

Oli Pergl, Proximo Spirits UK Tequila Educator, says that overall the Beers, Wines & Spirits (BWS) category has been the largest growth area in convenience, with Independents growing twice as fast as the sector (IGD H1 2020)

“Looking at MAT YoY value growth, spirits within the Impulse channel has grown +21 per cent, with the tequila category leading this at a phenomenal +71 per cent rate,” he says. “Jose Cuervo® is outperforming the category at +97 per cent.” That means that over lockdown sales have almost doubled, even before the advent of this latest PMP.

Pergl adds that value growth is higher than volume, delivering incremental revenue and driving premiumisation. “As consumers look to recreate their on-trade experiences at home, we have seen the move to shopping local and supporting independent retail,” he says. “No longer is tequila viewed just as a shot at the end of a ‘big night’.”

He concludes by saying that the £15.99 per 50cl PMP, for Jose Cuervo Especial Silver and Jose Cuervo Especial Reposado, is now available across the country in cash and carry. It has been designed specifically to support independent convenience as consumers change their buying habits.

Despite the nation being locked down, sales of energy drinks are soaring. In fact energy drink category sales have had an extremely strong 2020, particularly amongst independent stores, which saw value sales grow by 4.4 per cent YTD, whereas grocery sales grew by only 0.8 per cent.

“Price-marked packs continue to play a strong role in retail outlets by delivering a greater perception of value to consumers, with 76 per cent of shoppers stating PMPs help convenience store’s price image” said a Red Bull spokesperson, with reference to the latest HIM! Convenience Study.

In addition, 38 per cent of shoppers say PMPs reassure them that they are not being overcharged in a convenience store. Vitally, the study found that a fifth (21 per cent) wouldn’t buy a soft drink from a convenience store if it wasn’t a PMP, meaning that PMPs are essential for category margin. And 22 per cent of convenience store shoppers said they bought a PMPs “every time” or “most times” they visited a convenience store.

That makes energy drinks the essence of PMP marketing, as Mark Tanner, Head of Wholesale and Independents at Carabao Energy Drink UK&I, told us.

“2020 brought about an unparalleled amount of economic uncertainty for businesses and shoppers alike, with millions facing unemployment or furlough,” he explained. “While we have every confidence that the new year will be brighter than 2020, consumer behaviour is often slow to catch up and it’s highly likely that shoppers will continue to seek out great value products, such as PMPs, until well after the economy has stabilised.”

However, PMPs only work if the price point is attractive to shoppers, and 18 per cent of shoppers believe that energy drinks are too expensive. “Especially in this time of economic recession, consumers that see a price-marked can from the market leader for £1.29 are going to feel that this is not good value when making their selection. By stocking Carabao’s ‘only 69p’ cans, retailers can provide their customers with the option of purchasing a great product at a fantastic price,” says Tanner, and points out that PMPs are now chosen by seven out of 10 impulse shoppers over non price-marked:

“Retailers should stock up on Carabao price-marked packs and position them prominently in chillers to give shoppers instant visibility of the great value offering.”

 On the back of the successful introduction of its PMP range, Carabao has introduced its newest and best-selling flavour, Mixed Berry as a priced-marked pack. Carabao Mixed Berry is only 63 calories per can, is the perfect addition to the already thriving range of its “only 69p” products, says Tanner, pointing out that Mixed Berry was the #2 energy launch in the total market for 2020 YTD.

Meanwhile the Red Bull Core range are essential cans to stock, and are available in PMP format, including Red Bull Original 250ml, 355ml, 473ml and Red Bull Sugar-free 250ml. Red Bull’s Editions range consists of both PMP and non-PMP cans with flavours including Tropical, Coconut & Berry and the latest Edition the Red Edition all available.

Amy Burgess, Senior External Communications Manager at Coca-Cola European Partners GB, is another expert voice that agrees on the current elevated importance of PMPs.

“Our best-loved brands, including Coca-Cola, Fanta, Sprite, Dr Pepper and Monster are all available in PMPs and plain packs, so retailers can choose the best option for their stores.

Burgess explains that 35 per cent of consumers say their income has taken a hit as a result of the pandemic outbreak – with the understandable result that many are focussed on saving money. PMPs account for more than 60 per cent of total soft drink sales in convenience stores (Nielsen MAT Total Soft drinks independents and symbols w.e. 21.03.20), so ensuring PMP availability – and visibility – is crucial.

“To help retailers respond to ongoing shopper demand for value, we reduced the recommended price points on PMPs across our colas portfolio in May 2020, including 1.75l sharing bottles of Coca-Cola Zero Sugar (original and cherry and vanilla-flavoured variants) and Diet Coke, and 1.5l bottles of Coca-Cola Original Taste,” she advises.

PMP is king of snacks

“In the convenience channel, it’s especially important to offer consumers snack foods, like biscuits, in PMP format, as this is the category in which PMPs are most popular with shoppers. Biscuits in PMPs are a trending category, with over a quarter of shoppers (29 per cent) saying they’re more likely to buy biscuits in a PMP format,” says pladis’ Scott Snell.

Matt Collins, Trading Director at KP Snacks, says that bagged snacks also remain a vital driver of growth within Convenience and demand shows no sign of slowing. He says that the KP Snacks portfolio is currently growing in value at +6.4 per cent, ahead of the overall category at +3.6 per cent.

The total crisps, snacks and nuts category (CSN) is worth £3.3bn, Collins reveals that in five years KP Snacks delivered almost one-third of overall category growth and the biggest growth contribution of any single supplier.

“At KP Snacks we want to help retailers increase CSN sales by ensuring we offer the right product range in the right case formats, boosted with the right promotions and in-store merchandising,” he says. “We offer retailers 21 PMPs across the KP family and continuously look to add value to retailers.

COVID-19 has certainly had an impact on the way that consumers shop, says Snell. “This began with shoppers’ strong desire to stock up on their household essential items, and was followed by a movement towards less frequent, higher-spend shops as consumers across the UK restricted the amount of time spent outside their homes.”

KP Snacks, too, has seen a substantial change in shopping behaviour over the pandemic, with the resurgence of bigger baskets, main or at least big shop, shopping lists, stocking up for longer and reducing the number of trips and number of stores they visit, and maximising the efficiency of visits. Collins believes we can definitely assume that this will shift back to “little and often” shopping as government restrictions are lifted and recession descends.

“As this happens, promotional mechanics and appropriate merchandising in Convenience will play a key role in offering value to shoppers, serving both insulated and constrained spenders,and the role of PMPs in Convenience will again increase as shoppers’ budgets are squeezed.”

PMPs cater specifically for such shoppers, 33 per cent of whom of think that PMPs are cheaper. What’s more, says Collins, almost half of shoppers also like PMPs as it means they don’t have to ask the price in store – surely an underrated PMP advantage.

He recommends specifically that retailers stock McCoy’s, the best-selling ridged crisp brand McCoy’s Fire Pit, a brand-new range inspired by “wood fired” cooking. Available in Grab Bag and £1PMP, he says that McCoy’s Fire Pit takes BBQ flavours to the next level with three sizzling flavours including Flame Roasted Peri Peri, Flame Smoked Chorizo and Flame Scorched BBQ Ribs.

Scott Snell stresses that while PMPs remain a popular choice for shoppers looking for value during this time of economic uncertainty, he says they also look to heritage brands “for the established flavours and core products that they know and love. Independent retailers should ensure they are well stocked with the bestselling PMP sweet and savoury biscuit lines, as these will help them fulfil consumer demand for their favourite snacks.”

It’s important to remember that four out of five biscuit sales come from only 8 per cent (or less than one in ten) of products in convenience stores, so independent retailers should allow plenty of space in-store for the bestselling biscuits, says Snell. This, coupled with the fact that PMPs account for over a third of biscuit sales in convenience, means that stocking bestselling products in PMPs, and restocking regularly, is essential.

“Six of the 10 bestselling biscuit products in convenience stores are McVitie’s brands, which are all available in PMPs. These are McVitie’s Chocolate Digestives, McVitie’s Milk Chocolate Hobnobs, McVitie’s Digestives, McVitie’s Jaffa Cakes, McVitie’s Rich Tea, and McVitie’s Dark Chocolate Digestives – so stocking these specific products in this pack format is a must for all independent retailers.”

Snell says it is especially important to offer consumers snack foods, like biscuits, in PMP format, as this is the category in which PMPs are most popular withshoppers. “Biscuits in PMPs are a trending category, with over a quarter of shoppers (29 per cent) saying they’re more likely to buy biscuits in a PMP format,” he reveals.

In fact, 43 per cent of shoppers believe that products in PMP format are on promotion, and promotions are the driving force behind purchases for over two fifths (43 per cent) of impulse shoppers.With all this in mind, pladis has been setting out its PMP stall assiduously.

“In fact, earlier this year we launched our Flipz Milk Chocolate variant in PMP format, as well as our Jacob’s Mini Cheddars Smoky BBQ PMP,” says Snell.“Both of these variants at RRP £1are particularly popular and the new formats will continue to help retailers drive footfall and maximise sales.”

Last but not least, remember confectionery, which can also benefit from PMP treatment, especially in bagged form. Victoria Gell, Fruity Confections Portfolio Director at Mars Wrigley,agrees that, “As well as offering good value, PMPs help retailers build a sense of confidence and trust with shoppers, with many saying PMPs reassure them that they are not being overcharged.

To that end, SKITTLES Giants are available in a 125g PMP bag, retailing at £1. “Softer on the inside and bigger on the outside, SKITTLES Giants are three times the size of a standard Skittle, delivering more mouth-watering fruity flavour in one sweet,” says Gell.

And Marta Gil, Brand Director Extra Gum with Mars Wrigley, says that they also looked to continue growing the gum category with the launch of the £2 RRP EXTRA® sugarfree gum PMP, 46 pellet bottle, across their best-selling core flavours: Peppermint and Spearmint.

“An exclusive format for the retail channel, the bottle format continues to tap into the growing demand for keeping teeth clean and breath fresh after snacking on the go,” she says.“Whilst individual packs remain essential lines for stores of all sizes, the larger bottle format is set to be one of the bestselling formats of the year.”

Gil believes thegum bottle will be driving the growth in 2021 with +1.7 per cent projected increase, and recommends it is stocked alongside core single packs for maximum sales success.

In conclusion, as Mark Tanner of Carabao says,all this fabulous PMP innovation and activity“suggests that independents are well prepared to face into the economic uncertainties of 2021 and are on a stronger footing than the grocers, at least partially due to the positive effects of PMPs.”