Pound price point is king in confectionery as deals soar

This article is part of our Confectionery Report 2015

The £1 price point is five times more important to confectionery than £2, as brands and retailers ramp up promotions. It now accounts for 45% of category sales compared to 33% five years ago [Kantar Worldpanel 52w/e 24 May 2015].

“Price points in this sector are critical,” says John McGrath, buyer for impulse at Budgens. “There has been a continued trend towards heavy promotions with consumers getting more and more used to £1 pack deals and buying more frequently based on price.”

Price-marked packs have played a major part in a number of brands’ strategies over the past year. Big Bear Confectionery, which manufactures products such as Poppets and Fox’s, is an advocate of the £1 price point, claiming shoppers are increasingly price sensitive.

“Round pound deals are consistently successful, and the majority of our branded lines, from Poppets to Fox’s, feature one or more products at a £1 price point,” says Ross Stanley, head of trade marketing at Big Bear Confectionery. “We find price marked packs are a great way to reinforce this appealing price point to consumers.”

Swizzels’ NPD Squashies also came in £1 price-marked packs, which it claims helped boost sales of the larger bags. As such, it is rolling this out on new Drumstick and Refreshers Bon Bons. 

Mondelēz, meanwhile, launched £1 promotional packs of Cadbury Dairy Milk tablets in May and urges retailers to make the most of this “lucrative opportunity” by utilising PMPs in-store.

“Research suggests that PMPs are helping to make consumers hunt for value easier with one third of shoppers describing clarity and transparency as the major benefit, while independent retailers agree that PMPs sell faster than standard packs and can be used to save time pricing in store,” says Susan Nash, trade communications manager at Mondelēz International.

But, Nash warns that while PMPs can drive sales, it’s important to remember that they are a promotional tactic. “PMPs are a type of promotion, so retailers should be advised to consider how much of their stock they want to be perceived as ‘on promotion’ – if they are offering nearly all their stock as PMP, is this giving shoppers an expectation of a store that can’t be continued long term?”

Kantar also warns about the levels of promotions in the category, claiming promotions have hit their peak with little room to increase. In 2005, 32% of confectionery was sold on promotion with 10.5% of this total price reduction. In 2015, however, 49% of confectionery was sold on promotion and the amount sold under total price reduction strategies increased to 37.3%.

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