Biscuits: Brexit takes the biscuit as packs shrink

Talk about taking the biscuit! As the pound’s value continues to fall following the Brexit vote, packets of biscuits are shrinking.

This summer, Pladis cut the number of McVitie’s Jaffa Cakes in a standard pack from 12 to 10 (double packs went from 24 to 20). Rsps were also lowered, but the fall in size still yielded a more than 3% rise in price per cake. It’s not just Pladis, of course. “We’ve also had to make some changes to our pack formats,” Premier Foods’ sweet treats brand director Jo Agnew told The Grocer in October.

The rising cost of key commodities (for example, butter, up 73% year on year at wholesale in September) combined with the impact of currency exchange rates is also making things difficult for Oreo and BelVita owner Mondelez, says marketing director for biscuits Alessandro Ursino.

“We carry these costs within our business for as long as possible to keep our brands as affordable as possible, but sometimes unfortunately it does mean we have to make changes,” says Ursino. “This is not unique to our business or our brands. It’s something that happens across the industry.”

All this has contributed to a 1% rise in price per kilo, says Nielsen senior analytic consultant Steven Hansell. “Prices have increased across all segments apart from everyday biscuits,” he says. “Many have passed on price increases through shrinkflation.”

It’s not just packs that are shrinking. So are their contents. The big three biscuit manufacturers (Pladis, Mondelez and Burton’s) have all launched thin versions of their bestsellers. Oreo Thins and our top biscuit launch of the year McVitie’s Thins rolled out in January, followed by Maryland Thins in June.

“Innovative launches within the category have seen manufacturers being able to charge a higher price, especially if they offer a distinctive proposition,” adds Hansell. Indeed, Thins are more than just a slimmer (pricier) version of a standard biccie. Their higher ratio of chocolate to biscuit delivers something different, suggests Pladis.

“They offer an alternative to the ‘dunking’ moment provided by the core McVitie’s range,” says trade comms controller Hena Chandarana. “The product has outperformed all other (biscuit) NPD this year and remains the number one launch of 2017.”

Thins came hot on the heels of Pladis’ big launch of 2015, Nibbles - sharing bags of tiny chocolate-coated Digestives and Hobnobs aimed at the ‘big night in’. “Both product ranges are examples of how McVitie’s and Pladis are broadening their footprint in the sweet biscuit category,” says Chandarana. “We’ve seen huge success with the launch of McVitie’s Digestives Nibbles, the biggest sweet biscuit launch of the decade, adding £17m to the category in its first year.”

Indeed, without NPD like this, McVitie’s £6.3m loss would be far greater. Innovation was also a key driver of Oreo’s £6.7m growth (the greatest gain in sweet biscuits). In the past 18 months the brand has launched a raft of flavour variants including Strawberry Cheesecake and Peanut Butter. August saw the launch of a Choc O’ Brownie line, backed by a £2.5m marketing campaign. At category level, new sweet biscuit products have put an extra £73.3m through the tills in the past year, up 35% on the previous year.

With own label stealing share of sweet biscuits (sales are up 6.2% or £21.3m), particularly when it comes to standard ‘everyday’ lines, brands will need to keep their innovation pipelines flowing in the coming year. The same can be said in savoury biscuits, where own label is the only significant grower (up £9.5m) as its share of shelf has grown at the expense of brands. Overall, the market has dipped 1.9% on volumes down 2.9%.

There are a few factors at play here. Savoury biscuits - often positioned as a healthier, baked alternative to fried potato crisps - are having to compete with a whole host of new ‘healthier’ bagged snacks lines such as popcorn. “More and more consumers are seeking snacks that are better for them,” says Hayley Murgett, brand controller at Kallo, which is up 1.5% on volumes down 2.2%.

Some players also complain that the category is not being merchandised as effectively as it could be. “With the change in retailer merchandising strategies - relocating multipacks of baked savoury snacks to the much larger category of crisps, snacks and nuts –we have had to adapt to an entirely new category dynamic versus savoury biscuits,” says Burton’s Biscuit Co marketing director Mandy Bobrowski. “The category is highly competitive, with increased competition from NPD and other categories such as popcorn vying for space off shelf.”

This helps explain why Burton’s Fish ‘n’ Chips line has seen nearly half its value wiped out in the past year (it’s now worth £6.8m, down from £13.3m a year ago), although Bobrowski says the decline is partly the result of investment to back the brand’s relaunch tailing off. Jacob’s Oddities was another casualty after Pladis axed the brand earlier this year to make way for three new Mini Cheddars variants (Smoked Applewood, Stilton and Red Leicester).

Oddities’ exit after six years on sale took £2.2m out of the market. Yet Cheddars failed to make up the difference. It’s lost £100k.

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McVitie’s Digestive Thins by Pladis

Granted, everyone seems to be slimming down their biscuits in a bid to broaden the category’s appeal (and offset spiralling costs). But no one’s done it better than Pladis. This trio of thinner Digestives (in Milk, Dark and Milk Chocolate Cappuccino) has moved the nation’s bestselling biccie on from tea break dunker into something far more sophisticated, which fetches more than double the price per weight than standard Digestives. It’s racked up a whopping £10.3m since launch in January.