Canned goods: canned price spikes drive own label up

Once lost in deflation, canned food has had some much needed value pumped back into it over the past year as rising commodity costs and fewer promotions force average prices up.

Take the market’s biggest loser - fish, where spend was down £7.2m (-1.7%). That’s a big slowdown from last year’s £30.6m loss, and it follows a 5% hike in average prices for ambient fish. “We have seen the rise of the cost of sustainability, with increased regulation and governance,” says Jon Burton, John West marketing director. “On top of this, as a result of El Niño and other weather conditions there’s been a poor tuna catch worldwide.”

Unfortunately for brands, however, higher prices have put some shoppers off. Market leaders John West and Princes suffered double-digit volume losses as average prices rose 6.5% and 3.1% respectively. Princes, which lost a fifth of its value as volumes plummeted 21%, also fell victim to range rationalisation, with “reduced ranges of Princes in some retailers” and an increased focus on own label hitting performance, according to marketing director Neil Brownbill.

Faced with higher prices and a reduced selection of branded products, shoppers have traded down to own label, where volumes rose 3.6% despite a double-digit surge in average prices. However, it’s still worth noting that own-label canned fish has still been selling for an average of 72p a kilo less than branded.

Tinned fruit has also seen significant price inflation, which has buoyed value sales. “Canned fruit is not immune from the challenges faced across the grocery sector - increased raw material and importing pricing due to currency fluctuations has necessitated price increases,” says Martin Tilney, commercial director for UK and Ireland at Del Monte Europe.

Higher prices took a toll on volumes of tinned fruit, but market leader Del Monte enjoyed a 10% surge in volume sales after emerging the winner in recent range rationalisation. In contrast, Princes suffered a £3.6m loss in canned fruit as “a combination of range rationalisation and price inflation” hit volumes, says Brownbill.

Elsewhere, inflation is also creeping into canned beans, albeit to a lesser extent than in fish and fruit. Baked beans have been subject to the same inflationary pressures as other canned products, including “exchange rate fluctuations and rising raw material and packaging costs,” says Brownbill.

Shoppers are also “moving away from the standard 400g can size into either smaller cans, or newer more convenient formats”, which tend to have a higher average price per kg, says Aaron Crinion, senior brand manager for Heinz Beanz.

But an even more significant factor behind canned beans’ inflation was the shift away from multibuys in the mults, which has reduced promotional savings on brands and meant fewer tins are being sold on deal. At the same time, supermarkets have slashed prices on own-label beans and rationalised their ranges further in an increasingly desperate bid to hold off Aldi and Lidl. Some of the more “niche” Hunger Breaks SKUs were among the victims of range reviews, says Brownbill.

Despite all this, however, baked bean brands are generally doing better than last year. Branston returned to growth after brand owner Princes invested in a “strong promotional plan to drive volume and value”, which saw average prices dip for the brand. Branston is up 1.5% on volumes up 2.7%. And Heinz’s £1.2m loss was considerably more palatable than the £5.4m decline it racked up in 2016. It follows the launch of its No Added Sugar Beanz range, which has “brought new shoppers to the category and increased sales through existing customers” says Crinion.

Heinz, which also launched a no-added-sugar variant of its Hoops range in July, did even better in canned pasta, growing sales by £1.3m. However, the wider category slumped again in the face of reduced promotional activity and concerns around health. “Sugar has been a major concern with mums due to the uncertainty of the nutritional content of the pasta they are serving their children, meaning some choose to opt out of the category or serve it less regularly,” says Crinion.

Meanwhile, canned veg has returned to growth after a strong performance from own label. Canned meat lost another £4.9m, with market leader Princes suffering a 10.7% decline after higher commodity costs on corned beef, and lost distribution for its stewed steak and hotdogs hit sales. All in all, Princes’ fish, fruit, meat and now defunct pasta products have lost a whopping £27.3m.

Ouch.

TOP LAUNCH

Heinz No Added Sugar Beanz by Kraft Heinz

Brits don’t want low sugar, they want no sugar. So the decision by Heinz to follow in the footsteps of its soft drink peers and swap out Less Sugar Beanz with No Added Sugar Beanz was a canny one. Sweetened by stevia and still with 25% less salt than standard Heinz Beanz, the new recipe mean Brits can enjoy their beloved toast topping without worrying about sugar levels. Shoppers have welcomed the change, with the NPD delivering much needed incremental sales growth for beans.