Higher ingredients costs have prompted French dairy giant Danone to force through price increases on Activia – prompting the mults to raise on-shelf prices by up to 15% and scrap their long-term two-for-£3 deals.
The price of Activia had remained stable for a long time, but significant price rises on milk, sugar, fruits and packaging had left Danone with no choice but to increase the cost price charged to retail customers, claimed the company.
“While it has been possible to absorb some costs without compromising the quality of our offering, this is no longer sustainable,” it said.
In light of the hike, Asda increased the price ofActivia four-packs by 15% to £1.84 on 30 October and Morrisons, Tesco and Waitrose followed suit [BrandView.co.uk]. Sainsbury’s moved to £1.80 on the same date, but raised the price to £1.84 on 11 November.
The hikes bring to an end the two-for-£3 promotions introduced by many retailers in January 2009. Asda had continuously run the deal for 259 days, and Sainsbury’s for 819, but both ended the promotion on 1 November.
On 8 November, Tesco (272 days) and Waitrose (237 days) also ended the offer as did Morrisons on 14 November after 230 days.
Tesco and Waitrose are now running two-for-£3.50 deals, which will end on 29 November 2011 and 6 November 2012 respectively. Sainsbury’s is also offering two-for-£3.50, as is Asda in a deal that saves shoppers buying on deal 2p less than when two £1.84 packs were on sale for £3.
As the biggest selling yoghurt brand by value in the UK with a 10.8% value share of the chilled yoghurts and desserts category [Nielsen 52w/e 19 February 2011], Activia could potentially trigger price rises on similar rival brands and own label products.
One supplier said it was unlikely because, unlike rivals and own label, Activia had a very strong brand proposition and could sustain a price increase without it affecting sales volumes.
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