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Importance of Brand - Annual Food & Drink business survey

For the second year running we have partnered with Johnston Carmichael on their annual Food and Drink survey focusing on understanding the views of the businesses that make up our sector. Here is an excerpt of the report written by our Director Clodagh Sherrard.

Brand is king. According to the survey results the vast majority of businesses agree that a strong brand is key to their business success, with most businesses looking to invest the same level of marketing or more in their brand in 2023. The most crucial areas of focus for brand development are enhancing profit margins, reviewing promotional strategy, retail distribution and securing a price increase.

Investing in brands even in the current economic climate is a key focus for food and drink companies irrespective of size, with 78% of respondents citing it as important. What is interesting to note is that the focus around investment is more about improving profit margins and securing price increases, (30% combined) than it is promoting the brand itself (10%). Looking at the results through a binary lens it seems as if most of the energy in ‘brand investment’ is directed at optimising all things relating to physical availability at the expense of any meaningful investment in mental availability. This is undoubtedly a reflection of the times we are in and the inflationary pressures facing the sector. It was also perhaps unsurprising to see the number of companies looking to Governments to either (a) step in and support businesses or (b) complete their bonfire of regulations and delay the introduction of new ones, such as DRS for the drinks sector.

Brands are caught between a rock and hard place in the current economic environment. With the pricing challenges faced by manufacturers, it is increasingly difficult to fund both above the line investment for the longer-term health of the brand, and short term tactical below the line promotions to drive volumes and maintain/drive year on year sales. Consumers will say they want prices kept as low as possible, which would suggest a policy of EDLP (Everyday low price), however, it is clear from category data that they are increasingly less brand loyal, and shop more promiscuously attracted by offers.

Mark Gowdy. Commercial Director, White’s Oats

What was somewhat surprising from the results was not the fact that companies are looking to improve their profit margins but the fact that so few of them were looking at the levers they could control e.g. pack optimization (4%) and ingredients (6%) alongside negotiating better trade terms. We know from our own work that 50% of consumers would accept a smaller pack size in order to keep prices down.

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Full copy of the report available here.

Photo by Kristian Egelund on Unsplash

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