Death knell rings for the BOGOF and retailer rule
This view was expressed at the European Food and Farming Partnerships (EFFP) annual conference called 'More with less driving performance, sustainably' held in London last month, which addressed the changing dynamics in the food supply chain.
Growing global demand for food and pressure on limited resources are forcing prices up. October's inflation figure was 2.7% but Siôn Roberts, a senior partner with EFFP, predicted that food inflation would peak at around 4% by the end of next year. Food prices have risen by a third since 2007, which was making cash-strapped shoppers more savvy about what they buy.
'Climate of austerity'
Martin Glenn, chief executive of frozen foods group Iglo, said: "Everywhere that we supply, we have seen a big reduction in multi-buy promotional technique and that is partly being driven by the climate of austerity and partly because consumers are also saying 'I'm buying what I need'."
The National Farmers Union president Peter Kendall and Food and Drink Federation president Jim Moseley, both echoed comments made by Dexter Paine, founding partner of agricultural private equity firm Paine & Partners, that the balance of power was shifting towards suppliers. Moseley also felt consumers were increasingly taking the driving seat.
But retailers were responding to more "promiscuous" shopping by increasing their promotional activity in an attempt to attract customers, said Dr Clive Black, head of research at analyst Shore Capital. He reported "a dramatic rise in promotional activity".
'Producers expected to pick up cost'
Moseley, who is also md of General Mills UK and Ireland, argued that changing consumer behaviour was influencing the type of promotional activity that supermarkets undertook. Kendall argued that all too often, producers were expected to pick up the cost of promotions.
"Consumers are beginning to vote very much with their feet and their shopping actions when it comes to promotions," said Moseley. "Most consumers are now tending to shop on price points, so they are looking for half price goods or the £1 or 50p deals. So they have recognised that the 'buy one, get one free' does create waste in the home and they don't want to waste anything."
Moseley said the Department of Health would turn its attention to promotional techniques as a contributor to the UK's rising obesity epidemic. "BOGOFs and multi-buys may come under the spotlight at that point."
