Magazine article Marketing

Going with the Flow

Magazine article Marketing

Going with the Flow

Article excerpt

Value is up but volume sales are falling as consumers' purchasing habits shift, driven by health and price considerations, writes Jane Bainbridge.

From the upsurge in home-cooking to the assimilation of the Mediterranean diet by health-conscious British consumers, the changes in the way people are eating have benefited the edible oils market.

Public education campaigns about saturated fats being bad for the heart seem to have hit home and in many areas of cooking solid fats have been replaced by edible oils. The body of research has grown suggesting the benefits of a Mediterranean diet, high in olive oil, include lowering the risk of diabetes as well as cutting deaths from Parkinson's and Alzheimer's disease.

This has benefited the edible oils sector. Its value has increased 30% in the past two years to pounds 323m in 2009, according to Mintel. Even when food price inflation is taken into account, this still represents a rise of 17%.

A major factor in the hike in value has been the rise in commodity prices as well as the weak pound making imports more costly. Also as biofuels have established a market, greater quantities of vegetable oils have been diverted to energy use, placing further pressure on the market and raising prices. So this value rise has taken place in a context of falling volume (down 5% in the same period) as shoppers have switched to smaller bottles.

While olive oil has gained ground, largely at the expense of solid fats, so too have speciality oils, which a growing number of consumers use both for home-made salad dressings and ethnic cooking. However, the latter still account for less than 10% of value sales.

Price rises are influencing consumer shopping behaviour and for some the higher cost of olive oil has sent them looking for cheaper alternatives While this affects all brand owners, it has also meant that sales of vegetable oil are expected to overtake olive oil in 2009 for the first time in years, as people trade down in the type of oil they use.

Many prefer sunflower to vegetable oil, especially as, until more recently, there was little difference in price. However, as the cost of sunflower oil has risen, vegetable oil has benefited with shoppers choosing the cheaper option.

Brand owners have fought back with price promotions to limit the price differential between their products and retailers' own-label lines.

Liquid oils comprise 96% of the market as solid oils have been squeezed out; Trex and Pura are almost the only brands now operating in this market.

Oil sprays have enjoyed steady growth as they offer portion-control for people watching their fat intake. MH Foods' Fry Light established this category in the UK. Rapeseed oil has been the focus of much media interest of late and this has influenced shoppers' choice. Cold-pressed rapeseed oil is trying to carve a niche in the market akin to extra virgin olive oil as the more flavoursome, cooks-choice oil.

Princes' Crisp 'n Dry is the main brand in the own-label-dominated standard oil segment, having benefited from consumers trading down. In olive oil, the leading brand is Filippo Berio, followed by Princes' Napolina. While there is ad support for the brands, in edible oils there is very limited innovation.

Penetration is high in this sector - at just over nine in 10 shoppers - and frequency of purchase has risen slightly, perhaps as a result of more people cooking from scratch. Olive oil is bought by about 50% of households. Those that buy the greatest volumes of edible oils are the under-45s and ABs. …

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