Cereal and alcohol make up 41% of on-pack promotions, reveals UK supermarket research

• By category, alcoholic drinks made up 28% of in-store, on-pack promotions, while breakfast cereals made up 13%. They are the largest two categories for on-pack promotions
• The top five FMCG brands – namely Nestlé, Procter & Gamble, PepsiCo and Unilever – are all using promotions to drive sales and increase engagement
• “Retailers and shoppers are in a race to grab attention with promotions that work” says Carey Trevill, managing director of the IPM. Brands are “using promotional packaging to drive sales” says Jonathan Jackson, CEO of Hive

Hive, Loughborough: New research by Hive, the experts in unique code-enabled promotions, gives a fresh look into the current state of on-pack promotions. The market research was carried out at three of the largest stores belonging to the UK’s biggest supermarket brands: Asda, Tesco and Sainsbury’s. The research uncovered new insights on how major FMCG brands are finding ways to increase sales in an industry characterised by fine margins and competition, with all the top five global FMCG companies using promotions on at least one of their brands.

The research discovered that most promotions can be found on alcoholic drinks. Overall, 28% of promotions could be found in this crowded category where it is challenging for brands to differentiate themselves. The next most popular category for promotions was in the cereals aisle, with the research finding cereals carried 13% of promotions. Large cereal box packaging give a lot of space for promotions to be communicated, creating eye-catching designs and driving sales.

Furthermore, the research revealed that the mechanics of promotional packaging are evolving in the digital world and changing the dynamic of the relationship between FMCG, supermarkets and consumers. 49% of promotional tools used by brands in-store are unique codes and 25% require online entry. Just 8% used vouchers, showing the demise of cut-out coupons. Social media is also being used as a sales and promotional tool for competition entry and brand engagement. HJ Heinz used Facebook for entries, for example.

Jonathan Jackson, CEO of Hive, explains: “Traditionally, FMCG brands have used multi-buy and buy-one-get-one-free deals to drive sales, but supermarkets have begun to scale back these offers and are moving towards everyday low prices. With 70% of purchasing decisions taking place in the aisles[1], the brands are responding with new ways to drive sales. Our research shows that FMCG brands, particularly breakfast cereals and alcohol, are using promotional packaging to stand out and drive sales.”

Carey Trevill, managing director at the Institute of Promotional Marketing (IPM) says, “Retailers and shoppers are in a race to grab attention with promotions that work. Hive’s snapshot into these three stores reveals that some brands and categories are working more effectively than others to promote effectively at POP. Packaging is key to ensuring brands stand out and the way this platform is now used will bring success for brands, while delighting consumers who interact more and more with packaging.”

Almost 90% of promotions surveyed now require purchase. Of those requiring purchase, 60% were unique code enabled, providing a strong proof of purchase method that allows companies to precisely target promotions that drive sales. For example, McVitie’s made a cost saving of 80% using Hive’s unique codes technology and increased their frequency of purchase by 30%.

“We see a real divide between these weak promotional methods such as asking for photos of packaging, entering a batch barcode or just online entry and strong methods using unique codes. Without strong proof of purchase verification, anyone can enter the promotion on offer without buying the product. The promotion does not necessarily drive sales. The use of unique codes helps to increase sales by an average of 8%.” says Jackson.

Digitally enabled packaging, using unique codes entered online, allows brands to take advantage of the digital space in ways not previously possible using packaging alone. Unique codes, when entered online, give the brand a plethora of information such as the factory the product came from and the supermarket it was stocked in. But more than this, it gives brands information about who buys their products. This is a consumer-friendly way for brands to enrich what they know about their average shopper. With repeat code entries it forms the basis of building brand loyalty and ultimately increases sales.

To download the full report, please click here.