IV and V range with Mdd, a competitive advantage Years ago, the distribution brand shed its image of a basic and cheap product, which democratized supermarket shelves.
In the category IV and V range solutions, the different manufacturers have been implementing some of their innovations in their Mdd offer, offering products with a better value for money. And these improvements are reflected in the data, which shows how the segment has evolved in recent years. And it is that two out of every three products that are purchased in organized distribution are white label.
However, the outbreak of the pandemic caused by the Covid-19 virus has impacted this category of refrigerated plant solutions, having to readapt in record time manufacturers and distributors, and offer maximum flexibility and efficiency to continue conquering a consumer who has returned to rationalize your purchases as in times past.
The economic impact that the Covid-19 health crisis has brought to our country has raised the propensity to purchase private label products driven by the price factor. And it is that with an unemployment rate of 15.8% in the month of July, and with more than 24% of the workers under the ERTE umbrella, there is no doubt that the Mdd has found a competitive advantage in this context , and will take advantage of this new gap in the home of consumers, more sensitive to price and inclined to seek more competitive solutions. If the consumer experience is satisfactory, the increase in penetration will be followed by the purchase frequency, an essential variable in this category, given the short life of these products. Precisely the drop in the frequency of purchase was an aspect that played against during the first months of confinement in homes.
According to the data provided by the consultants and the manufacturers themselves, the category registered a fall of between 20 and 40% in the first weeks of the State of Alarm. And while the Mdd better withstood the decline in sales, it also suffered. However, the big market trends – health, food safety, product origin or sustainability – have not changed, and the advance of Mdd continues, especially in adult salads.
But, what was the evolution like before the arrival of the pandemic? According to data from the consulting firm Iri, the sale of IV and V range solutions with a distribution brand invoiced € 471.30 M in the TAM computed until December 2019, which meant a growth above 6% compared to the same period last year. In volume, the increase was very similar to this figure, with an increase of 5% in volume, with close to 80,440 t being sold. These data show that there is an upward trend and in balance. In more absolute values, the sale of IV and V range products with million dollars represented 66.2% of the total value invoiced in the category, a figure that reaches 74.5% when the volume is analyzed. In both cases, a percentage point was added with respect to the data recorded a year earlier.
How does the Mdd generate value?
The development of cutting-edge solutions for sale with Mdd has become an important business channel for all manufacturers, which have production centers with large production capacity, which allows them to work the volume demanded by distribution. However, volume and value are not at odds, and over the last few years retailers have demanded more valuable references. For specialists, establishing relationships with distribution to manufacture their own range of products and sustain it over time requires a solid structure as an organization. Thus, in recent times, value has been created thanks to the commitment of manufacturers to quality, safety, healthy eating and innovation. These issues are essential to continue advancing, and even more so in the current situation, in which concern about the economy is leading some consumers to opt for distribution brands.
If a year ago there was talk about how innovation had also reached private label products, in the current context manufacturers are choosing to generate more consumer confidence, offering products of the highest quality. For this, the watchword is to be more flexible and efficient to prepare and serve what the consumer requires in record time. According to some specialists, fundamentally the most commodity products are growing, such as bagged and family-size salads, compared to the formats of complete salads, specialties or peeled and cut fruit. And it seems that the rationalization of the purchase has also been transferred to the product catalog, presenting a much more continuous offer and without grea.
Source: IFEMA https://www.ifema.es/