A change in ethical food buying - consumers now "want value for their values"

Joanne Denney Finch of the Institute of Grocery Distribution in her keynote speech to the Consumer Goods Forum stated that consumers now "want value for their values". The conclusion is based on research they carried out in Britain, France ,Spain and Germany, and its interesting because it indicates that consumers are once again raising the bar on what they expect when they buy food.

Cynics would say that consumers have always wanted more than they are prepared to pay for, but I think there is a subtle shift of emphasis here. Yes, in the past a sizeable minority have been prepared to pay for what they believe in, but what seems to be happening now is that people expect higher standards but don't expect to have to pay for them. As Mary Vizosa of Waitrose said in the Times, consumers expect their retailers and suppliers to act ethically and sustainably, and not present ethics as an extra which commands a premium.

We can therefore expect a change in consumer behaviour, as they shop around to find the outlets that offer both value and values for a given product. Those who fail to deliver will lose custom.

This could be why Sainsbury took full page advertisements in today's papers to say that they have been named as "Best large supermarket 2010" by Compassion in World Farming, and put a value offer in the advert too ( 2 packs of sausages for £4, and 20% off Freedom Food chicken). Waitrose stopped short of adding a value twist to their communications but the front page of this weekend's newsletter features a very handsome beast with the caption "Farming with Compassion - Waitrose wins award for putting animal welfare first".

It would seem that ethical foods are just another example of what was niche gradually becoming the norm.

With the move to mainstream comes the loss of any price premium. The best example is Fair Trade, where volumes have rocketed but price stayed the same as the standard version, witness Sainsbury's Fair Trade bananas, and Cadbury's Dairy Milk.

Ms. Denney Finch argued that ethical products now offer competitive advantage, and that British business, which generally has a good ethical reputation, can use them as a springboard for growth internationally.

The notion that British business should raise the ethical bar is very welcome. The challenge of course to raise the bar without raising the price, and ensure in the process that all players in the food chain are treated ethically and sustainably.

Does Waitrose Sales Growth and Deal with Duchy Signal Return to Premium Food Buying?

Market research company Taylor Nelson Sofres tells us that in the last three months, Waitrose sales grew by 10.2% versus 5.6% for the whole grocery market.

So what prompted the spurt?

Contrary to popular belief the powerhouse has not been Essential Waitrose. This range was never meant to a budget offer competing with value ranges from other supermarkets. In fact most of the products in the range remained as they always had been, and were sold at the same price as previously. The difference was that the range was pulled together under one distinctive brand name.

Essential Waitrose was a rebranding of mostly existing lines, but the vast publicity surrounding its launch seems to have encouraged shoppers back into the stores to re-evaluate what Waitrose had to offer. Once back inside, and helped many more price promotions than hitherto, shoppers liked what they saw and started buying again across the whole Waitrose range. Indeed, Richard Hodgson Commercial Director told the Grocer “Essential Waitrose has played a role at the bottom end but most of our growth is coming at the top end”.

The other factor behind growth may well have been the froth coming off discount shopping. Many of the shoppers who were lured to Aldi and Lidl tried them once, and never came back. The discounters have not converted triers into regular shoppers and growth has slowed from north of 20% per annum to a still respectable but not earth shattering 8% for Aldi and 6% for Lidl.

So does the growth in Waitrose sales and the bloom coming off the discount rose signal the end of the recession and a return to premium food shopping? Well in truth, premium food shopping never went away provided the product in question justified the price charged. What shoppers were not prepared to do was buy premium merely because the label said premium. This is where many organic foods struggled.


Which leads to the Duchy deal. This does seem to be a good thing for both parties. Duchy Originals is a well known and respected brand which should benefit from Waitrose support, and Waitrose commitment to donate to the Prince of Wales Charities can only be beneficial.

It will be interesting to see what Waitrose does with Duchy. The brand is apparently being positioned as super premium, and Mark Price Waitrose Managing Director reckons that it will grow to about 2.5% of Waitrose sales, equating to a turnover of some £100million. The challenge will be to ensure that shoppers are given a clear justification of the super premium positioning. We know that just saying organic on its own will not be enough. One thing is certain. Unless the quality of Duchy products is absolutely superb, and better than anything else available for a similar price, the brand will not blossom.

Finally, can we say that the growth in Waitrose sales, their optimism about Duchy, and the slow down in growth for discounters means a return to pre credit crunch ways of shopping?

Not completely. Shoppers now have a much better handle on what is and is not worth paying for. They have got the taste for chasing bargains. And lurking at the back of most people’s minds is a worry about what the economic climate will be like over the next few years. They won’t be throwing their money away in a hurry.

Essential Waitrose - All a Bit Confusing

To Waitrose, keen to see what the new “essential Waitrose” range is all about.

Billed by the Waitrose press office as “designed to make shopping for staple groceries easier for shoppers”, I found it all rather confusing.
Perhaps the problem was expectation. I had expected to find a new range, displayed alongside existing products, but with a cheaper price and an easy to understand reason about why it is cheaper. Similar to Tesco’s Value, Sainsbury’s Basic and ASDA’s Smartprice.

Not so. Much of the new range is being sold at the same price as existing products. This is true of meat, where the new range and the old were being sold side by side, and fruit. What makes it more difficult to understand is a sign above the meat and fruit shelves saying “all the quality you would expect from Waitrose at prices you wouldn’t.” Which means the price conscious shopper will probably feel put out because prices have not been reduced, and the quality conscious consumer fret that the product is not as good as it used to be.

And then there is that word “essential”. On shelf today were blackberries from Mexico, blueberries from Chile and raspberries from Morocco. Hardly essentials. Essential branding on the meat shelf is being used on rump and sirloin steak, not just on cheaper cuts like mince and braising beef. And I see from the press photo that there will be an essential farfalle. It’s a pasta apparently, but to most people probably not an essential purchase.

On a less critical note, it is easy to see an opening for a bog standard yoghurt, because at the moment all you can buy are speciality flavours and ranges like Seriously Fruity or Probiotics. Also, an offering of free range eggs that do not come from a specific breed like the currently sold Columbian Blacktail could be cheaper, and understandably so. The milk, jam, and biscuits are not yet on shelf so we do not know what sort of products they will be.

Waitrose is a great business, to be wholeheartedly admired for its commitment to quality, and its exemplary animal welfare standards and reputation for fair dealings with its farmers. Clearly it does need to tune its strategy, along with every other retail operator, to manage through the current economic challenges.

But to work, an initiative needs to have a clear and simple message easily picked up by consumers. I think the issue Waitrose faces is that they tried to combine two elements – a pack design change with the introduction of cheaper products. And its hard enough to communicate one new message to shoppers, let alone two.

I really hope it’s just me who finds the offer confusing.