Biggest brands: Top 20 Brand Categories

Price promotions and consumers' premium desires are polarising purchasing decisions, discovers Jane Simms

Given that wine, beer and lager, and spirits are the bestselling categories, with a combined value of £5.6bn, while chocolate confectionery is at number five, it would be tempting to conclude that we are a nation of alcoholics and chocoholics - were it not for the presence of soft drinks in the number two slot.

Alcohol is a relatively expensive purchase, but sales growth of both wine and beer and lager have outperformed other categories, at 17% and 12% respectively, fuelled by consumers trading up to more expensive products.

However, the sector exemplifies what Edward Garner, communications director at TNS Superpanel, calls 'the price paradox'.

'The everyday low pricing battle is hotting up and driving prices lower, while growing levels of disposable income mean consumers are prepared to pay a premium for the right proposition,' he explains. With the two ends of the spectrum increasingly polarised, more shoppers are willing to save pennies on a commodity item such as a can of beans while splashing out on fair trade coffee, organic vegetables or a bottle of wine.

While heavy promotions in Tesco and Asda in the run-up to Euro 2004 drove consumers into the beer and lager category, the growth of premium lagers such as Stella Artois indicate that consumers are trading up by taking advantage of falling prices.

Baffled consumers

Laundry products, one of the three categories in the top 20 to experience a sales fall over the past year, have suffered from offering too much choice. In a market characterised by the continuing battle for supremacy by market leaders Persil and Ariel, many consumers are baffled by the ever-changing and expanding range of machine-wash products on supermarket shelves, and often revert to the tried and trusted product they (or their mothers) always used - or even switch to private-label products.

The fact that sales in 14 of the top 20 categories grew, and remained stable in three more, suggests that consumers generally are less motivated by value and more by quality, particularly where quality implies greater healthiness or indulgence.

The flight to quality is most evident in the bread market, the third-highest growth category, with a 10% increase in value sales last year.

The trend for low-carbohydrate diets, popularised by the late Dr Robert Atkins, is exerting a downward pressure on bread volumes, which is taking its toll on the value sector. But this has benefited the premium end of the market, as the strong growth of Warburtons and Hovis - up 17% and 9% respectively - testifies.

The move toward premium brands is also manifest in the growth in the crisps and savoury snacks market. Walkers' Sensations, up 55% over the year, is positioned as a 'posh crisp'.

Likewise, sales in the skincare market were up 9% last year, thanks to women's growing propensity to invest in premium-priced anti-ageing creams.

Consumers extend their indulgence to their pets too: pet food, although not a big growth area, is high on the list of branded categories, just below chocolate. Worth more than £1bn, it too has been driven by the wider consumer trend toward premium products, notably single-serve portions such as pouches.

Debit/credit approach

Also evident from the TNS Superpanel data is another consumer paradox, regarding health. While the trend toward healthy eating is clear in categories such as yoghurt and yellow fats, for example, the chocolate market is worth £1.3bn and is growing at 6% a year. 'People seem to think that if they eat well most of the time, or go and work out in the gym, they deserve a treat,' says Garner.

This debit/credit attitude to life is evident both on a weekly basis - people eat healthier early in the week, succumbing to indulgence products as the week passes - and on an annual basis. 'Sales of low-fat and low-calorie options peak in January, then tail off throughout the rest of the year,' says Garner.

In a low-inflation economy, it is virtually impossible for a manufacturer to get a retailer to agree to a price increase, and this has spurred them to grow their product portfolios through innovation and line extensions in the hope that people will trade up and create value for them that way.

On the face of it, this seems like good news for consumers, but in reality, although consumers like the idea of choice, range proliferation has arguably gone too far in some categories - notably laundry - and achieved the opposite effect from that intended, driving consumers toward simpler, own-label products. It's a risk that manufacturers must bear in mind.

TOP 20 BRANDED CATEGORIES

Rnk Brand Value %

(pounds m) chng

1 Wine 1910-1915 17

2 Soft drinks 1895-1900 3

3 Beer & lager 1805-1810 12

4 Spirits 1385-1390 5

5 Chocolate confectionery 1330-1335 6

6 Pet food 1000-1005 2

7 Breakfast cereals 875-880 4

8 Bagged snacks 855-860 3

9 Cooked meats 760-765 0

10 Bread 750-755 10

11 Laundry 660-665 -2

12 Cheese 655-660 7

13 Yellow fat 640-645 0

14 Yoghurt 595-600 1

15 Skincare 595-600 9

16 Frozen meat 570-575 4

17 Sauces & condiments 500-505 0

18 Cakes & pastries 485-490 -2

19 Toilet tissue 465-470 -2

20 Instant coffee 455-460 2

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