Article preview

Table

TOP X BRANDS

Pasta & pasta sauces: SXw/e X August 2011

                            SALES         CHANGE
                      [pounds sterling]M  Y-O-Y%

DRIED PASTA
Own label                          XXX.X     X.X
Napolina                            XX.X     X.X
De Cecco                            XX.X    XX.X
Buitoni                              X.X    -X.X
Marshalls                            X.X    -X.X

AMBIENT PASTA SAUCES
Dolmio                             XXX.X     X.X
Own label                           XX.X    -X.X
Loyd Grossman                       XX.X     X.X
Sacla'                              XX.X   -XX.X
Homepride                           XX.X    XX.X

Full article

Cheap, convenient, comforting, healthy and delicious, pasta is arguably the meal solution most perfectly in tune with our times. And it's had a simply storming year.

[ILLUSTRATION OMITTED]

Total value sales are up XX.X% to [pounds sterling]XXXm, driven by double-digit growth in shapes, spaghetti and fresh cut pasta [Kantar XXw/e X August 2011], with leading brand Napolina posting value growth of X.X% to [pounds sterling]XX.Xm and nearest rival De Cecco's sales rising XX.X% to [pounds sterling]XX.Xm [SymphonyiRI XXw/e X August 2011]. Volume sales have also risen, albeit at a slower rate. Sales of pasta sauces, meanwhile, increased by X.X% in value and X.X% in volume, with ambient sauces comfortably outperforming chilled offerings.

One of the foundations of this success is the perception that pasta is less expensive than competitor carbohydrates such as rice and noodles, says Nigel Singh, commercial manager for Pasta Lensi, the biggest own-label pasta supplier in the world. "Even with inflation, the consumer still sees pasta as being cheap," says Singh. "You can buy a bag of pasta for between Xop and Xop in a supermarket and you can feed six."

But its success is not straightforwardly about price alone. The pasta category is still dominated by own label, which accounts for XX% of value sales and is responsible for the lion's share of the category's growth (own-label pasta sales increased by XX.X%, compared with a X.X% increase for branded products). Much of that growth is the upshot of retailers no longer using pasta as a weapon of mass destruction in their price wars, says Singh. "Six or seven years ago there was a massive battle between the retailers over who was going to be the cheapest in pasta and that really affected their margins. Now they're making some money out of it they can reinvest that money in activities, such as promotions, to support the market."

The dominance of own label means branded pasta offerings remain limited, however-a situation some suppliers believe is to the detriment of the category as a whole (see box, PXX).

[ILLUSTRATION OMITTED]

And those brands that have made it on to shelf have enjoyed mixed fortunes. Brand leader Napolina and second-placed De Cecco rose in value, while the Marshalls and Buitoni brands suffered declines in sales.

Napolina says it has been able to increase its market share by promoting more meal occasions to consumers through recipe suggestions on packs and on its website. "Cooking self-assembly meals at home is very much on-trend at the moment," says Dean Towey, marketing director for Napolina. "We help consumers who want to cook restaurant-quality meals for family and friends without having to cook completely from scratch."

The growth of Napolina shows consumers are still willing to fork out for brands that can justify their price premium. And consumers' enthusiasm means brands established in other markets still see pasta as an attractive proposition.

A notable arrival is Campbell's. Better known for its soups, the brand joined forces with Symington's to launch a range of dried pasta dishes in January. Campbell's claims the range is 'changing perceptions of what dry foods can deliver'.

New entrants would be wise to treat pasta with caution, however, as prices are set to come under increasing consumer scrutiny following recent developments at the production end. Durum wheat plantings are down around XX% over a five-year period, according to Singh, as farmers revert to using wheat for biofuel. A "disastrous" harvest in North America, meanwhile, is set to push prices up further still.

Input price increases have also heaped pressure on suppliers of pasta sauces. A hike in the cost of tomatoes, in particular, is putting pressure on sauce suppliers to push through price increases. This XX year, the Italian government stopped subsidising the country's tomato crop-which has made them less economically viable for farmers.

Italian farmers are switching to alternative crops, according to Diego Paviotti, export director of Italian tomato products producer Cirio. He cites World Tomato Council figures that show Italy's tomato harvest at X% below last year's levels. Increases in the price of basil, olive oil, glass and tin have also contributed to rising costs.

PROMOTIONS

The other challenge, of course, is promotions. Suppliers concede that high levels of promotional activity and price increases have, to some extent, artificially inflated sales figures.

Across the entire pasta category, the number of featured space promotions has increased by XX% in the big five retailers, with the heavyweight bogof or half-price promotional mechanics accounting for a greater proportion of deals than the pre vious year - XX% vs XX% [Assosia, XXw/e September 2011].

In fresh pasta, promotions account for XX% of total market value, up from XX% last year and XX% the year before [Kantar XXw/e X October 2011]. X-for-y deals remain the most popular mechanic, but retailers are also favouring price reduction deals in an effort to drive frequency of purchase, says Stephen Hull, brand development director at Giovanni Rana UK. There has also been a trend towards running cross-promotional deals linking fresh pasta and sauces, he adds.

In ambient pasta sauces, meanwhile, number-one brand Dolmio significantly ramped up promotions and now accounts for over a quarter of all pasta and pasta sauces sold on deal.

One of the problems with this culture of promotional excess is that smaller brands, unable to afford to promote as deeply as larger rivals, can suffer. Sacla's pasta sauce sales fell by XX% in the past year [SymphonyIRI XXw/e X August 2011], and although much of that decrease was due to tough comparables after Tesco used Sacla' to cover a shortage of own-label pesto in the previous year, hard-hitting promotions from rivals also played their part.

"We've been on a mission over the past XX years to build this brand to stand for premium and quality and authenticity and there's no way we can afford to trade it at the moment," says Clare Blampied, UK managing director of Sacla'. "If you just give your product away, you're not creating a long-term sustainable business."

Blampied is confident, however, that consumers are buying into the category more frequently, which means suppliers aren't wholly reliant on promotions to shift pasta and pasta sauce products. "If you look behind the numbers to the shopper, there is some positive behaviour going on," says Blampied. "The foundations seem to be strong."

INNOVATION

One of the ways in which suppliers are coping with pressures is by adding value through innovation. Sacla's, in particular, has recently introduced several new, premium concepts to the pasta market.

In May, the brand made its first foray into fresh with the launch of a XX-strong range of pasta, pesto and sauces, and followed it up with the summer launch of Per Uno - a range of ambient cooking sauces designed to serve one person.

Of the fresh range, Blampied says Sacla's aim was to bring an authentic Italian offering to the chilled cabinet. "Chilled shoppers want authenticity, but the category is dominated by own label. Lots of promotions were driving value XX out of the category - and we're saying it needs a brand that can come in and add authenticity and heritage and value."

The Per Uno range, meanwhile, will compete directly with Loyd Grossman's For One range. At [pounds sterling]Xm, first year sales of the Grossman single-serve sauces range fell well below the [pounds sterling]Xm target set by Premier Foods - but the product remains "bang on trend", according to Max Strieker, category controller for cooking sauces at Premier Foods, and is set to benefit from new variants and a redesign to the entire Loyd Grossman brand.

Loyd Grossman was recently identified as one of Premier Foods' eight 'powerbrands' - an indication of the faith the company has in the brand. "We've identified the brands we really feel we can win with and are focusing on those," says Strieker. Although sales of Loyd Grossman pasta sauces grew by just X% in the past year, in the context of the row with Tesco that led to more than XX of the brand's pasta sauce SKUs being delisted for a period of up to three months, the fact the range remains in growth is an indication of "just how important it is", Strieker adds.

Perhaps the most significant addition to the pasta market in the past year has come from Tesco itself, with the launch of its Parioli venture brand. According to the retailer, Parioli aims to give families easy access to authentic Italian flavours. The entire range has been trading at a round-pound price point in recent weeks to drive penetration. Although Tesco won't divulge trading figures, a spokesman says Parioli has performed well since launch.

The Parioli roll-out suggests Tesco has confidence in the future expandability of the pasta and pasta sauces category. However, the brand's immediate recourse to promotional activity suggests branded suppliers hoping for an end to the cycle of promotions may be waiting a little while longer.

RELATED ARTICLE: * The pasta market has grown significantly in the past year, driven by higher purchase frequency and price rises. Fresh pasta grew ahead of dry, thanks to an increase in the number of buyers.

* Sainsbury's, Waitroseand Marks & Spencer displayed the fastest year-on-year growth among the retailers. Sainsbury's succeeded in attracting more buyers to the pasta market, while growth in Waitrose was a consequence of customers returning to the fixture more frequently and simultaneously buying more.

* Pasta sauces are growing slower than pasta.

* Ambient sauces dominate the market - with XX% spend share, they are growing ahead of chilled pasta sauces. The market is slowing primarily because shoppers are leaving chilled pasta sauces.

Valentins Kirillovs

[ILLUSTRATION OMITTED]

RELATED ARTICLE: LAUNCHED: OCTOBER 2011

HELLO KITTY ORGANIC PASTA Fun foods X All

Fun Foods X All has added Hello Kitty oranic pasta to its portfolio of character-licensed pasta products. The pasta is made in ltaly from the finest organic durum wheat semolina and joins products featuring Bob The Builder, Scooby Doo, Thomas and Friends and The Simpsons in Fun Foods X All's line-up. "This is Fun Foods' first 'girl-focused' product and, as most parents know, girls opt for pasta over other convenience foods like pizza, so the new Hello Kitty pasta is set for success," says Fun Foods director Nigel Singh.

...