|Title:||United Kingdom retail sales of vegetable cooking oil by type in pounds sterling, liters, and percent change for the year ended February 19, 2012|
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Oils: XX w/e XX February 2012
VALUE VOLUME [pounds y-o-y litres y-o-y sterling] % (m) % m
Vegetable oil XX.X XX.X XX.X X.X
Extra virgin XX.X -X.X XX.X -X.X
Sunflower oil XX.X XX.X XX.X -X.X
Light olive oil XX.X -X.X X.X -X.X
Other olive oil XX.X -X.X X.X -X.X
Other speciatit oil XX.X X.X X.X XX.X
Rapeseed oil X.X XX.X X.X X.X
Other cookin oil X.X X.X X.X XX.X
Sesame oil X.X X.X X.X X.X
Groundnut/peanut oil X.X -X.X X.X -XX.X
Corn oil X.X XX.X X.X XX.X
Chilli oil X.X -XX.X X.X -XX.X
Grapeseed Oil X.X -XX.X X.X -XX.X
Walnut oil X.X -XX.X X.X -X.X
TOTAL XXX.X X.X XXX.X -X.X
Edible oils suppliers haven't exactly been striking oil lately. At first glance, things seem to be bubbling along nicely in the oils market, with value sales up nearly XX% year-on-year [Kantar Worldpanel]. But growth has been driven almost entirely by price hikes, and these have had an inevitable impact on volumes, which have slipped by X%. Consumers aren't buying more oil--they're just paying more for it, as falling supplies inflate raw costs (see pXX).
Interestingly, own label has been hit hardest, with the price rises to a certain extent levelling the playing field with the brands [Kantar Worldpanel]. However, as the latest SymphonyIRI data shows, not all the brands have benefited. Filippo Berio sales have fallen by X.X% over the past year as it began to cut back on "damaging" promotions (see pXX). SOS Cuetara's Bertolli brand, meanwhile, was hit by delistings--it vanished from Waitrose and Morrisons in late 2011, leading to a XX% fall in value sales.
The sheer amount of choice available hasn't helped. The top five supermarkets stock XX% more SKUs now than they did three years ago [BrandView.co.uk]. To restore meaningful growth to the category, suppliers will need to work much harder at educating consumers on the varied usage and taste of different types of oil.
"The opportunity for brands is to educate consumers so shoppers are not relying on a one-oil-fits-all solution," says Edible Oils marketing director Neil Brownbill.
Some oils, notably cold-pressed rapeseed (see pXX), have already done this to good effect--though they're usually coming from a lower base. The challenge facing more established subcategories is far bigger--as are the potential rewards.
Vegetable oil, the biggest sector in the category, is, on paper, in no need of rescuing: it has boosted value sales by XX% on the back of X% volume growth. But insiders say this level of growth may not be sustainable beyond the recession. Consumers have been migrating from seed oils such as sunflower, which have suffered most from price hikes, to vegetable oil, which remains a cheaper alternative despite also suffering from inflation. "The move from sunflower to vegetable oil often occurs during inflationary periods as shoppers look for the cheapest product," says Brownbill.
Vegetable oils have little to gain from education, being too familiar and too homogenous to need explaining. Olive oil, however, stands to gain a lot--if it can get it right. Unlike other oils, it tends not to follow the price of crude oil, and has lost sales. A big problem is that it has become commoditised by constant, deep promotional activity. "Customers often buy in multibuys to stock cupboards," attests Ian Kevitt, sauce, pickles and oils buyer at The Co-operative Group. "Many only buy when it's on offer."
To counter this, consumers need a reason to buy other than price. "Brands must focus on educating consumers on how to use oils," says Samantha Higgins, senior product marketing manager at RH Amar, which imports Gaea Greek extra virgin olive oil.
This might mean choosing extra virgin olive oil to drizzle over steamed vegetables, or milder olive oil for frying. Guy Grimsley, senior consultant at branding agency The Value Engineers, believes oil could learn from categories such as wine and potatoes. "Supermarkets juggle many different varieties of potato. They help customers by labelling according to use," he says. "A similar approach could work for oils."
The key, adds Grimsley, is to give simple advice that clearly explains the end benefit. It's a practice exemplified by the wine industry, which suggests ideal usage without relying on consumers knowing a lot about grapes, regions or pressings.
"People know it does not make much sense to compare Champagne with plonk," says Jeff Bayley, managing director of Hojiblanca distributor Single Marketing. "Olive oil is still at the incubation stage. There's a general lack of awareness. Consumers know little about the various grades of oil and do not understand the reason for the great range of prices."
Olive oil market leader Filippo Berio is investing heavily in education, with a new TV and print campaign begun on XX April focusing heavily on demonstrating the versatility of oil and debunking myths, such as the idea that olive oil is unsuitable for frying. Over the Jubilee bank holiday, for instance, the company will be giving away one million recipe booklets in the Sunday Times and the Mail on Sunday.
It's a change of tack for Filippo Berio--and one the company is hoping will reverse an X% slip in value and volume sales [SymphonyIRI]. Filippo Berio UK MD Walter Zanre maintains the brand has suffered in comparison to a "cracking" 2011 -but adds that its biggest problem has been over-promotion in the category. "Promotions have gone too far," he says. "We're having to work harder to stand still."
A belief that such promotion is dangerous and unsustainable has led to Filippo Berio cutting deals by XX% year-on-year [BrandView.co.uk] With others continuing to promote heavily, the decision has impacted the brand, concedes Zanre--but, he adds, "we'd prefer to let volumes slip than continue cannibalising sales". His aim now is to recover growth without returning to a reliance on deals. "We're confident that over the next three to four months we'll see a benefit from the advertising," he adds.
In the meantime, though, Filippo Berio has come perilously close to ceding its top spot to Napolina, which has grown value and volume sales by XX%. As Filippo Berio cut back on promotions, Napolina has upped them by XX% [BrandView.co.uk].
Dean Towey, Napolina marketing director, acknowledges heavy promoting has helped, but also attributes growth to distributional gains and "strength in other categories, such as tomatoes and sauces, as consumers shop for brands they trust".
Zanre, however, maintains Napolina has made its gains from rock-bottom deals that tempt shoppers from own label. "Napolina is on deal XX weeks a year. Its average price is lower than Tesco's own label," says Zanre. Indeed, although in the past year the brand has moved on and off promotion in Asda, Sainsbury's and Morrisons, in Tesco it has always kept at least one SKU on deal [BrandView.co.uk].
"Napolina are eating into own-label share," says SymphonylRl industry insight director Tim Eales, "presumably through the additional deals they're running."
Olive oil producers caught in the promotional trap will no doubt look enviously at cold-pressed rapeseed oils. The industry has made a concerted effort in recent years to publicise rapeseed's advantages--which has paid off in a hike in sales, with overall rapeseed volumes up by X.X% and values rising by XXX% [Kantar Worldpanel].
"If consumers understand the health benefits, they are more likely to put rape-seed oil on their shopping lists," says Sam Fairs, founder of cold-pressed rapeseed oil Hillfarm. "This has started to happen as a result of us working hard on education."
In October 2011, Hillfarm initiated a collaboration of six producers and a panel of experts to educate the media about the benefits of rapeseed oil. And HGCA--the cereals and oilseeds division of the Agriculture and Horticulture Development Board--ran an event in March 2012 to explain rapeseed to food writers and bloggers.
Expert validation is, Grimsley says, key--consumers need reasons to change their habits. "The popularity of cooking shows and celebrity chefs is leading the change in purchasing habits," confirms Brownbill.
Individual brands have also been working hard. Hillfarm, for instance, has added a QR code to its labels linking directly to a video about the health benefits of rapeseed oil. And Rachel Bell, marketing director of cold-pressed rapeseed oil Bell & Loxton, reports stores selling out after instore events showing how the oil is made.
Of course, it's not all about education. Promotions have also played a part, and rapeseed has benefited from industry-wide reinvention and premiumisation (reflected in the high-end price tags of new products--see left). But its focus on education is something olive oils can, arguably, mimic.
With many in the industry agreed that the cost of olive oil will remain low, now is the time for action.
TOP XX BESTSELLE
Olive oil: XX w/e XX March 2012
SALES CHANGE [pounds sterling] m y-o-y %
Own label XX.X -XX.X