Shoppers are more price savvy since the introduction of Minimum Unit Pricing

In January of this year, Minimum Unit Pricing (MUP) was enacted in the Republic of Ireland. It sets a minimum price for a milligram of alcohol no matter where it is sold; off-licences, supermarkets, bars or restaurants. MUP was included in the Public Health Alcohol Act 2018 but wasn’t enacted until January of this year. The goal of MUP was to stop alcohol from being sold in supermarkets and shops at very low prices, thereby in the hope of reducing alcohol intake and alcohol-related harm.

Research conducted by Shopper Intelligence, which captures the perceptions of 30,000 Irish grocery shoppers, found that Irish shoppers in the beers, wines and spirits (BWS) categories in 2022 are concerned about price and potentially confused about the impact of the new legislation. The Shopper Intelligence Grocery Insights Research looks at what shopper behaviours have changed over the years and how rising prices are impacting shopper satisfaction and what these changes mean for brands and retailers. Colm Rooney of Shopper Intelligence recently presented the results of their Grocery Insight research for 2022 at a webinar hosted by GS1 Ireland.

3 in 5 alcohol shoppers were aware of Minimum Unit Pricing prior to its introduction

The research shows that prior to the introduction of MUP legislation, around 60% of beer, wine and spirits (BWS) shoppers were aware of the incoming changes to legislation. 35% of shoppers said they were planning to ‘stock up’ in advance of the pricing changes. Following the introduction of MUP in January, the level of awareness had increased, with 86% of beer, wine and spirits shoppers reporting that they were aware of MUP, while 31% claimed to have already stocked up in advance. As Colm elaborates,

Prior to the introduction of MUP, three in five beer, wine and spirits shoppers said they were aware of the incoming change in legislation, which was surprising to our clients in the industry, who felt that was a remarkably high proportion of consumers.

Colm Rooney – Shopper Intelligence

Price metrics rose in importance following the introduction of MUP

The research shows that price has become more important to Irish grocery shoppers this year overall, but even more so to the beer, wine and spirits shoppers following the introduction of MUP. Satisfaction with price in this category has declined and customers are more likely to look for pre-store promotions when it comes to alcohol prices. Shoppers have also come to view alcohol as a ‘beacon’ category which informs them if the rest of the store was good value or not and they are more likely to be open to private label options post-MUP, as Colm explains below.

The importance of price among beer, wine and spirits shoppers went up. Satisfaction with price went down. Both of those were fairly predictable, considering the type of legislation that came in. Pre-MUP, the expectation was that if the if MUP is going to hit the value tier, shoppers will be more likely to trade up. Surprisingly, shoppers told us that they were less likely to trade up.Openness, the private label jumped up by 12%. This is a category where there isn't really a private label presence, so why all of a sudden, were shoppers more open to private label? Our theory is that, despite being ‘aware’ of it, shoppers didn’t fully understand the legislation. The value tier increased in price which motivated shoppers to look for a private label option, which they never really looked for or bought before…and which wasn't really there.

Colm Rooney Shopper Intelligence

Price satisfaction has declined post-MUP

Beer, wine and spirits shoppers’ satisfaction scores have held up well in all areas apart from price. Among shoppers in grocery retailers price satisfaction dropped by 4% but when the data is split in terms of types of retailers, however, price satisfaction in the convenience channel actually increased by 6%. As Colm explains,

Although MUP came in and pushed prices up, at least in a certain tier, the perception amongst convenience channel shoppers who bought beer, wine or spirits was that they were more satisfied with price. The convenience channel shopper felt, that with this new legislation, pricing is more similar between the grocery and convenience channels so they aren’t concerned about being charged a premium to shop at the convenience channel. This legislation has brought a perception of price parity for shoppers.

Colm Rooney Shopper Intelligence

Mixed response to premiumisation following the introduction of MUP

Over the years, satisfaction scores for premium alcohol products have been relatively flat. In 2022, when beer, wine and spirits shoppers were asked, they say that they are ‘less likely to trade up to premium’ than they were last year. This changes somewhat when you look at the convenience retailers such as Centra, Spar etc. whose customers are more likely to be more open to both trading up and trading down. This suggests that perhaps there is confusion among shoppers regarding minimum unit pricing which has caused them to look to both upper and lower tiers.

There was confusion in the grocery channel, shoppers didn't want to trade up and they were looking for private label, which went against predictions. In the convenience channel, shoppers were more likely to trade up to premium (+8%), and there was also more satisfaction with premium. We see the same thing for private label. So, it wasn't channel-specific, shoppers were looking for private-label all of a sudden in a category that maybe they never looked for private-label before it because those prices are going up.

Colm Rooney Shopper Intelligence

Possible knock-on effects of MUP: Pre-store and in-store

Intentionality and pre-planning among BWS shoppers are increasing year on year. It’s unclear what the cause of this preparedness is. It may be that shoppers overall are more organised, having been trained during COVID lockdowns to make a list and ‘stock up’. However, it may be that with MUP-related price rises, shoppers are reacting to a raised price floor by being more organised and pre-planned. BWS shoppers are also browsing in-store more than ever, perhaps driven by uncertainty, and potentially, changes in layout and navigation.

In terms of in-store behaviour, similar to grocery in general, more browsing was driven by an increased interest in the category, more exploration or uncertainty and shoppers looking for enjoyment or theatre. There was also a small decline in layout satisfaction scores so there's a bit of confusion whereby shoppers can’t find some products, or things have moved are not where they used to be.

Colm Rooney Shopper Intelligence

 

About the Irish Grocery Shopper Summer Webinar Series hosted by GS1 Ireland

Colm Rooney, Country Manager at Shopper Intelligence Ireland presented the latest 2022 insights from their annual Irish Grocery shopper study in a series of four webinars in June and July, hosted by GS1 Ireland.  The first webinar in the series – “State of the Nation” looked at an overview of the grocery market and included the main 5 retailers. In webinar two we took a deep dive into the profiles of the retailers from a shopper-behaviour perspective, and identify where each has its strengths. The third webinar in the series looked at 3 of the pProduct-specific metrics; environment, traceability and Irishness. The fourth and final webinar in the series looked at how Alcohol Minimum Unit Prices (MUPs) are impacting perceptions among Irish grocery shoppers in the Beers, Wines and Spirits category. For more information or to access the recordings on-demand please visit https://forms.gs1ie.org/watch-si2022-videos

About Shopper Intelligence

The Shopper Intelligence research measures shopper perceptions and behaviours to provide powerful insights,  - helping producers and brand owners to make informed and compelling plans and strategies to present to their retail partners. All the major categories in the Irish grocery channel are covered, with quotas for each main retailer (specifically, Dunnes Stores, SuperValu, Tesco, Lidl, Aldi and the convenience channel). Shopper Intelligence provides the direct voice of the shopper, providing ongoing performance indicators compared at country, channel, retailer, category and brand level that improve promotional efficiency, build persuasive proposals, and inform credible joint plans for growth with retailers.

Contact Colm Rooney.