Cashing in during the credit crunch

We’re all going to hell in a handbasket – or so the financial doomsayers would have us believe. The economy may not be rosy, but the news for packaging isn’t all bad. Some of the sector’s biggest clients are benefiting from the credit crunch. As consumers trade down in an effort to save money, sales of cheaper products and in cheaper supermarkets are going up. Takeaway chains have benefited from customers turning their backs on restaurants. And the trend for home cooking has boosted products like olive oil and dishwasher tablets. Consumers may be tightening their belts but people still have to eat, clean themselves, their houses and clothes.

Kerry Group
Kerry Group, which owns brands such as Wall’s and Richmond sausages, delivered a meaty set of results, with like-for-like sales growth of 6.3% in 2008. Sales of Kerry’s children’s snack Cheestrings grew 10%. The packaging for the brand was redesigned by Jones Knowles Ritchie in November. The company’s frozen offerings are also doing well, but it’s not just the cheaper end of the market that’s booming – the group’s premium Porkinson sausages also racked up increased sales.

Heinz Baked Beanz
Beloved by generations of students, beans on toast is the ultimate cheap meal. Sales of Heinz Baked Beanz soared 21% in the three months to the end of January, compared to the same period last year. People are coming home to prepare inexpensive meals, says Heinz chief financial officer Art Winkleblack. The company added that the recession was helping packaged food companies as consumers choose to eat at home rather than in restaurants. Heinz’s quarterly profits also rose 11%.

Domino’s Pizza
Cashing in on the trend for staying in, Domino’s profits jumped almost 25% in 2008. The chain opened 52 stores over the year, creating 1,500 jobs, while sales grew by 18.4%. Chief executive Chris Moore believes the firm’s business model will prove resilient to the current trading environment: Despite the challenging economic climate, our franchisees’ appetite for growth continues.

Frozen food
The frozen food market is heating up as consumers look to reduce waste. Sales in the sector were 6% higher in January than at the same time last year, making the category worth £4.95bn. Brian Young, director general of the British Frozen Food Federation, says: Consumers are more aware of the amount of food that gets wasted and with frozen there is very little waste. Frozen vegetable sales have grown 10.1% in the past year to just under £400m as consumers look for products with longer shelf life. Frozen fish has grown 7.7% year-on-year. Young adds that he expects to see the growth continue as the economy suffers: Frozen food offers value.

Olive oil
Staying in is the new going out, and as a result more people are cooking from scratch and buying olive oil. Sales rose 3.7% for the 12 weeks to 25 January, according to Nielsen. The value of olive oil sales increased by 5.5%, as customers splashed out on higher-grade oils to impress guests entertained at home rather than in restaurants. Filippo Berio sales were up 3.6% for the year ending 25 January. Shoppers are also more nostalgic. Sales of comfort foods such as custard are up, while sales of Scrabble were 20 times higher this Christmas.

Reckitt Benckiser
Cleaning up in the credit crunch. Reckitt Benckiser, which makes brands such as Cillit Bang, Dettol and Harpic, swept up like-for-like growth of 10% for last year. Revenue for the year grew by 25%. The company’s revenue grew across fabric care products, such as Vanish; surface care lines including Dettol and Cillit Bang; dishwashing brand Finish; and healthcare brands such as Strepsils and Nurofen. New variants performed particularly well. However, the real star of Reckitt’s 2008 show was its prescription drug business, which grew 45%. The company’s methadone-alternative Suboxone performed especially well.

Organic and Fairtrade
Some are trading up as the economy slows down. Far from people abandoning their principles, sales of organic products are holding up well. Morrisons’ organic range soared to 32% higher sales in December 2008 than 2007. The supermarket reported a like-for-like sales increase across all products for the six weeks to January of 8.2%. Sales of Fairtrade goods rose a staggering 43% on 2007, according to the Fairtrade Foundation.

Sainsbury’s Basics
Sainsbury’s had a very merry Christmas in 2008, recording its best ever festive period. The retailer had like-for-like sales growth of 4.9% for the quarter ending 3 January 2009. Sainsbury’s own-brand products performed especially well. Sales of the supermarket’s Basics range, for which Williams Murray Hamm designed the packaging, are up more than 40% compared to last year. The quirky tag-lines on the Basics packaging make a virtue of the low cost. Chief executive Justin King says: Sainsbury’s offers great quality products at fair prices and appeals to the full range of customer needs and budgets.

Aldi
As customers trade down Aldi sales are rocketing up. The discount supermarket produced 24.1% year-on-year growth for the 12 weeks to 25 January, according to TNS Worldpanel. Last year, Aldi announced plans to open a new store every week. The German chain is spending £1.5bn on a five-year UK expansion plan. The credit crunch is an opportunity because more people will think about shopping with us, insists UK and Ireland managing director Paul Foley.

Fish and chips
Things are going swimmingly for the nation’s traditional takeaway. Sales at the UK’s 9,500 fish and chip shops were up 5% for the eight months to November, compared to 2007. Seafish, the seafood industry body, believes fish and chip shops will profit in the credit crunch. A judge for the 2008 Fish and Chip Shop of the Year award comments: Fish and chip shops are well placed to prosper in the current economic climate, as they offer value for money and a quality product with a feel-good factor.

Chocolate
Success was sweet in 2008, with Nestlé and Cadbury producing bumper figures. Cadbury revenue was up 7%, with its Dairy Milk chocolate and Trident gum brands up 11%. Nestlé Group had organic growth of 8.3%. The company’s confectionery lines grew 8%, with KitKat performing particularly well. Coffee and milk products also sold well. George Clooney’s favourite, Nespresso, racked up 30% growth. Chief executive Paul Bulcke says: Nestlé offers the ability to trade up and trade down without trading out of Nestlé. The company has also started pushing smaller sachet packs.

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