Posted 20 июля 2022,, 13:27

Published 20 июля 2022,, 13:27

Modified 24 декабря 2022,, 22:37

Updated 24 декабря 2022,, 22:37

Question of the Day: why it became necessary to reduce the size of food packaging labels?

20 июля 2022, 13:27
The Russian government is going to change the size of information labels on food packages in order to save paper, but experts fear that the true goal of this is completely different.

In Russia, the fight continues for the buyer, who is reducing and reducing their store costs in anticipation of a severe crisis. Retail outlets are trying to reduce the drop in turnover.

This fight is conducted by different means. For example, experts from the ProductMedia channel report that Russian retailers have returned to aggressive promotions: the share of goods sold by shares has recovered to pre-crisis levels:

“In July this year, analysts recorded a record 48% share of goods that are sold in retail chains through promotions. They explain this both by the strengthening of the ruble and by the desire of retailers to return consumer demand, which is noticeably “sagging”.

Trade networks and manufacturers have not yet come up with anything better than to stimulate falling consumer demand with discounts and promotions (and in the face of falling real incomes of the population, there is no time to think like that, except that discounters open en masse), therefore, voluntarily, one has to return to total discounts.

Moreover, in many networks there is a situation where buyers generally refuse to take goods if they are not sold on sale.

The share of stores where they go for a particular brand and buy it regardless of the price is declining. For example, dairy products, sausages / sausages, almost all confectionery are sold exclusively for promo. The proportion of promo in bread is lower, but there is a nuance here: there are many types of so-called social bread - it is actively taken.”

It is interesting that analysts of the Central Bank of the Russian Federation also note the same trend in their report : “The desire for savings is shifting food consumption to the budget segment. Discounters are gaining popularity and expanding their regional presence. In the current conditions, the brand and the quality of the packaging are less important to the buyer, and the price is the priority. …enterprises …adjusted their assortment in the direction of increasing the share of goods of a low price category, including by reducing the weight of packaged goods in a package»

However, there is another point of view, it was expressed by a commentator on the Money and Arctic Fox channel, who noted another strategy for retail chains to return consumer demand:

“The real share of promo in chains before the crisis was more than 90%, especially not in impulse goods (tiles, boxes).

Bars and everything that is on the “checkout” is lower, but there are payments for a place (which, in fact, also falls in the TTS budget and is reflected as a promo in P&L in the end).

A 100% promo share in the network cannot be made, but any increase in promo reduces profitability. And foreign companies are used to receiving % of profits in a stable currency.

We are waiting for the deterioration of the recipe.

We do not notice the first. It runs on an 80/20 basis (80% of respondents in a closed test should not feel a change in taste). Well, usually the recipe is changed no more than 5%, so as not to change the packaging. Its stocks are usually for 2-3 months.

Next comes the second optimization according to the 80/20 scheme.

And here an interesting moment arises: only 64% should not be distinguished from the primary product in fact (0.8X0.8 = 0.64).

Well, we already have to make changes to the recipe so that it's time to change the packaging with the composition. It's just about time.

Maybe that's why the lobby wants to break through the law on changing the packaging in order to reduce the amount of information?

At the same time, the expert refers to the events of early July, when, due to a shortage of paper and ink, manufacturers proposed to reduce the size of labels on product packaging, and Deputy Prime Minister Victoria Abramchenko instructed the departments to study the issue of changes in the national standards of the Russian Federation "in the field of product labeling." According to this document, we are talking about standards that define the minimum and maximum area that product information occupies when placing a label on a carton. Rosstandart, the Ministry of Industry and Trade, the Ministry of Economic Development, the Ministry of Agriculture, Rospotrebnadzor and Rosakkreditatsiya must make a decision to change the standards by July 22."

Here it is also curious that the cost of labels in the cost of finished products is 3-5%, and therefore a decrease in its area by 20-30% is unlikely to lead to a decrease in cost. And if you consider that most buyers look only at the expiration date of the product, then perhaps the real reason is different.