Market volumes had remained soft in many fast moving consumer goods categories, meaning manufacturers had to rely on other tools to drive sales, according to data provider Circana’s new Liquid Data Go platform.
Near a third (61%) of UK SME manufacture value had increased through promotional giveaways in the last 12 months, compared to the previous 12-month period. This released an additional 10% of sales value growth.
How SME manufacturers use promotions to grow
In contrast, the 39% of manufacturers that lowered promotional investment achieved only a 2% sales rise.
“Promotional investment has driven disproportionate growth for SME brands, but the scale of out-performance – just eight percentage points – pales in comparison to the out-performance that is achieved through distribution gains and comes at a cost along with the inherent risk of margin erosion,” said Circana senior strategic director Alex Lawrence.
Although, gaining new distribution wasn’t always possible, especially when retaining existing distribution did not translate into growth, Lawrence explained. “Our data highlights efficient promotional investment is the key growth enabler”.
Lawrence continued: “Driving promotional efficiency for SMEs is challenging with premium location off-shelf display in high demand and expensive, nevertheless, 56% of SME value has seen an increase in the proportion of units sold with off-shelf displays year-on-year.”
Efficient and promotional investment
Brands succeeding in this area had outperformed their counterparts by nine percentage points, emphasising the importance of efficient promotional investment as an SME growth opportunity.
Meanwhile, a family-owned SME ingredients manufacturer this week secured £9m of investment to expand into the US, having already succeeded with trade across over 50 territories.
The manufacturer’s CEO, which specialises in natural ingredients, told FoodNavigator US market demand for natural ingredients was on the rise.