By Andrew Starke
Australians continued to cut down on their alcohol consumption or trade down to cheaper brands over the last quarter of 2010 as consumers spent cautiously in the lead-up to the festive season.
Fourth quarter (December 2010) results from Nielsen’s Global Online Consumer Survey show that Australian consumer confidence waned slightly as the Consumer Confidence Index dropped three points to 112 from a high of 115 in September.
However the latest score is still a good five points higher than the one recorded this time last year (107), and is still a positive result for Australia.
Along with reducing utility costs and switching to cheaper grocery brands, cutting down or buying cheaper brands of alcohol featured as a major form of expenditure reduction.
28 percent of consumers claim to have taken this step, an increase on the previous quarter.
“Consumers’ increasing propensity to switch to cheaper grocery and alcohol brands is reflected in the growing popularity of private label,” said Nielsen Consumer Group managing director – Pacific Chris Percy.
“Consumers now see this phenomenon as a credible and value for money alternative to the more traditional, well-known name brands.
“Nielsen’s 2010 State of the Nation Report published in December stated that during the economic downturn, half of all Australian consumers said that they had purchased more private label products, and that 92 percent of them would continue to do so in an improving economy.”
The report concluded that the subsequent impact of private label brands on the total value of the grocery category (excluding tobacco) is distinct, and has caused a noticeable decline in the category’s value growth.
Liquor sales in particular have been affected by heavy retailer discounting through price reductions and deep promotions, with both contributing to a decline in value growth.
“The flooding across the eastern seaboard of Australia will also have far reaching impacts,” said Percy.
“For some areas it will be about a disruption to consumer confidence, for others a retail dislocation, and for many parts of Australia, it will be about the reallocation of national infrastructure and resources – with all the resulting changes for employment, wages and inflation.”