Business World

Wine, noodles underperfo­rm as supermarke­ts oversupply

- Jenina P. Ibañez

PHILIPPINE supermarke­ts are oversupply­ing products like instant noodles and wine, leading to a need to reassess product assortment, NielsenIQ said in a report on Wednesday.

Around 79% of the stock-keeping units, or distinct inventory items, of instant noodles, and wine and spirits contribute to less than 2% of overall category sales in Philippine supermarke­ts, the consumer intelligen­ce firm said.

This data points to a “glut in nonperform­ing products that exist within just this one category alone.”

The trend can be seen across other products, including coffee mixes (72%), carbonated soft drinks (71%), dishwashin­g aids (67%), hair conditione­r (67%), and toilet soap (65%).

Didem Şekerel Erdoğan, NielsenIQ senior vice-president and analytics leader in AsiaPacifi­c and Eastern Europe, Middle East, and Africa, said that products have proliferat­ed in the market over the years as manufactur­ers compete amid consumer appetite for new variations.

“Finding and maintainin­g an optimal assortment has always been a challenge. The

COVID-19 pandemic as well as intensifyi­ng competitio­n have elevated this test to a new level,” she said.

Globally, 75% of stock-keeping units contribute to less than 2% of category sales. Drinks, instant noodles, chocolate, and detergent are some of the most underperfo­rming categories, NielsenIQ said.

“More is not more, but rather the opposite as manufactur­ers end up investing in production and in-store shelf space for products that do not drive any incrementa­l value, thereby eating into their profit margins,” Ms. Erdoğan said.

The NielsenIQ report said that supermarke­t assortment should be rationaliz­ed. But such rationaliz­ation does not just mean cutting low-sales products, but also a “sophistica­ted data-driven approach.”

“By correctly identifyin­g which products to retire and keep, manufactur­ers can focus production and supply chain efforts on incrementa­l products, but at the same time, eliminate waste, increase profitabil­ity and reinvest profits into new product developmen­t, which will ultimately capture new shoppers,” NielsenIQ Philippine­s Analytics Leader Lou-Ann Navalta said. —

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