Changes in consumer habits in Serbia

, News

World-famous companies such as Unilever, Coca Cola, and McDonald’s have raised the prices of their products in recent days in response to rising costs and inflation.

It was also a reaction, as reported by the Financial Times, to the reduction in profits that these companies had from sales at Walmart, the largest retail chain in the US.

Unilever warned of “truly unprecedented costs”, the FT said, and prices for its brands – including Dove soap, Helman mayonnaise and Cif cleaning products – rose by an average of 11.2 per cent in the second quarter, compared with a year earlier. The increases helped Unilever report higher-than-expected sales, although physical sales volumes were down two percent as consumers “switched to cheaper products”.

Coca Cola had a similar experience. Prices of its products rose by about five percent, while McDonald’s said it was considering offering more cheaper menu options as inflation prompted some consumers to switch to less expensive alternatives.

In Serbia, there is no doubt that almost everything has gone up in price, except for a few foods from the basic consumer basket, such as certain quantities of sugar, flour, pork leg, oil and milk, the price of which was frozen by the Government at the end of last year at those of November 15.

In the meantime, the price of pork was recently “lowered” by the Government’s decision, but despite this, consumers are aware of their declining purchasing power every time they leave the store.

It’s no wonder, because according to the data of a trade chain given to Danas, in the first six months, prices in stores rose by an average of 12 percent, and when viewed by category, the price of basic food items went up by as much as 21 percent, the highest among them being sugar 27, but also oil 21 percent, meat 26 percent and bakery products 20 percent, of which bread 17 percent.

From January to June, flour went up by an average of 15 percent, the same as fruits and vegetables, toilet paper by 16 percent, cleaning products by nine percent, and those for personal hygiene by only one percent. Of course, the prices are different from store to store, and there are some where personal hygiene products have become more expensive than the mentioned one percent.

For the same reasons as the world-famous companies, domestic ones obviously reached for the same recipe, but most of those whom Danas sent a question about whether they raised prices and by how much and whether they plan to do so – did not answer that.

In the Atlantic Group, they say that during the first six months of 2022, they recorded sales revenue in the amount of 399.1 million euros, which represents an increase of 11 percent compared to the same period last year.

The profit was reduced compared to 2021, but according to the president of the Atlantic Group Management Board, Emil Tedeski, Atlantic continued to achieve significant revenue growth in the first half of the year despite all the challenges.

“Growth was achieved in all business and distribution areas thanks primarily to the excellent sales results of our own and principal brands. Part of the increase in income is also the result of the increase in sales prices, which, however, only partially compensated for the negative effects of the significant price increases of key raw materials, packaging materials, energy sources and services, which, as we announced, affected the drop in profitability”, Tedeski points out.

In the second half of 2022, this company expects an unhindered continuation of production and continuous supply to customers and consumers, but also a continuation of strong inflationary pressures.

The highest growth of 23.1 percent was achieved in the beverage segment, where the leading brand is Cedevita, followed by coffee – Barcaffe and Grand coffee with a growth of 15.3 percent. The pharmacy chain Farmacia also achieved growth of 15.1 percent, and Argeta also grew at a double-digit rate of 10.6 percent.

In some retail chains, they say that turnover has remained the same, because prices have risen, so that brands are selling less goods, although this cannot be seen from the turnover itself. On the other hand, the prices of private label products remain the same or increase, but their sales also increase, which means that under price pressure, customers switch from more expensive to cheaper items, that is, from major brands to private labels.

The fact that producers partially explain the rise in prices by changes in consumer habits and the switch to cheaper products is mostly confirmed by trade chains in Serbia.

The Delez company, which has Maxi, Shop&Go and Tempo stores, told Danas that there is a noticeable increase in demand for private label products in all their stores.

“The categories from this segment that are most in demand are staple foods, dairy products, meat products and soft drinks.” Customers cite a good, favorable price and proven quality as the main reason for choosing products from this segment”, Delezo points out.

In their stores, customers can also save by following, as they say, “blue prices” that are long-term on more than 800 private label products. Deleuze says that they also recognize “Bee” weeks, when promotional prices and discounts of up to 50 percent are offered.

Univerexport points out to Danas that after the increased demand for sugar at the end of May, the market stabilized.

“Seasonal foods, basic necessities and refreshing drinks are bought regularly. Also, we notice a slightly higher demand for our brand BashBash, which offers the quality of favorite brands at a more favorable price, which we generally expect to be a trend in the coming period as well”, Univerexport points out.

The structure of demand is partially changing in accordance with global events, they note in this chain and add that the fact is that consumers follow prices more than before, especially actions and promotions.

“The global increase in the price of energy and raw materials caused an increase in the prices of producers and distributors, which led to an increase in prices. We are aware that price growth directly affects purchasing power, and in accordance with that, we try to respond to these challenges with special offers and promotions, as well as with personal production,” Univerexport emphasizes.

Lidl told Danas that during this period they did not feel significant fluctuations in demand, and it is especially important for them that they noticed that consumers remained loyal to the Lidl brand and carefully selected offer with the best price-quality ratio, Danas writes.