Wine, noodles underperform as supermarkets oversupply

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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 Sekerel Erdogan, NielsenIQ senior vice-president and analytics leader in Asia-Pacific 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. Erdogan 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. — Jenina P. Ibanez