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OMD Sense. An unhealthy downturn

OMD Sense. An unhealthy downturn

By Ben Haley, Insight Manager OMD and Stephen Stokes, Associate Strategy Director, OMD UK.

The current economic down-turn is compounding the current issues that are leading to a decline in the nation’s health.

According to the Office of National Statistics (ONS), food inflation in the UK stood at over 12% earlier this year, the highest rate in the Western world. This combined with rising energy prices, higher credit costs and general economic gloom is fuelling a “cutting-back” culture.

The first things that have been cut back on are non-essential items and services. First on the list for many people has been their gym membership. Currently Fitness First and LA Fitness are desperately trying to woo people pack with eyecatching incentives.

We’ve even seen established high-street names like Woolworths and MFI go into administration. Many others are having to cut back their spend on food, with the middle classes making exploratory forays to low cost supermarkets such as Aldi and Lidl.

Aldi’s sales were reported to be up 20% y.o.y in June 08 with a 17% increase in ABC1 shoppers coming through their doors. The bigger multiples however are fighting back.

Tesco has announced a review of its value range and Asda is making a commitment to low prices with its Smartprice range – 500 everyday items at exceptionally low prices. As well as this there are more items on offer at ½ price, 2 for 1 or with loyalty card point incentives.

This is especially good news for the wallets of low income families, however there is a big downside. The National Consumer Council have just released a report highlighting the health implications of these promotions.

The report found that over half (54%) of these promotions were for food with a high fat or sugar content with just 1 in 8 for fresh fruit or vegetables.

At the same time the inflation in cost of fruit and vegetables has well exceeded the rest of the food and drink market. According to the ONS the cost of bananas in Tesco rose 30.5% from July 07 to July 08.

Implications

So what does this mean for the nation’s health? According to the Office of National Statistics currently 68% of men and 56% of women in the UK are either overweight or obese. To compound the situation, only 14% of men and 27% of women in England consume the recommended five or more portions of fruit or vegetables a
day.

The current compromises being made by cutting-back on healthier food (and gym membership) are likely to move these figures in the wrong direction.

While there are a few emerging signs to counter this (former gym members are rediscovering free forms of exercise and sales of fruit trees and tomato seeds are at record levels, suggesting that the grow at home trend might be entering the mainstream) many low income families are finding it harder to change to a healthier lifestyle.

So, there are potentially worrying times ahead. However, as previous recent Sense pieces have outlined, there are plenty of opportunities for brands to play an active role in helping consumers through these difficulties.

Examples are creating healthier products; educating the public on the importance of a balanced diet and encouraging regular exercise.

Brands that successfully engage and resonate with consumers will emerge from the economic downturn stronger in terms of market share and profit, and perhaps with healthier consumers too.

AJR
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