With nationwide maximum price for Alpro, Danone is pushing commercial boundaries

To boost the plant-based category, Danone has announced a remarkable initiative in Belgium. The manufacturer reached a commercial agreement with just about all food retailers about a maximum price of two euros, which is communicated on the packaging of three Alpro references.

Major effort

The Alpro campaign will last up to six weeks – about three times longer than a classic promotional campaign in Belgium. The litre packs of Alpro Oats and Almond (with or without sugar) will announce an agreed maximum price of two euros in striking red colours. Compared to last week’s average retail prices, this means a reduction of between 20 and 40 %, depending on the product and the supermarket chain.

With the price cut, Alpro is cutting its (and the retailers’) margin. “Of course, retailers set the sales prices, but they have all committed to get in on the action and not charge consumers more than 2 euro for the next six weeks”, Danone Belux commercial director Olivier Rabartin told RetailDetail. “We reached a commercial agreement with each of our customers. They were not easy talks – especially at the beginning – but in the end they all went along.”

Growing the category

Retailer still have the freedom to put their own accents: Colruyt, for example, is not going to include the customised packaging because of logistical complexities. Rather, it will run a ‘Red Price’ campaign (i.e. a “We are matching the lowest price”) for six weeks. “Some retailers will have leaflet promotions, others will not. Supermarket chains Albert Heijn and Jumbo do not buy these products in Belgium, so we could not propose this action to them.”

With the discount campaign, Alpro wants to make the plant-based category more accessible and growing, Rabartin stresses: “The objective is to attract consumers who today buy little or no plant-based drinks to this category. We hope to convince them to try the products, and add some more plant-based to their consumption habits. This fits into our long-term mission to encourage healthy and sustainable eating habits in a responsible and sustainable economic model. With Alpro, we want to take the lead in the food transition, even in difficult economic circumstances, like now.”

These three specific references were chosen because they are important to consumers, the commercial director says. Moreover, they are more expensive than milk, soya drink and rice drinks, which enjoy an exemption from packaging and sugar taxes. Indeed, almond and oat drinks are subject to a sugar and packaging tax of 17 to 22 cents per litre.

Increase penetration permanently

While the meat substitute category is experiencing a slowdown, plant-based drinks are holding on better in Belgium than in neighbouring countries, Danone says. The penetration rate here is over 40 %, one of the highest in Europe. “The category did shrink a little at the beginning of the year, but now it is growing again – also in volume. This is due to the strength of Belgian brand Alpro. As category leader with a substantial market share, we have big ambitions with this brand.”

When will Danone consider the campaign a success? “The first major success is that our customers have accepted this promotion. That was not certain, because this is very new and different. We will be happy if during those six weeks we see significant consumer interest reflected in the sales figures, but especially if we see that we have permanently increased the penetration of the shelf category. We will only know that in six to nine months’ time.”

Win-win for everyone

Will prices go up again after six weeks? “I do not know that, that is for the retailers to decide. If they see demand has doubled, they will make the calculation for themselves. What do you do if you see sales rising sharply with slightly lower margins? We have seen huge fluctuations in prices in our categories this year, irrespective of the prices recommended by Danone. Those are strategic considerations for retailers, but I do hope some changes will prove to be permanent.”

Finally, the move is reminiscent of a similar initiative with Danone in France earlier this year. However, negotiations with French retailers were much more difficult and by no means everyone agreed. However, Rabartin thinks you can not actually compare the two cases. “In Belgium we are talking about different references than in France. We took the time this summer to discuss this at length with our customers. They agreed to respect the maximum price, to highlight the products in the shops, in the brochures… This needs to be a win-win for everyone: we want to increase the penetration of the category. And hopefully this will also attract the attention of the government, about equalising excise duties.”