POTATO CHIPS PRICING STRATEGY

SITUATION

The client, market leader in the European snacks industry, faced increasing competition from private label brands and discount retailers in key European markets threatening their market share and profitability in the potato chips category.
Significant price gaps between the client’s portfolio and PLBs posed a major challenge.
Evolving consumer behaviour and the rise of value-segment purchases required strategic approach to protect category leadership, ensure profitable pricing, and address shifting consumer purchasing behaviour.

Analyse price elasticity, identify key price points, and establish a strategy to capture critical price gaps while maintaining relevance across consumer segments.
Develop a pricing strategy for the main European markets to optimise market positioning and ensure profitability against the backdrop of intensifying competition from PLBs and discounters.
Provide recommendations on pricing, promotional strategy, and assortment optimisation to help the client retain category leadership.

Analysed pricing tiers across multiple markets to understand the evolution of the value ladder, focusing on the share of premium, mainstream, and value brands.
Examined the share and evolution of each price range, identifying leading potato chips brands and SKUs within each segment.
Validated the evolution of consumer perceived quality for key SKUs, focusing on willingness to pay more, taste, uniqueness, and overall quality, as well as assessing the perceived acceptable price range.
Performed a detailed shopper switching analysis to uncover demographic and behavioural patterns, including key SKUs shifting to PLBs and value brands and the impact of pricing on shopper behaviour in organised trade (OT) and discounters.
Evaluated price elasticity by SKU to determine the optimal price index versus PLBs, pinpointing pricing thresholds where consumer sensitivity increased significantly.
Completed a detailed diagnostic of private label pack-price architecture (PPA) strategies, revealing their hot price point coverage, value-driven trade-up packs at lower price-per-kilogram, and direct price competition matching price points but offering greater volume.
Regularly engaged with country teams to align on emerging insights and deep-dive into areas requiring further exploration.

Identified priority actions from a range of options including adjusting price indexes, developing a value-segment strategy, optimising discount portfolios for value shoppers, leveraging PPA and promotions to drive growth, and expanding premium offerings to sustain profitability.
Recommended optimal price indexes by market to maintain volume growth against PLBs, providing guidance for present and future pricing adjustments.
Recommended tailored Price-Pack Architecture strategies for each market to drive 10-15% volume growth while preserving margins, utilising options such as downsizing, upsizing, new pack formats, and promotions.
Proposed “ways into the value segment” using promotions and strategic PPA moves, emphasising a combination of pricing and pack adjustments to effectively target value shoppers and address competitive pressures.