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Most grocery trade promotions lose money for suppliers

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More being spent on trade promotions, but returns getting worse
New analysis pinpoints improvement opportunities for manufacturers

London, Thursday 18 June 2015.  Six-out-of-ten grocery trade promotions now lose money for FMCG suppliers, and the situation has been getting worse – according to a ground-breaking three-year global trend analysis by Nielsen, a leading global provider of information and insights into what consumers watch and buy.

Every year an estimated $500 billion is spent on trade promotions globally, with FMCG manufacturers often investing 20% of their revenue on these promotions.

Last year, across the Western world’s major markets, 59% of trade promotions made a net loss.  In addition, the average loss on these trade promotions has worsened in the last three years.

This is the first time the returns on trade promotions have been quantified on such a substantial scale.  Nielsen analysed the performance of nearly 212 million promotion ‘events’ in 2012-2014 for 5 million UPCs (universal product codes), across multiple channels from seven countries – US, UK, Germany, France, Italy, Spain and Canada – with retail sales totalling more than $1.5 trillion.

While the study’s headline figures show average performance by country and category, there are great variations between different manufacturers’ promotions, with some doing very well and others, very badly. Across the study, the most efficient promotions (top 10%) made seven times the returns of the least efficient (bottom 10%).

In the UK, the proportion of trade promotions making a loss (58%) is only marginally better than the global average – but still worse than in Spain, Germany, Canada and Italy, and level with the figure in France.
In the US, the loss rate is even higher, at 71%. 

The full picture is available by clicking on this interactive data visualization, showing trade promotion performance by country, department and category.

The UK analysis across nearly 200 categories shows that the best promotional returns last year were on skin cosmetics, toilet paper and, most efficient of all, dishwasher detergent, which made money 78% of the time.  However, the worst promotional returns were on fresh fillings, pâtés and, least efficient of all, abrasive cleaning pads, where only 6% of promotions made money.

Despite painting a picture of poor trade investment, the wide-ranging data is now being put to good use.  Nielsen has been able to accurately distinguish between profitable promotions and those performing poorly to help manufacturers pinpoint improvement opportunities.

Nielsen leader for sales effectiveness in Europe Paul Walker explains: “Most FMCG players acknowledge the ineffectiveness of trade promotions, but until now, their efficacy has largely been a matter of guesswork.  That’s no longer the case.

“For the first time, Nielsen has worldwide data to show how effective their promotional spend is.  By looking at the retail sales of each category, we can gauge the potential for improved performance before the investment is made.  There are opportunities across the store.”

Walker concludes: “Understanding what is and isn’t working is allowing us to help our manufacturer clients become more strategic, less tactical and ultimately get more from their trade investments.”


Nielsen N.V. (NYSE: NLSN) is a global performance management company that provides a comprehensive understanding of what consumers Watch and Buy. Nielsen’s Watch segment provides media and advertising clients with Total Audience measurement services across all devices where content — video, audio and text — is consumed. The Buy segment offers consumer-packaged-goods manufacturers and retailers the industry’s only global view of retail performance measurement. By integrating information from its Watch and Buy segments and other data sources, Nielsen provides its clients with both world-class measurement as well as analytics that help improve performance.  Nielsen, an S&P 500 company, has operations in over 100 countries that cover more than 90 percent of the world’s population. For more information, visit

For more press information:
Neil Beston
PR director, Nielsen
07770 644136