Consumers Respond to Rising Prices by Buying Promotions, Value Options and Bargaining Down – Produce Blue Book

August 09, 2022 CHICAGO–(BUSINESS WIRE)–Information Resources, Inc., which recently merged with The NPD Group to create a leading global technology, analytics and data provider, today released new information on food inflation and its impact on consumer buying behavior .

The information leverages the latest point-of-sale data for July 2022 and includes data covering all US food channels, including e-commerce.

July data shows consumer goods prices remain elevated across all categories. Food at home prices rose 1.2% from end-June to end-July and 14.4% year-over-year to July 31. In June, take-home food prices were up 1.2% from May and 13.7% year-over-year to June 30.

“Consumers are reacting to rising prices by buying promotions, favoring value options and negotiating to avoid going without them,” commented Krishnakumar (KK) Davey, president of Thought Leadership for CPG and Retail.

“We advise our manufacturing clients to deploy all strategic revenue management levers, prioritize strong in-market execution and invest in retailer partnerships to ensure the right products are available in the right place. at the right time. Additionally, retailers must have the tools to quickly adapt to changes in consumer preferences to ensure they offer the right assortment at prices that appeal to price-sensitive shoppers as well as their customers. the most valuable.

July highlights include:

Persistent inflation. Food and beverage inflation continues to persist on a sequential and year-over-year basis, despite recent price declines in other sectors of the economy (such as gasoline). The categories with the five largest price increases include:

Limited relief for consumers. Although prices for some food categories have started to decline in recent weeks, they still tend to remain high year-over-year. The categories with the five biggest price drops include:

Promotional activity is on the rise. Promotional activity – including weekly sales and coupons – across many food and beverage categories is returning to pre-pandemic levels as supply pressures ease and consumers increasingly seek more the best offers. Recent data indicates that the top five food and beverage categories where promotion increased in the four weeks ending July 10, 2022 show close parallels with the same four weeks in 2019, before the pandemic, with almost 50% of sales in these main categories to come from discounted items

Consumers are on the hunt for bargains. Consumers react when promotions are available. In some of the most promoted categories within the grocery channel during the four-week period ending July 10, 2022, the percentage of dollar sales and the percentage of increase in sales volume increased significantly .
55% of ice cream and sorbet, for example, were purchased at promotional prices during the four-week period, 9 percentage points above what they were two months ago. These promotions drove 93% more sales in the category, up 13 percentage points from two months ago.

Consumers opt for value-driven categories to preserve quantity. Within food and beverages, overall volume and units remained resilient despite price increases. However, data comparing the 13-week period ending July 10, 2022 and the previous 13-week period reveals:
Consumers buy higher value meal solutions, such as pasta (+6 percentage points, or “pp”), rice (+5 pp), frozen potatoes (+6 pp) and frozen soup. preserve (+3).
Consumers are buying less in categories such as sports drinks (-9pp), ready-to-drink coffee/tea (-3pp), frozen novelties (-6pp), chilled entrees (-8pp ) and frozen dinners/ starters (-5 pp).

Consumers switch to more affordable brands within a category. Consumers “swap” or drop a favorite brand or more expensive product for a lower priced product in many categories:
In spirits, value brands increased their share by 4.1 percentage points to 73.6% in the 13 weeks ending July 31, 2022, compared to the previous 13 weeks, taking the share of premium and super premium spirits.

Private label continues to grow in many food categories. Consumers are moving away from national brands in categories where private labels are already well known or in commodity categories. In the four weeks ending July 24, 2022, private label share increased the most in fresh eggs (+6pp), sugar (+5pp), sour cream (+4pp) , shortening and oil (+3 pp), butter/butter mixes (+3 pp), flour (+2 pp), frozen meat (+2 pp) and bottled water (+4 pp).

Upscaling continues in some categories despite high inflation. Mirroring the behavior of the Great Recession of 2008-2009, consumers are trading down to trade up on small luxuries, including premium and super premium imported beer, which saw the share of combined sales increase by 2.6 percentage points to reach 51.2% share of category sales in the same 13-week comparison. In a few other categories such as frozen dinners/meals, chilled juices and beverages, higher-priced products at the premium tier rose by about a percentage point each.

Slower spending outside of food and drink. Consumers are buying less in categories such as aluminum pans, household cleaning cloths, toilet paper, tissues, laundry detergents and household cleaners.

About IRI
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