Cost of living crisis | FMCG | Rachel Cristofoli
The squeeze on the consumer purse due to the rising cost of living is being felt by us all, and not least when it comes to spend on food and groceries. Consumers are voting with their feet and our own tracking survey ‘The Measure of 2023’ has been looking at what’s going on.
It’s not new news: consumers are ever more price-sensitive and cautious about their grocery spending, actively seeking out deals, discounts, and promotions to stretch their budgets.
With a shift towards value and budget alternatives to help reduce overall grocery expenses, shoppers are making sacrifices on some of the items they buy.
The question now is whether prioritising affordability and value are traits that are likely to stick in the longer term and become the ‘new normal’. Consumers are lowering the bar of what’s ‘acceptable’ to put in the shopping basket and if these behaviours stick, the implications for innovation and NPD could be significant. I’ve personally ‘traded down’ in a number of categories, plumping for own label brands ahead of branded, and in some instances I’ve just stopped buying certain items I consider to be a ‘nice to have’.
A case in point is fruit juice where I’ve switched into Own Label and I can’t honestly see myself trading back up again unless I can be convinced by some very compelling reasons to do so.
Tropicana’s recent launch of some of its juice range into an ambient format plays directly into this shift in behaviour. The brand is now offering smooth orange, original orange and apple variants in the ambient section, providing a more affordable offering and allowing consumers to enjoy and potentially stock up on their favourite brand in a more affordable format.
“Among many factors, cost of living pressures have led to a change in consumer shopping habits, with customers turning to bulk buying and opting for shelf-stable options to help with budgeting,” said Tropicana (The Grocer 23rd May 2023).
To stay in the game, brands need to stay on the shopping list as a brand that their consumers aren’t willing to cut. Offering better value alternatives may be one route to retaining loyalty in the short term, assuming consumers will switch up again, when (and if) prices come down, but over the longer term manufacturers need to avoid running in ‘a race to the bottom’ – a trajectory that could result in serious devaluation of some of nation’s favourite brands.
The role of innovation will therefore be increasingly important in ensuring brands continue to offer not only relevant NPD but also NPD that can clearly demonstrate value to the consumer, and not simply through price. Brands will need to work much smarter at convincing consumers of their value right across the marketing mix.
That’s where we come in. We work with some of the world’s largest food and drink manufacturers across the globe, so if you’d like to know how we can help make your brands work smarter for you in the current economic climate, and beyond, do get in touch.