Neglect can hurt
A sizeable 42 percent of consumers have given up favorite food brands because of rising prices and economic concerns, says a study from Information Resources, Inc., which shows the lagging economy drives a dramatic move back to basics and a reversal of decades-long trends for convenient and healthier foods — via MarketingCharts.
The "IRI Times & Trends Special Report: Competing in a Transforming Economy" report finds that CPG prices are up 6.6 percent vs. 2006, with significant price increases in eggs, pasta, baby formula and milk:
Escalating prices have bred high price sensitivity, driving declining demand across multiple categories, growth in private label, trial of lower-priced brands and accelerated channel migration, IRI said.
Though changes in shopping and purchase behavior vary based on life stage and presence of children, those with lower-incomes report being the hardest hit:
- Roughly half of all consumers with incomes less than $55,000 per year say they have trouble affording the groceries they need.
- Nearly a quarter of those earning between $55,000 and $99,000 also say so.
- Among those with incomes over $100,000, 16 percent report having trouble.
As a result, consumers are increasing purchases of basic ingredients and meal components, reducing restaurant spending and decreasing purchases of "non-essentials":
- 53 percent of consumers report that they are cooking from scratch more now than they were six months ago.
- About 59 percent say they are buying fewer single-serving products.
- 55 percent say they are buying fewer prepared meals.
- 52 percent say they are buying fewer organic products.
- Stores are seeing a resurgence in sales of frozen foods, perishables, and "center-store" items.
- Private-label products show strong gains, with 50 percent of consumers saying they have stepped up their spending on such products in the last six months.
