Supermarket Perimeter - June 2023 - 17

Defining essentials
Opportunity is ripe as consumers continue to change their shopping
behaviors. They are using multiple tactics to combat food inflation
while also trading up to affordable luxuries. The definition of the U.S.
shopper also continues to change. Today, households are at their lowest
point ever with an average of 2.5 persons per household. Seventy
percent of households don't have children, and 29% have decision
makers under the age of 40 years old.
In regard to inflation, 90% of shoppers are concerned about budget
increases, according to a survey conducted by The Harris Poll on behalf
of Alpha Foods, Glendale, Calif. FMI's U.S. Grocery Shopper Trends 2023
Food Value Matrix found that 68% of shoppers report spending more
on groceries than they did one year ago. Households with children
reported the greatest increase in grocery spending year-over-year.
Older consumers are most concerned about rising food prices, with
80% of Boomer consumers showing concern in February 2023 versus
69% in October 2022.
With food inflation at 8.5% in April, consumers still perceive food
inflation as high. A February Consumer Trends Tracker survey from
dunnhumby, London, found consumers perceive at-home inflation to
be twice as high as actual inflation. Many consumers remain unsure of
the current environment, leaving consumer inflationary expectations
virtually unchanged from last year, according to the Survey of
Consumer Expectations from the Federal Reserve Bank of New York.
For example, those aged 18-35 talk about inflation as being less
severe than those aged 36 and older. Consumers feeling the inflationary
pinch will often look for ways to absorb these costs by saving in other
areas. A consumer survey conducted by Category Partners, Idaho
Falls, Idaho, found that, in fresh bakery, 45% see prices as somewhat
higher. 35% see prices as significantly higher and 19% haven't noticed a
change. To compensate, some consumers are shifting from bulk/value
items to smaller and lower-ticket items, according to Circana. Because
consumer perceptions and economic conditions vary state-by-state
and region-by-region these aspects should be considered accordingly
when developing private label products.
Making adjustments
As a result of ongoing economic pressures, consumers across multiple
demographics seek to create lower-cost, restaurant-like experiences
at home. At-home versus away-from-home remains a larger portion
of consumer spend, with 80% of meals being prepared at home. The
desire for out-of-home quality and taste is likely fueling private label
success in these high-growth categories, but this assumes quality
is on-par with branded competition, according to Melissa Altobelli,
principal, strategic solutions group, Circana.
Better-for-you products continue to drive growth in many bread
segments. A recent survey conducted by Circana found that 40% of
primary shoppers plan to eat healthier, and low-carb products continue
to be in high demand. But the strongest growth rates in bakery private
label are in the tortilla, flatbread and naan categories with double-digit
growth rates. These multi-functional items appeal to consumers who
look to achieve cost savings and create restaurant-like items at home.
This could include tortillas to make homemade breakfast burritos (a
convenient option for on-the-go eating), pizza using a flatbread crust
for a quick lunch or after-school snack, and better-for-you air-fried
tortilla chips.
In the buns and rolls category, bulk rolls and dinner rolls are also
fueling private label success, accounting for the majority of bread/bun/
roll sales. In addition to buns and rolls, private label bagels, croissants,
tortillas and flatbreads also show dollar and unit sales growth. For
private label breads in particular, Circana is seeing higher share gains
in value channels, but gains are smaller in grocery. Value options can
further up the ante to provide for the whole family or for sharing with a
group. As gatherings become popular again, sharing sizes teamed with
value are a winner.
Within the private label sweet baked goods category, sales are up
12% in dollars and flat in units. Private label cookies and donuts showed
both dollar and unit growth in the latest 52 weeks. Private label pie
dollar sales growth driven by whole pies also showed unit sales growth.
Conversely, there was a decline in units sold of individual/snack pies.
These indulgent items allow instore bakeries to accommodate the
desire to treat oneself as a form of self-care.
More upscale artisan bread products, flatbreads and naan show
significant private label growth and remain an underdeveloped part of
the category and an option for expansion. Private label offers a number
of opportunities to experiment with recipes to diversify among and/or
to provide a value option in the better-for-you segment, according to
Altobelli.
" Economic uncertainty and inflation continue to fuel private label
growth in many categories, " she continued. " Consumers are making
several behavior changes to reduce spend during these pressured times
- shifting from grocery to value channels like mass/club, shifting from
premium brands to value brands, and shifting from national brands to
private label. "
supermarketperimeter.com
JUNE 2023 - 17
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Supermarket Perimeter - June 2023

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