Natural indulgence

The indulgent food segment, which includes chocolate and confectionery categories as well as savoury snacks and ice cream, is at ‘high risk’ to global inflationary pressure, GlobalData writes in one of its latest releases.

The data and analytics company notes that the segment is only due to rise by 2.2% in volume CAGR 2021-2024. Chocolate and confectionery will be one of the categories that will be hit the hardest with volumes set to decrease from a 2016-2019 CAGR of 2.1% to a 2021-2024 CAGR of 1.5%. Ice cream is set to see a double digit increase in value over 2021-2024 but only a 2.2% rise in volume in the same period.

Jenny Questier, senior analyst at GlobalData, says because these products are often positioned as treats and rewards and not staple parts of weekly meals, they are more likely to be compromised in consumers’ shopping baskets as household budgets continue to get tighter and consumers consider their health priorities.

Indulgence’s growth may have to take a backward step. Still, the food and drink industry’s ability to continue innovating means that as much as consumers talk thin, at the same time they continue to eat fat by indulging in the foods they love.

All price increases will be hard to pass on so the door is open to enhancing dialogue with consumers.

GlobalData’s forecasts do highlight that all categories in indulgent food are gaining value over volume, suggesting that inflation and price increases are currently set to drive growth rather than increased sales in the next couple of years.

Questier adds: “The current circumstances could be an opportunity for brands and manufacturers to look at product portfolios and innovation with a view to staying relevant and available to consumers. Price points in these categories especially will need to stay low to encourage spend, either by smaller pack sizes or perhaps even as part of cross-promotions in future with more essential products.”

What needs to be factored in is consumers prioritising and strategising.

Consumers are aware of, and have been for some time, price increases and, as a result, are readjusting their priorities.

With brand loyalty diminishing and consumers making fewer trips to the supermarket, industry players will have to take a number of actions to address inflation and drive change for the years ahead. If industry can make a good argument for buying indulgent products it could become easier to influence discretionary spending, Retailers and brands have to understand the woes of shoppers and take care not to ignore the challenges that they’re faced with.

Inflation is an inconvenient truth, and with such pressure comes the opportunity to reevaluate.

 

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