Last year ended in a flurry of festive optimism. Interest rate cuts were imminent, stock markets powered to record highs, and we anticipated having more money in our pockets in 2024. We had reached the bottom and the only way was up. It was set to be the roaring ‘20s we’d all been waiting for.
But as the January hangover hit, reality started to look very different. Inflation remains high, interest rate cuts are further off than anticipated, and oil prices are elevated due to political uncertainty in the Middle East and eastern Europe.
Houthi attacks in the Suez Canal are once again highlighting supply chain vulnerabilities and, at the same time, the wars in Ukraine and Gaza show no signs of near-term settlement. This is complicated further by the upcoming and divisive elections in most major democracies. Needless to say, these times are complex and increasingly expensive for consumers.
Retailers are walking a tightrope between squeezed consumer incomes in a cost of living crisis, supply chain security, digital disruption and political accusations of profiteering.
Brands are focusing on revenue growth management. They must balance a recovery of profits, which have been hit by input cost inflation, with sharper promotion and portfolio management. They must make ever more valuable shelf space work hard for them – alongside challenging a surging and increasingly high-quality private label offering and simplified ranging strategy. In the face of price rises to protect margins, volume growth is the watchword.
Amongst this astounding wall of complexity, two themes persist into 2024: the ‘flight to comfort’ and the ‘rise of snacking’.
We see the flight to comfort in effect across our fmcg brands globally – including Tony’s Chocolonely (chocolate), Oatly (oat milk), Mutti (tomato products), Vita Coco (coconut water) and Who Gives a Crap (toilet paper). Customers are willing to treat themselves to premium goods when value propositions are well articulated, albeit this is often supplemented by replacement behaviours such as home cooking rather than eating out, or making coffee at home rather than buying it on the go.
As incomes are squeezed, consistency and familiarity have also overtaken an explorer mentality. Articulating specific occasion targets has therefore become increasingly important to access the well documented ‘affordable treat’ occasion. Consumers want certainty that what they buy will deliver against expectations and are finding solace in indulgence, turning to foods they know will make them feel good.
Meanwhile, as food security and service become top of mind, retailers are turning to the reliability of established supply chains and highly professional fmcg strategics and brands. In an uncertain and complex world, delivering the goods takes precedence over innovation.
This dynamic, paired with the busier lives and 24/7 demands of a post-pandemic working world, have made snacking and reduced meal consumption big themes. Millennials, who form the largest consumer group, are more prone to eating across the day, spreading out mealtimes to deal with the challenges of working life and childcare in the face of a lack of state support.
For those with squeezed incomes or requiring a lifestyle shift to cope with daily demands, meal replacement products, small portion sizes, sharing bags and on-the-go formats provide value at lower ticket prices.
We all seek security in uncertain times. Offering consumers value for money across price points and formats, and delivering against promises and expectations, will be paramount in 2024. Justifying increasingly valuable space on-shelf through what will undoubtedly be a complex period will also be key to emerging as a consumer favourite.
No comments yet