As retail food prices rise, consumers are constantly reshaping their definitions of value and devising new retail strategies to conform.
That is putting pressure on retail grocers and their wholesalers to meet consumer needs and desires at a profit. The landscape of what consumers want is continually shifting.
DIFFERENT STROKES FOR DIFFERENT FOLKS
A story Tuesday by Food Navigator USA referenced Cara Loeys, VP and industry advisor for CPG, food and beverage Circana, who said during a recent MRP Solutions Webinar that national and private label brands will need to balance personalization, innovation and price to meet shoppers’ diverse needs.
Food Navigator said, “Consumers are focusing on essentials – particularly food, beverage and everyday CPG (Consumer Packaged Goods) items, according to Circana.”
Macroeconomic indicators could influence spending, Loeys said in the Food Navigator story. Things like slightly higher unemployment and softer consumer confidence as tariffs take effect point to moderately tighter conditions ahead.
But consumer behavior also is diverging across income, age and demographic groups, Loeys said in the article. Low-income households are (and always have been) highly price sensitive, focusing on smaller pack sizes, whereas higher-income households are more likely to save by buying in bulk or even pay a premium for perceived value.
Cuts to SNAP and Medicaid and new eligibility requirements were expected to constrain lower-income consumers’ discretionary spending, the article said.
Hispanic consumers have reduced their discretionary spending, and younger consumers are scaling back because of delayed milestones like home ownership and financial pressures, Food Navigator said.
HEALTH STEPS TO THE PLATE
Consumers also are shifting to healthier consumption patterns, influenced by the growing use of GLP-1 medications, the article quoted Loey as saying. The trend is reflected in declining demand for candy, alcohol, bakery items and certain snacks. Protein-based and multifunctional beverages, however were seeing growth.
Consumers increasingly were prioritizing ingredients, functional benefits and products that align with their diets, Circana said. There is greater focus on the types of foods they’re eating and the ingredients, Loey said in the article. So consumers increasingly are reading those labels.
While food and beverage price increases have increased an average 35% since 2019, outpacing wage growth, certain price spikes, like those for coffee, poultry, eggs, beef and berries, were driven by other constraints like disease and supply challenges, Loey said in the article.
Consumers are trading down in discretionary categories, but food and beverages continue to be prioritized by consumers, the article said.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $236.22 per cwt to $239.12, compared with last week’s range of $236.15 to $246.50 per cwt. FOB dressed steers and heifers went for $370.96 per cwt to $376.15, compared with $371.08 to $384.31.
The USDA choice cutout Tuesday was up $2.96 per cwt at $407.20 while select was up $2.62 at $379.76. The choice/select spread widened to $27.44 from $27.10 with 88 loads of fabricated product and 15 loads of trimmings and grinds sold into the spot market.
The USDA-listed the weighted average wholesale price for fresh 90% lean beef was $424.31 per cwt, and 50% beef was $182.23.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.30 to $1.40 a bushel over the Sep corn contract, which settled at $3.79 1/2, down $0.03 1/2.
No live cattle delivery intentions were posted against the Aug futures delivery month.
The CME Feeder Cattle Index for the seven days ended Monday was $344.98 per cwt, up $2.81. This compares with Tuesday’s Aug contract settlement of $350.55, up $1.65.