Today, research tells us that people want to consume products in a better way, but among all the noise, it can be hard for grocery executives to know what consumer demands are just temporary and which are here to stay. Consider a recent study by CPG market research company NielsenIQ (NIQ), which found that 78% of U.S. consumers say a sustainable lifestyle is important to them.
What’s more, the same study reports that products making ESG-related claims averaged 28% cumulative growth over the past five-year period, versus 20% for products that made no such claims, which bodes well for retailers.
These numbers show that not only are consumers now demanding better-for-you fresh foods, but they also are showing that they support this cause with their wallets. As such, here are five more key fresh foods trends to watch, including why they matter to your business, and what you can do about it.
Fresh food trend No. 1: The elephant in the room — inflation. Especially on the heels of the global pandemic, consumers are more aware of their health but also feel the impact of eating better on their wallets. While recent NIQ data suggests some relief, high prices continue to affect shoppers, and fresh food is one of the most impacted sectors. How much so?
- The rate of food inflation is slowing but still high at 8% with consumption down 2%
- The breakdown by food department: dry grocery +13%, bakery +11%, dairy +10%, and frozen +10% reported the top four increases for food
With 35% of shoppers focused on buying the essentials, NIQ recommends, “As a fresh food brand, you need to understand how to balance promotional sales, consumer needs, and margins to build for long-term growth.”
Fresh food trend No. 2: Consumers care about sustainability, with 92% saying that sustainability is important when choosing a brand today. In grocery aisles, products with ESG claims like “organic” are more popular, while new and emerging claims around regenerative agriculture, carbon footprint, water footprint, and more are growing rapidly.
With more transparency measures being taken to communicate sustainable practices with consumers, retailers need to do a good job of marketing products around these topics clearly in order to be found by shoppers. NIQ suggests making sure to “leverage sustainability attributes on your packaging or in the product descriptions to highlight your alignment with sustainable practices and meet shifting consumer needs.”
Fresh food trend No. 3: Health and wellness shaping shopping. According to NIQ’s 2022 Shopper Health Study, American consumers are facing many health concerns impacting their grocery needs.
- 31% of households report high blood pressure
- 25% report depression
- 24% report obesity
- 22% report cholesterol problems
- 13% report Type II diabetes
These stats coupled with a post-COVID world has revitalized the need for fresh food as a source of wellness. NIQ adds, “Fresh food brands can particularly benefit from this trend especially when aligned to plant-based diets or when their offerings are ‘organic’, one of the most desired product attributes.”
Fresh food trend No. 4: Online growth is slow but steady. Even though 86% of U.S. CPG dollar sales are represented by “omnichannel shoppers,” fresh food and perishables have not made much progress in gaining traction online. As an example, the total U.S. fruit market saw more than $45 billion in sales last year, but only $2 billion of that occurred online.
However, within the U.S., 21% of online CPG food is still being purchased on Amazon.com, so if you want to continue to build digital momentum, grocers need to fully understand the ways consumers shop online and the challenges that go with it. “Shipping issues for fresh food are less common than they used to be, but many consumers are still wary. Education is key to building an online foothold for many fresh brands,” according to NIQ.
Fresh food trend No. 5: Big-box and value retailers gaining traction. Grocery leaders cannot ignore their competition, which is why keeping an eye on big-box and value retailers is so critical, especially with many inflation-driven trends on the rise. It’s no secret shoppers are turning to stores with lower prices to stretch their dollars:
- Value retailers’ sales jumped 8% in March compared to the previous year, capturing 42.6% of CPG sales
- Food was the primary driver of their share gains, with a 16% increase in dollar sales versus the past year
- Private label sales are up 9%
NIQ warns that while private-label sales are less common in fresh, that may not always be the norm as retailers see the opportunity to grow. “As a fresh food brand, you need to be aware of these shifts and align your pricing and promotion strategies accordingly.”
Have a fresh food trend you would add to this list? Let us know in the comments below or email your thoughts to the SN staff at [email protected].