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07/14/2022

Inflation nation

Consumers are on the hunt for value. How will this impact where they eat?

As pandemic concerns ease and consumer mobility returns, how will dine-at-home behaviours and needs influence meal and snacking choices against the backdrop of surging inflation?

The size of the consumption prize has never been bigger. As Canadians continue to carve a pathway to the kitchen to meet a variety of meal and snack needs, it may surprise some to learn that the average Canadian consumes an item of food 12 times in an average day (up +1.2% versus pre-pandemic period).

And while there’s a whole lot of eating going on, Canadians are also increasingly mindful of value.

The consumption value trigger

When evaluating consumption choices, the value trigger metric measured in Ipsos FIVE evaluates two key aspects: wanting to save money versus wanting good value for money.

Today, good value for money factors into twice as many consumption decisions as compared to saving money. However, wanting to save money is up by 5% since January 2022.

With more than eight in 10 meal occasions still prepared at home, more than a third (34%) of dinner choices are motivated by the value trigger. While most meals continue to be prepared from scratch, easy meal solutions have increased in popularity, giving consumers new ideas, easy access to new cultural cuisines and an expanding repertoire of meal options, which is particularly important as cooking fatigue continues to set into some households.

It should be noted that eat rates of meal mainstays such as fresh fruits and vegetables, cheese, bakery items and most meat proteins like chicken and burgers held steady in year-over-year tracking, while beef, pork, fish and seafood consumption all declined. Meanwhile, snacking has increased once again with afternoon and evening dayparts continuing to grow. Daily noshing habits remain driven by hunger, craving, comfort, ease, treat, indulgence, habit, health and good value for money.

Even with inflation as one of the new drivers of this reality, retailers should keep in mind that while meals and snacks are for functional sustenance, they are also an emotional anchor for consumers. More than two-thirds of consumers report that they treat themselves with items they buy, seeking small indulgences in difficult times.

Retailers should be sure shelves are stocked with the categories and brands that their customers not only love but need during challenging times. And offer easy meal solutions targeted to specific households in appropriate pack sizes. Consider bundled solutions of foods, beverages and desserts that complement one another and offer value.

Pent-up demand for foodservice

Inflation has long been associated with a decline in restaurant dining as consumers avoid eating out to stretch their budgets. However, in these unique times, pent-up demand to return to restaurant dining has emerged.

Out-of-home dining has increased share (compared to food retail) over 2021 and is up +12%. This annual share growth has stalled somewhat over the past couple of months; However, on-premise dining, which was decimated during mandated pandemic lockdowns, led gains.

In the coming months, it will be critical for retailers to track foodservice performance to defend the certain return to out-of-home experiences. If the past two years has revealed anything, it has surely highlighted the interconnectedness of both channels.

Given the current pressure on consumers’ wallets, retailers should consider the opportunity to re-tool their home meal replacement offer and store experience to compete for out-of-home dollars. Consider featuring meals prepared by chefs specializing in unique multicultural cuisines to authenticate the offer and drive in-store traffic.

Affordable pleasures

We’ve long been tracking the rise of premiumization in modern food culture and during lockdown we saw consumers prioritizing premium foods, along with foods providing comfort and satisfying cravings.

While value and affordability is increasingly important, consumer demand for quality experiences, real food options and fresh, not processed solutions, also remains strong. As consumers continue to eat at home at much higher rates than during pre-pandemic times, they are also willing to treat themselves with value always top of mind.

The sweet spot for retailers in this new reality is to ensure your consumers remain at the centre of your strategies to be able to offer the right products at the optimal balance of costs and benefits.

This column appeared in Canadian Grocer's June/July 2022 issue.

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