A sizeable 42 percent of consumers say they have given up favorite food brands because of rising prices and economic concerns, according to a study from Information Resources, Inc. that shows the lagging economy is driving a dramatic move back to basics and a reversal of decades-long trends for convenient and healthier foods, writes MarketingCharts.
The “IRI Times & Trends Special Report: Competing in a Transforming Economy” report finds that CPG prices are up 6.6 percent vs. 2006, with significant price increases in eggs, pasta, baby formula and milk (see graph).
Escalating prices have bred high price sensitivity, driving declining demand across multiple categories, growth in private label, trial of lower-priced brands and accelerated channel migration, IRI said.
Though changes in shopping and purchase behavior vary based on life stage and presence of children, those with lower-incomes report being the hardest hit (see chart):
- Roughly half of all consumers with incomes less than $55,000 per year say they have trouble affording the groceries they need.
- Nearly a quarter of those earning between $55,000 and $99,000 also say so.
While the effects of $4+/gallon fuel, a slower economy, high(ish) unemployment and higher-than-normal commodity prices were sure to start leaving their mark, we're surprised that name-brand food was one of the first casualties to get noted. Americans have something of a love affair with food, and giving up a comfort brand in the name of economy likely indicates one of two things: either a lot of people are already hurting and are trying to control the damage, or b) private-label goods have gotten good enough that they now offer a reasonable substitute for many name-brand items at a lower price point.