Rising Prices Cause 42% of Consumers to Give up Favorite Food Brands

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.
• Among those with incomes over $100,000, 16 percent report having trouble.

As a result, consumers are increasing purchases of basic ingredients and meal components, reducing restaurant spending and decreasing purchases of “non-essentials” (see table):

• 53 percent of consumers report that they are cooking from scratch more now than they were six months ago.
• About 59 percent say they are buying fewer single-serving products.
• 55 percent say they are buying fewer prepared meals.
• 52 percent say they are buying fewer organic products.
• Stores are seeing a resurgence in sales of frozen foods, perishables, and “center-store” items.
• Private-label products show strong gains, with 50 percent of consumers saying they have stepped up their spending on such products in the last six months.