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'Indulgent' Food Categories Likely To Be Hit Hard By Inflation Increases

Indulgent foods such as desserts, confectionery and savoury snacks, are likely to be impacted the most by global inflationary pressures, a new report from GlobalData has suggested.

The 'indulgent foods' segment is due to rise at a CAGR of 2.2% between 2021 and 2024, GlobalData said, with chocolate and confectionery set to see a CAGR of 1.5% over the same period. This compares to a 2.1% CAGR gain between 2016 and 2019.

In addition, ice cream is set to see a 2.2% volume increase between 2021 and 2024, despite seeing double digit value sales growth, GlobalData noted.

Tightening Household Budgets

“As these products are often positioned as treats and rewards and not staple parts of weekly meals, they are more likely to be compromised in consumers’ shopping baskets as household budgets continue to get tighter and consumers consider their health priorities," commented Jenny Questier, senior analyst at GlobalData.

According to the research firm, all categories in indulgent food are gaining more in value terms rather than volume, indicating that inflation and price increases are currently set to drive growth in the near-term.

“Ice cream specifically has associated manufacturing, logistics and storage costs around freezing that will have to be passed on to the consumer as energy costs continue to rise," said Questier.

"Added costs combined with the seasonality of these products will further dampen peoples’ desire to purchase these in the future as they focus on essential items.”

Making Trade-Offs

In the US, the number of consumers that say that they spend a 'high amount' on chocolate and confectionery decreased by 12% in the third quarter of the year, compared to the first three months of 2022, GlobalData research found, indicating that shoppers are already starting to make trade-offs.

“The current circumstances could be an opportunity for brands and manufacturers to look at product portfolios and innovation with a view to staying relevant and available to consumers," Questier added. "Price points in these categories especially will need to stay low to encourage spend, either by smaller pack sizes or perhaps even as part of cross-promotions in future with more essential products.”

© 2022 European Supermarket Magazine – your source for the latest A-Brands news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: European Supermarket Magazine.

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