The ‘indulgent’ food segment, which includes chocolate and confectionery categories as well as savoury snacks and ice cream, is at ‘high risk’ to global inflationary pressure, writes GlobalData.
The segment is only due to rise by 2.2% in volume CAGR 2021-2024, according to the firm. Chocolate and confectionery will be one of the categories that will be hit the hardest with volumes set to decrease from a 2016-2019 CAGR of 2.1% to a 2021-2024 CAGR of 1.5%. Ice cream is set to see a double digit increase in value over 2021-2024 but only a 2.2% rise in volume in the same period.
Chocolate and confectionery volumes are set to decrease from a CAGR of 2.1% (2016-2019) to a CAGR of 1.5% 2021-2024. (Photo: Olga Danileiko I Dreamstime.com)
Jenny Questier, Senior Analyst at GlobalData, comments: “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.”
GlobalData’s forecasts show that all categories in indulgent food are gaining value over volume, suggesting that inflation and price increases are currently set to drive growth rather than increased sales in the next couple of years.
“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. 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,” she explains.
According to GlobalData’s 2022 consumer surveys, the number of US consumers who claimed to spend a ‘high amount’ on chocolate and confectionery decreased by 12%* in Q3 compared to the first three months of 2022. This means that as well as the long-term market forecasts predicting a change in spending habits, many consumers have already started to make these compromises.
“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. 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,” says Questier.
* Data from GlobalData’s 2022 Q1 and Q3 global consumer survey, 21,688 respondents