At-home food and beverage sales strong despite inflation in the category
- IRI’s “Impact of Inflation on Consumer Behavior” report found at-home food spending increased in both the center-store and perimeter categories.
- CPGs (consumer packaged goods) remained resilient despite the pressure, and consumers are showing more preference for private-label goods.
- Grocery saw more conservative growth overall compared to online, dollar and club channels — continued signs that consumers are searching for value when making purchases.
At-home food and beverage sales have remained strong in the U.S. despite the pressures imposed on consumers by continued inflation.
According to IRI’s “Impact of Inflation on Consumer Behavior” report, released Feb. 23, at-home food spending is strong with center-store sales up 11.1% and perimeter store dollar sales up 6.3% in the fourth quarter of 2022.
“The CPG space has proven to be less volatile and more resilient during economic downturns than other sectors,” said Alastair Steel, executive, client engagement at IRI, in the release. “However, shoppers are feeling the impact of high prices and are shying away from discretionary purchases. Multiple tactics are being used to reduce spend and manage budgets, with value channels performing well.”
Overall, the report found that inflation on center-store products, like CPGs, remained elevated at 15.3% in the fourth quarter, while inflation in the perimeter departments had decreased to 7.5% in the fourth quarter of last year. The report also found that price inflation varied across the store, for example:
- prices on alcohol were up 5.4% in the fourth quarter of 2022 compared to the year prior.
- fresh meat and seafood were 3.4% higher.
- bakery items were 18% higher in the fourth quarter of 2022.
- dairy products were 23.2% more expensive.
The food channel saw more conservative growth overall compared to online, dollar and club channels — continued signs that consumers are searching for value when making purchases. Online grew by 16%, the dollar channel grew by 14% and the club channel increased 12%, while the food channel grew by 7% as of January compared to last year, according to the report.
CPGs continue to show resilience even in the face of economic downturn, IRI noted. Non-edible CPG products saw a 10% change increase in dollars spent compared to 2021, while edible CPG products saw a 9% increase. The increase in dollars comes even as units sold have fallen. According to the IRI report, nonedible CPGs sold 1% fewer units while the edible CPG category sold 3% fewer units.
Categories that saw declines in both dollars and units sold during 2021 include footwear, juvenile, housewares, small appliances, books, video games and consumer electronics. The automotive, office supplies, and clothing and accessory category saw growth in dollars sold, but like CPGs, moved fewer units. The prestige beauty category was the only category that saw growth in both dollars and units sold, according to IRI.
While consumers are favoring private-label brands — they grew their share in 75% of all food and beverage categories — premium-label products were basically flat — down 0.6% in the fourth quarter last year. Still the premium segment, especially alcohol and energy beverages, has some room to grow, according to IRI.
Overall, IRI expects a continued focus on promotions throughout 2023, especially in the perimeter departments in grocery.