WHAT DID WE HEAR AT THE IAgrM SESSION ON “CONSUMERS AND FOOD IN A CHALLENGING ECONOMIC ENVIRONMENT” ?
John Giles, Divisional Director, Promar International & FIAgrM
Last week, we had a brilliant session (though I say it myself!) held by the Institute of Agricultural Management on how consumers and retailers are responding to the current economic situation - and what the prospects for the sector are going forward, as a result.
This involved, to begin with, presentations from Joe Shaw - Roberts from Kantar World Panel and then Nathalie Smith, the Agricultural Director from Tesco. This was held as one of the online lunchtime CPD events run by the IAGRM, which have been so successful during the COVID period. Last week, we had over 100 people listening in to this and another 30 or so who have listened since to the recording after the event was completed.
My role in this? To do a few introductions and chair the Q & A session that followed on from Joe and Nathalie’s initial presentations.
This event went on for an hour and covered a huge amount of ground in that time, but some of the most important elements to me seemed to me a combination of the following:
- food inflation has been the scourge of the farming and food sector over the last 12 months, but has varied hugely by commodity. Overall, it has been 14.4% - but for pasta has reached 40%; for dairy products it has averaged 20% and for fruits and vegetables, it has been between 5% and 10%
- consumer behaviour has been changing across this time period and larger shopping trips have increased by some 3%, smaller shopping trips have fallen by 2% and visits to restaurants and cafes have fallen by 6%
- across the consumer base per se, it can be seen that in response to food inflation, 27% of them are “struggling”, 44% of them are “managing” and a further 33% are still deemed to be “comfortable”
- lifestyle changes, though, are seeing consumers look to buy less per shopping trip, shop in cheaper stores, buy cheaper products and shop more on promotion
- as an example, the purchase of berry fruit is down, while the purchase of apples and bananas has increased. In the meat sector, there will be an ongoing switch from beef and lamb to pork and poultry - and from fresh to frozen products
- there is an increased interest in reducing food waste at all stages of the supply chain. This is estimated to cost each household in the UK some £450 per year. There is still a huge job to be done in order to educate consumers on this issue. 28% of food waste is down to vegetables, while dairy, bakery, meat and fruit all account for between 10% and 12% each
- it is expected that inflation will fall steadily in the rest of 2023 and maybe reach only 4% by the end of the year. It is also expected that consumers will continue to “trade down” for most of the year and online shopping will eventually bounce back
- consumers will also look for “meal simplification” where fewer ingredients are bought and will also make fuller use of shopper reward and loyalty cards to ease the financial burden of shopping. Each household in the UK has an average of 4 of these
- for supermarkets, improving the long term sustainability of supply is still a key area for them to focus on
- there will be an expectation that farmers will continue to invest in better animal health and welfare, as well as reduce the use of pesticides in response to consumer demands for this. The cost of living crisis and price is a key short term driver for consumer behaviour, but the areas of healthy eating and sustainability are still important issues for them too
- there is still a need for more work to be done on technical innovation, R & D and the use of data to measure, manage and drive change at both farm level and across the supply chain. Reducing environmental impacts and increasing efficiency remain key objectives for retailers and their suppliers
In an hour, we covered a lot of ground. The Q & A session could have gone on for longer, which is always a good sign. It covered areas such as the organic food market, the impact of avian flu on the agri sector, the role of domestic as against imported products, the current “buzz” around regenerative agriculture, the need for better forecasting in terms of both supply and demand for food and trends in the takeaway sector.
Thanks so much to Joe and Nathalie for joining us for this session and sharing their thoughts with us. This is much appreciated.
Watch out for the last few of these IAGRM online session over the next few weeks. This is before the organisation takes a break from them until the autumn and the emphasis of activity switches from “indoor to outdoor” over the summer months, at both branch and national level.
John is a Divisional Director with Promar International, the consulting arm of Genus plc and is a Visiting Lecturer at the University of Reading and serves on the Council of the Institute of Agricultural Management.