Food inflation changes consumption habits and benefits local businesses

Food inflation changes consumption habits and benefits local businesses

Inflation is affecting the consumption habits of Spaniards, according to a report by NIQ (NielsenIQ), and curiously the most benefited are local businesses. “Households try to contain spending and that translates into more changes of establishments in search of better prices, smaller baskets and a greater frequency of purchases, which is favoring local store formats,” says Patricia Daimiel, director for southern Europe from NIQ.

The NIQ data also reveals how different households reorganize their budget to contain spending. The analysis shows the relevance that the health factor currently has for consumers, which translates into a general increase in spending on fresh products.

Inflation puts the purchase decision in the price

The contraction in demand and the tendency of consumers to buy lower value products to reduce your spending in the shopping cart are the main challenges for distributors and manufacturers of mass consumption, according to the survey of AECOC among 75 companies in the sector -with a market share of 90% among the distribution- presented today at the 28th Congress of Commercial Strategy and Marketing.

In this sense, the 60% of companies expect the current drop in purchase volumes to continue throughout the year. Specifically, 38.9% of distributors anticipate that 2023 will close with a drop in purchase volumes of up to 5%, while 27.8% anticipate that demand will stagnate. On the other hand the The remaining 33.3% plan to grow and volumes.

The prospects of manufacturers van in the same line. 56% point to drops in sales volumes of up to 10%, while 14% expect results similar to those of 2022 and 29.7% forecast growth.

As a result of the inflationary scenario, the distribution as a whole expects growth in value of up to 10%, while, in the case of manufacturers, 78.9% also expect to increase their turnover in 2023 due to this same effect.

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“He Price is currently the deciding factor in purchasing decisions and that is affecting the volumes. The priority of manufacturers and distributors is recover demandso, predictably, we will see more promotions in the second half of the year”, points out Rosario Pedrosa, manager of Commercial Strategy and Marketing of AECOC.

Slowdown in price rises

The data presented by NIQ confirm that the drop in purchase volumes so far this year is 2%. However, consumption picked up in April, with year-on-year growth of more than 4%.

It is upturn in consumption coincides with a notable slowdown in the average increase in prices of consumer products in the advance of results registered for the month of April, which stood at 9.5%. The data -which NIQ obtains based on the real sales of Mass Consumption establishments- represents a decrease of 4.7 points compared to the 14.2% rise in prices for the month of March.

Regarding the evolution of the sector, the NIQ data shows an accumulated growth of 11.3% in value so far this year.

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