Innovating for Recession-era Changes in Consumer Behaviour

Man grocery shopping

We’ve identified three overarching food trends driving consumer behaviour during the current COVID-19-related recession

Though parts of the world are slowly coming out of COVID-19-related quarantines, there are many questions in the food industry about what happens next. Still, with most officials in agreement that we are already in a recession, we can prepare for the future by studying how the recession of 2008 impacted the food and beverage industry and weaving in new consumer insights to suggest future areas of opportunity and innovation.

Here’s a look at what we know, and what we can predict about consumers as they shift into a recessionary mindset.

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How food and beverage fared following the 2008 recession

The food and beverage sector has historically shown resilience during a recession, and in the current economic downturn the industry is again predicted to experience positive growth. For example, new product development in private label has gained significant momentum since the last recession, in 2008, and consumer acceptability has soared, suggesting it will continue to accelerate and gain from the consumer recessionary mindset. In the previous recession, innovation played a vital role in maintaining relevancy and sustainable growth, something that’s important for brands to keep in mind. Even now, there is potential for wins and opportunities for food and beverage innovation.

The recessionary mindset for food and beverage

Consumer desires don’t fundamentally change in a recession. But with money tight for some and uncertainty affecting many, how consumers prioritise and justify purchases within the categories may change, with many potentially buying in different ways, formats, channels or frequency. 

Even during a recession, consumer purchases can be grouped into three general categories with unique innovation criteria: necessity products, comfort goods and luxury foods and beverages.fresh cookies

Consumer purchases can still be grouped into three general categories, which each have their own innovation criteria:

  • Necessity products, such as shelf-staples. Brands in this arena can innovate to win by communicating total value, including price and benefits such as convenience, sustainability and health.
  • Comfort goods, such as sweets and bakery items. Players in this category can gain market share by offering consumers smaller, more affordable ways to escape, indulge or treat themselves at home.
  • Luxury foods and beverages, such as premium spirits. Manufacturers of top-tier goods can retain consumers by clearly communicating added value details and offering convenient ways to interact with and purchase products, such as ecommerce and home delivery.

Across these categories, we’ve identified three key consumer trends we believe will shape the way forward for innovation in the food and beverage industry through the current recession and health crisis. Below we explore each, including what brands need to know when innovating products that will appeal to recession-minded consumers.

Health to the forefront

Consumers were proactively approaching health and wellness even before COVID-19, shopping for products with added functionality and clinically proven health benefits. Though consumers are generally spending less, because this economic downturn is intermingled with a health crisis, we expect the public will continue prioritising and investing in food products with health claims.

One contributor to this is the overall number of available products with on-pack claims, which has risen significantly since the 2008 recession. Functional claims have increased tenfold over the past 12 years from 0.5% to 5%, with immunity benefits increasing from 8.3% to 12.5% during this period, according to Mintel. At the same time, Kerry Trendspotter™ data shows a recent rise in interest for foods known for their inherent health properties such as spinach, citrus fruits and ginger, suggesting products featuring these and similar ingredients may perform well.

The popularity of plant-protein is also on the rise, since many consumers associate plant-based foods with added health benefits. Meat substitute launches have increased by 300% since the last recession according to Mintel. Plant-based products will continue to evolve as the focus on health continues. However, this category must prove its affordability as many perceive a healthy or plant-based diet to cost more.

Brands that strike a balance between following industry trends and creating functional, safe and sustainable solutions while delivering products with unwavering taste and nutrition will win consumer favour.

Conscious consumption

Consumers are increasingly invested in the need to make more conscientious choices, rather than just focusing on what they want, personally. Evidence suggests that consumers are interested in clean and green labels; local, community-minded sourcing; and authentic, artisanal experiences, prioritising these elements in their food and beverage choices in both retail and foodservice channels.

While sustainability has been both negatively and positively impacted by the COVID-19 crisis, it is important to recognise that health and sustainability go hand-in-hand. Many consumers believe that choosing more sustainable diets is one of the main ways to improve their own health and help protect the environment.

A transparent food and beverage supply chain was important to consumers before COVID-19, and that is only set to continue as people grow more interested in food safety and sustainability claims such as carbon footprint. Many are already gravitating towards their trusted brands for guidance and reassurance.

There are opportunities to innovate for conscious consumers through:

  • Trust and transparency, such as spotlighting ingredient origin and production processes
  • Personalisation, such as bespoke products or nutrition profiles and novel taste and texture experiences
  • Planet-friendly products and ingredients, such as alternative dairy, grass-fed dairy and clean label protection
Value is vital

Value speaks to more than just price. Even during a recession, consumers will be willing to trade-up on indulgent comfort and luxury goods that offer taste, nutrition or a perceived reflection of their attitudes and outlook on life.

Brands, private labels and discounters must all strive to create added value for their products.

  • Brands will need to work to convince consumers they are worth the extra cost. Many enjoy a lingering halo effect from familiarty and nostalgia, but during a recession, brands must continuously prove value. To do so, they can demonstrate they have best interests of the consumer in mind, using heritage, authenticity and story-based marketing to offer reassurance around quality, safety and value in an authentic manner.
  • The private label market in Europe is amongst the most evolved in the world, and significantly more sophisticated than it was even 10 years ago. In Germany, for example, private label accounts for 55% of all frozen food sales and 54% of chilled, per Mintel. If consumers have a positive experience with private label products, winning on cost as well as value derived from taste, nutrition or novelty, they’ll make a lasting change.
  • Discounters gained considerable market share in Europe following the last recession. New shoppers visited the discounters due to cheaper prices and many stayed for the product quality. The launch of affordable luxury ranges at these retail outlets, such as Lidl Deluxe, were particularly successful during the last recession. Because of the growth of the conscious consumer, working with artisans and local companies may help drive growth.

Tomorrow begins Today at Kerry. Our insight-led innovation is designed to help you succeed faster. Visit our European website to find out more about partnering on future projects. To learn more about how COVID-19 is affecting the food and beverage industry, including changes in consumer preferences and purchasing behaviours, visit Kerry’s COVID-19 resource page.

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