• The current cost of living crisis is putting pressure on consumers' already strained budgets, and climate change is driving them to make more sustainable purchases.
The consulting company Ernst & Young (EY) published the results of the 13th edition of the study Future Consumer Index (FCI), which identifies changing consumer behaviors and spending patterns in the context of the cost of living crisis and climate change.
The study reveals the latest food industry insights, detailing how the cost of living crisis is causing consumers to reevaluate how they shop for food and drink and what products they choose. Rising food prices are prompting consumers to prioritize essential products and optimize food budgets.
Thus, 80 percent of global consumers remain concerned about their finances, and nearly half (46 percent) expressed extreme concern about climate change, the study, which surveyed 22.000 consumers from 28 countries, found.
Reduction in product purchases
More than half (54%) of global consumers plan to reduce their future purchases. The main reason for reducing their consumption patterns is the need to save money (73%). FCI's results reveal the close connection between the economy and the environment, with 67% of respondents stating that deep concern for the fragility of the planet is the main reason behind their intention to change their consumption patterns.
More than half (56%) of respondents believe that consumers should pressure companies to have better social and environmental impact. In comparison, 73% of respondents say that producers must drive environmental change, and 77% say that governments must be responsible for leading this action.
Also, almost half of consumers (49%) believe that new purchases are not necessary. Of those surveyed, 80% reveal they plan to spend less on social goods, and 41% plan to stay home more, up 6 percentage points from October 2022.
Diminished budgets change consumption habits
The cost of living crisis has had a significant impact on consumer spending in the food industry, FCI results show. The latest wave of data suggests that in order to stay on budget, consumers are paring down their must-haves, opting for less expensive brands and ditching delivery plans, leading to increased in-store traffic and to greater concentration of retailers on store brands.
More than half (57%) of consumer respondents are concerned about the rising cost of groceries and household essentials, 49% buy only what they need, and 39% plan to spend less on grocery delivery services in the next three -four months. Consumers are increasingly thinking about what constitutes value and necessity. The survey found that 29% of shoppers rate what is essential, indicating that these lists are getting shorter.
Own brands – growing in popularity
Established brand products are losing purchasing power among consumers as 64% of consumers believe that supermarket own brands meet their needs as well as "company products", and 61% say private label helps them save money.
At the same time, the contents of the shopping baskets are also changing, with interviewees saying that they will purchase fewer snacks. Experts say this phenomenon is likely a result of continued price increases within the category and the fact that fresh food is becoming more affordable as inflation stabilizes.
Additionally, this trend also reflects consumers' desire to be healthier, with nearly a third (32%) anticipating that their physical health will improve.
Trust remains vital as consumers will seek out brands they trust, with 35% of consumers saying they will pay more for products from trusted food brands, up 10% from February 2022.
Personal experiences of climate change influence purchases
FCI also reveals the importance of climate change in consumer buying habits, indicating that they are considering changing their lifestyles after being personally affected by the climate crisis.
One of the most important findings is that more than half (51%) of consumers have been affected by product price changes. Adapting to their needs related to climate change, they consider the possibility of changing their diet because the ecological crisis has increased costs or reduced availability.
As a result, 29% have already made these choices and had to change the foods they eat, and the share of those who are considering this change rises to 42% globally.
Consumers want to buy products that are better for themselves and the planet. And older adults are more active in adopting lifestyle behaviors to reduce their impact, such as bringing reusable bags to grocery stores and recycling or reusing packaging.
Compared to the US and China, the study found that European consumers are the most active in these specific behaviors. Gen Z consumers are more willing to spend sustainably and check companies' environmental claims, and older consumers are more willing to engage in activities such as recycling and water conservation.
Impact on traders
Food retailers' sourcing and stocking decisions will be decisively influenced by changes in consumer behaviour.
According to FCI, 88% of consumers are making an effort to waste less food. Additionally, 39% plan to spend less on snacks and 34% of consumers plan to buy more fresh food. Retailers will need to align with these behaviors by managing quantities, product categories and sales strategies to become more sustainable overall.
78% of consumers also said they want producers to play a more active role in ensuring a sustainable future, as consumer intervention in this aspect is relatively limited.
Article written by Gabriela Dan, Editor of Arta Albă
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