There will likely be a decline in consumer packaged goods (CPG) sales as shoppers switch to less expensive store brands amid inflation and rising food prices.
Private label has gained more market share in Europe over the past month, the Financial Times reported on Saturday July 23, and analysts said this came with “modest declines in share” ahead of 2022.
Some of the things consumers are ditching include yogurt, coffee, ice cream, and branded paper products. Instead, they choose various store-brand versions, and the report notes that analysts are also seeing this trend in salty snacks and frozen meat and vegetables.
Many multinational food and household makers, including Unilever and Danone, will release their first-half results this week. According to the FT, analysts believe many are likely to chronicle lagging sales.
The backdrop to all of this is a cost of living crisis, and owners of various global brands have had to raise prices as raw material, labor and transportation costs rise.
In the first quarter of the year, multinational consumer companies reported raising prices by an average of 5% year-over-year, and forthcoming results will show whether they were able to pass on any further cost increases on households without suffering a loss of sales.
Rising costs are affecting both businesses and consumers, and PYMNTS recently wrote that some US retailers, like Kroger, are identifying opportunities to offer customers lower-cost alternatives.
Read more: Kroger boosts ‘Home Chef’ meal prep as restaurant takeout and delivery slump
Kroger recently expanded its capacity of Home Chef-branded ready-to-eat meal kits, offering cost-conscious consumers an alternative to more expensive take-out meals.
The company is also opening a new production center for meal kits, which will be based in Douglasville, Georgia. Home Chef CEO Erik Jensen said the idea was to “make our production and distribution even more efficient, so we can continue to bring fans easy and delicious recipes”.
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