At-home food and beverage prices increased 13.2% from Q4 2021 to Q4 2022, according to the new Impact of Inflation on Consumer Behavior report from Information Resources Inc. (IRI).
But the year-over-year increase in food prices varied significantly by category, with dairy (+23.2%) and bakery (+18.0%) showing the largest increases and fresh meat and seafood (+3.4%) and alcohol (+5.4%) increasing the least. Sales remain strong, however, with center store sales jumping 11.1% and perimeter dollar sales rising 6.3% in Q4 2022.
Switching to private label to cut costs
Inflation is driving consumers toward private label brands, with many now committed to continuing to purchase private label products. But premium products are losing ground.
IRI’s research found that premium’s dollar share peaked in 2021 with a 1.0 point gain, but it lost 0.6 share points in the 12 weeks ending on November 27 last year. Meanwhile, private label brands steadily gained share in 2022, most recently increasing by 0.9 share points in the 12-week period ending on November 27.
In the 13 weeks leading up to January 1 of this year, the categories where private label’s dollar share grew the most included deli prepared meats (+11.8%), deli spreads (+8.7%), and perimeter cookies (+7.9%). But consumers are still willing to splurge a bit on premium products in some categories — sports drinks (+2.3%), canned/bottled fruit (+2.0%), and non-chocolate candy (+1.5%) had the highest dollar share gains among premium categories over the 13-week period.
IRI expects consumers to continue buying private label products across several categories where they’ve become familiar with such products, but big name brands aren’t likely to lose share in their strongest categories.
Searching for premium at-home experiences
Though consumers are striving to be frugal when grocery shopping, IRI’s report shows that they’re also looking for ways to treat themselves through high-quality, better-for-you products and experiences. A look at the fastest-growing small brands shows growing consumer interest in functional beverages, as well as clean label products that allow them to enjoy premium snacks or easily cook up authentic meals at home.
See the full report for more insights on how rising food prices are impacting consumer behavior.
