Inflation’s Impact on Private Brand & Organic Sales
By Shari Steinbach, MS RDN, RDBA Contributing Editor
Escalating food prices have been top of mind for shoppers and retailers alike during the past several months, and key categories like private brands and organics are seeing the impact of this period of inflation. According to a recent Deloitte survey, 65% of shoppers say they will trade brands if prices are too high, and the majority of categories across 2022 experienced substantial movement between private brand and branded products. Of these categories, 71.5% gained in private brand share. With the quality and assortment continuing to increase and the wide variety of better-for-you items available, many private brands have become the preferred choice for many shoppers who aren’t going to trade quality for price.
When it comes to the effect inflation has had on organic sales, the results depend on the category. In the US, for example, pantry staples such as organic flours and baking ingredients grew by 30% over the past year as bread making and baking became more popular pastimes, (Organic Trade Association.) In addition, awareness of the climate crisis is at an all-time high and consumers will continue to prioritize this concern. However, while consumer research shows a willingness to purchase more sustainable foods, including organic foods, that intention to purchase is not reflected in actual sales. One in two (50%) US consumers that buy organic food say cost is the main barrier that prevents them from buying more. But the price gap between organics and conventional food prices may be narrowing. For the long-term, organic brands will have to keep prices steady and continue to push their personal and planetary benefits.
To help your retailer become an inflation-fighting destination, include private brands and organics choices into your educational programming around money saving solutions. Here are three areas of key consumer interest:
- At-home food consumption: Consumers understand the many benefits that come from cooking and eating at home, including increased culinary confidence, creating quality meals for less money, consuming healthier foods, and connecting with loved ones at mealtime. This means demand for groceries will continue, and retail RDNs have a sizable opportunity to highlight recipes, affordable meal planning, and new product solutions to customers.
- Prioritization of price and value: The impacts of inflation will continue into this year which will lead to continued brand switching and trial of new items. Retail RDNs can communicate the health attributes and value of products while showing consumers how to fill a basket with meal options that provide the most nutrition for their money. Other educational topics may include how to reduce food waste and planning occasional meals based around lower cost items such as beans and lentils.
- Desire for health and wellness: Consumer definitions of health and wellness change as priorities shift. The covid pandemic has certainly elevated shopper priorities around sustainable health, immunity, and self-care. Retail RDNs should expect increased demand for products and solutions that help consumers stay well.