KeHE VP: ‘Millennials are trading values for value’

“Inflation drove prices of food very high, so consumers are [behaving] different than they were two years ago and much different than during the pandemic. They are choosier. They know that the supply chain is up and working, and they are voting with their dollars,” said Goldsmith.

Millennials ‘are looking to get everything in one swipe’

Many consumers — especially younger Millennials and Gen Zers — disproportionally feel the impact of higher food prices and are reprioritizing how and what they buy, Goldsmith noted.

“Millennials are trading values for value because they are dealing with the impact of what the economy is doing. They are dealing with a smaller paycheck when they are looking at housing and food and all the things, and they do not have that extra 20% to put towards food. So, they are looking to get everything in one swipe, and I think they are reprioritizing those today,” she explained.  

KeHE is also preparing their suppliers for the possibility of an economic recession and what that could mean for their brand and how they approach retailers, Goldsmith said. Historically, in times of economic stress, consumers gravitate to more at-home items, with breakfast, lunch and snack items doing particularly well, she added.

Is private-label a threat or an opportunity for food manufacturers?

Switching from values to value, consumers are also increasingly purchasing private-label products, which often compete directly with many of KeHE’s suppliers. KeHE operates two private-label brands — CADIA and MADE•WITH — and works very cautiously to “not interrupt the business of [its] beloved suppliers,” Goldsmith said.  

Brands might have an opportunity to tap into the growing private-label market by selling their surplus production capacity, she noted. For instance, olive oil company De Nigris keeps “the best of the best” of their production for their brand and then sells approximately 40% to private-label businesses, she added.  

"Private label has grown in popularity over the past two years. Of course, it is a threat when we have the conversation on values to value, and private label can really come in at a steep discount compared to a CPG brand that has put a ton of money into advertising and marketing. A lot of the brands though are part of that private-label economy in their own way because they are great manufacturers of private-label products."

From value to functionality: Consumers want it all

Additionally, consumers are seeking products with better-for-you or functional claims while still finding time to indulge, Goldsmith explained.

“People are really still looking for foods that help make them healthy and have adaptogens or other functional benefits that their counterparts or conventional items do not have,” she said.

She added, “Indulgence and sweets are still very much at the top of the consumer's mind, but you will see that the size of those items is much smaller than in the past. I think what it is all about is portion control and making sure that you still get that sweet treat, but you do not have to overindulge.”

Confectionery brands at the show tapped into the permissible indulgence with portion-controlled offers, including Issei Mochi Candies with its mochi bites and TidBits with its low-sugar gummy candies. Other brands, like chocolate brand Free2b, focused on better-for-you experiences with top-12 allergen-free products.

The lines between functional and indulgent are also blurring, as many iconic candy brands are making their way into functional categories. Energy bar ONE shared its latest collaboration with The Hershey Company with two bars — a Hershey Chocolate and Reese’s branded energy bar — each containing 18g of protein and 3g of sugar per bar.