Between November 2023 and 2024, global retail food and beverage dollar sales grew by 2.6%, price and product mix by 1.6% and volume sales by 1.1%, according to Circana Compass insights.
Despite small price hikes, the overall revenue growth from pricing and product mix is subtle as companies focused on offering more promotions to stay competitive, resulting in less profitability from price adjustments, per Circana data.
Consumers saved money by trading down from national or high-end brands to store brands or less premium alternatives while simultaneously gravitating towards more innovative, high-quality or specialty products – helping retail volume grow, according to Circana.
While the back half of 2022 saw double-digit price inflation, 2023 saw a softening to single digits and low single digits in early 2024 with a reduction in foot traffic by 2% in 2024 due to high labor and other costs impacting retail, particularly higher foodservice prices, Sally Lyons Watts, global EVP and chief advisor consumer goods & foodservice insights Circana, told FoodNavigator-USA.
Retail volume sales grew for the first time in three years, as consumers moved away from higher foodservice costs in early 2024, she explained.
Consumers are paying approximately 30% more for groceries, compared to 2019, despite inflation softening. This price hike swayed consumers to shop in more value channels (e.g. dollar stores, warehouse clubs and online), along with private label and premium/super-premium products which softened purchases around mainstream brands, she said.
The rise of the ‘unscripted consumer’
This shift in consumer purchasing habits created more unpredictable shopping behavior, where “consumers are acting in ways that we have not seen before,” Lyons Watt said.
The “unscripted consumer” is characterized by a more flexible, reactive approach to shopping where consumers decide based on immediate needs, perceived value and available budget rather than adhering to established patterns, she said.
“We have seen times where consumers will trade down to a private label. … We have seen them shop value before. What we have not seen is this combination of shifting on channels, the shifting on the products, and then the implications on categories,” she explained.
Biggest trends of 2024 and what to expect in 2025
This story is part of FoodNavigator-USA's recent collection of articles and podcasts exploring food and beverage trends in 2024 and what is on the horizon in 2025. Check out the full collection in this letter from the editor .
Quicker shopping trips with fewer items versus stocking up also increased, suggesting a more reactive shopping behavior where consumers grab what they need in the moment rather than buying in bulk or planning for future needs, she added.
Ultimately, the unscripted consumer is adjusting spending patterns to balance a more limited budget – this may mean making trade-offs between different product segments like choosing between private label and a premium brand or shifting shopping patterns like visiting value channels more often and reducing foodservice consumption, she said.
How can national brands compete with private label and premium?
Lyons Watt pointed out that for consumers value is more than price.
“Consumers are willing to pay more if they feel there is a value. … What am I getting for my money?” she said.
For national and mid-tier brands, offering consumers added benefits and ramping up social media presence could serve as a solution to compete with the private label and premium channels.
For example, cottage cheese, a “middle mainstream” product, boomed in 2024 due to its use in recipes across social media, Lyons Watt said.
“One of the most popular versions of cottage cheese that got promoted was making cottage cheese into a high protein ice cream” that included chocolate chips and caramel for a high protein, low fat ice cream, she explained.
Other mainstream products “that might be competing and dealing with softness” could create more excitement through communication – whether it is new uses or occasions or partnering with other products, she added.
How can brands evolve in 2025?
- Back to basics: Companies should focus on understanding their consumers on a deeper level by looking at attributes like flavors, benefits, nutrients, packaging and pricing to uncover new growth opportunities both instore and online. More proactive collaborations between brands and retailers and private label could also help cater to the diverse needs of the market.
- Growth in food service: Brands can drive traffic by partnering with foodservice operators that leverage digital engagement to strengthen value and loyalty.
- Implement bifurcated messaging: Differentiating between premium and value products within a brand’s portfolio will help create clarity for consumers. For premium products, this means a focus on benefits and creative messaging tailored to usage occasions. For value products, emphasizing affordability and convenience, particularly for consumers who are spending more in retail such as low-income consumers and Baby Boomers.
- Innovation: Brands should consider how they want to position themselves relative to private brands by delivering value through solutions that meet the needs of different consumer segments. This involves understanding the distinct preferences of diverse groups and aligning product offerings across various price tiers from mainstream to super premium.
2025 predictions
In 2025, Circana predicts global food and beverage dollar sales will increase between 2% and 4%. Price and product mixes are anticipated to grow between 1.5% and 3.5% driven by modest base price inflation, stabilized promotions and consumer demand for value, including products that offer premium benefits, according to Circana.
Volume sales will range between 0% and 1% driven by shifting consumer preferences between different types of sales channels that align with factors like convenience, price and product availability. Further, the industry can expect consumers to prioritize affordability, which ultimately influences where they shop and what they buy, according to Circana.
Uncertain federal policies (e.g. proposed immigration legislation and tariffs influencing wages and import costs) may potentially create challenges for the industry, forcing companies to maintain affordability and transparency amidst consumer expectations and public scrutiny on grocery prices.
Compared to 2024, the 2025 economy is slated for a moderate slowdown in gross domestic product and disposable income and increased unemployment despite stable consumer confidence, according to Circana.
If the economy performs better than expected, retail food volumes may decrease slightly as consumers may choose to dine out more, along with a stronger price and product mix driven by consumer preferences for premium products. On the other hand, if the economy performs worse than expected, consumers may spend more on retail groceries and cut back on dining out to potentially increase volume spend, while price and product mix may decrease as consumers prioritize value over luxury foods and innovation.
