“Indulgent” food segment, which includes chocolate and confectionery categories as well as savoury snacks and ice cream, is at “high risk” from inflationary pressure, stated a recent report.
According to analytics company GlobalData, chocolate and confectionery will be one of the categories that will be hit the hardest, with volumes set to decrease from a 2016-2019 CAGR of 2.1 percent to a 2021-2024 CAGR of 1.5 percent.
Ice cream is set to see a double-digit increase in value over 2021-2024 but only a 2.2 percent rise in volume in the same period.
GlobalData forecasts that all categories in indulgent food are gaining value over volume, suggesting that inflation and price increases are currently set to drive growth rather than increased sales in the next couple of years.
Jenny Questier, Senior Analyst at GlobalData, stated that as these products are often positioned as treats and rewards and not staple parts of weekly meals, they are more likely to be compromised in consumers’ shopping baskets as household budgets continue to get tighter and consumers consider their health priorities.
The heightened costs of logistics and storage costs around freezing are expected to be passed on to the consumers.
“Ice cream specifically has associated manufacturing, logistics and storage costs around freezing that will have to be passed on to the consumer as energy costs continue to rise. Added costs combined with the seasonality of these products will further dampen peoples’ desire to purchase these in the future as they focus on essential items,” Questier said.
“The current circumstances could be an opportunity for brands and manufacturers to look at product portfolios and innovation with a view to staying relevant and available to consumers. Price points in these categories especially will need to stay low to encourage spend, either by smaller pack sizes or perhaps even as part of cross-promotions in future with more essential products."
