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With food inflation now at a record 14.6%, fine food values such as provenance and quality are slowly dropping further down consumers’ priorities when shopping.
According to a recent survey conducted by Meatless Farm, one in two (55%) people admitting price is now significantly more important than health, sustainability and quality when it comes to the weekly food shop.
In fact, two fifths (41%) plan to buy more frozen and non-organic (40%) meat whilst almost a third a third of shoppers (28%) are switching to cheaper processed meat. Two in five (39%) also say organic and fairtrade foods are now bottom of their shopping lists despite previously being ‘must have’ items.
So how will this affect speciality food and drink retailers over the winter?
The organic and sustainability market
Before the cost-of-living crisis, the organic market was flourishing, and interest in sustainability on the rise.
As Vicki Hird, sustainable farming officer at Sustain, explained, “Domestic sales of organic food surpassed £3.05 billion last year - it’s highest ever value and a growth of 5.2% - and people were buying more sustainably, however the current market dominance of supermarkets leaves farmers and growers with only 8% of Gross Value Added.”
But inflation has taken its toll, and “The economic downturn is inevitably having a big impact on the food and drink market and household spend, and we are very aware that organic is not immune to these challenges”, explained Lee Holdstock, senior business and trade development manager at the Soil Association.
“The organic sector, producers and retailers, must also play on organics known strengths and reinforce messaging around the core benefits of organic which support and substantiate consumer choices on sustainability, health, higher welfare, taste and quality”, he added.
According to Maddie Grinham, brand manager at Mr Organic, “Whilst we are seeing a general reduction in organic basket spends, the increasing price of meat is resulting in more and more people trading from meat to plant-based options.
“At Mr Organic we haven’t seen a drop in sales across our range, largely due to increasing popularity of products like beans and pulses as alternatives to meat.”
The effect on indies
Retail as a whole is being significantly affected by the cost-of-living crisis, but this shift away from sustainable and planet-friendly foods is concerning for fine food retailers.
Vicki explained, “Recent research published by the Food Standards Agency shows that 40% of people are worried about being able to afford food in the next month and 30% have skipped a meal or cut down on portion size because they did not have enough money.”
“This means specialist, sustainable and organic brands may need to work harder to earn their place in shoppers’ trolleys”, according to Morten Toft Bech, founder of Meatless Farm.
“With shopping bills at an all-time high, many consumers are already savvier to the prices of what they are picking up off the shelf, where they shop, and the benefits vs cost. This can mean some tough choices when sustainable or organic options are priced higher than alternatives”, he added.
But for Maddie, “There is still a big market for fine food retailers, especially as shoppers trade down from restaurant meals to premium at-home options.
“The desire to shop more sustainably is something we believe all of us still share, but it is about communicating the quality, taste and sustainability of the product in a way that justifies the cost.
“Shoppers are looking to re-create the taste experience of eating out, and the quality of independent fine food retailers ranges allow this in a much more affordable way. We believe that, as the cost-of-living rises, consumers will gravitate towards more premium lines on an occasional basis as a way to ‘treat’ themselves, similar to some of the habits we saw in the pandemic, so it is important fine food retailers are still catering to this demand by offering tasty, high-quality ranges.”
Encouraging shoppers to value sustainability
Being in the customer-facing roles they are, independent retailers have the opportunity to explain to customers why they should continue to value sustainability in their shopping choices.
“For consumers, we believe the most important element is justifying their spend – be it through quality, health credentials or sustainability. Retailers can encourage purchases through clearly communicating the benefits to the consumer through marketing efforts and in-store merchandising, as well as offering a premium in-store experience which is attractive to the consumer”, Maddie explained.
Morten agreed, “Independents need to help consumers understand the broader benefits of making sustainable choices. They need to provide clear brand information about the impact of their products, cutting through greenwashing and information overload.
“Of course, price will still be the most important factor for a lot of consumers, so it’s also about keeping pricing as competitive as possible and being realistic and sympathetic about the challenges consumers are facing. Helping customers get more out of what they are buying, with tips for minimising waste, extending shelf life, using up leftovers and bulking out recipes with other ingredients are all practical ways we can help people get through the challenges ahead whilst also reducing negative impacts on the environment.”
As Lee concluded, “The shift to buying organic is a long-term trend and while it is inevitable that the cost-of-living crisis will force even the most committed organic shoppers to trim their spend where and when they can, the evidence suggests demand for planet and nature friendly food and drink is here to stay.”