Hatch Communications
Hatch Communications
Hatch Communications
Three ways inflation is impacting food & drink brands

Thought Leadership

Three ways inflation is impacting food & drink brands

by Emily Boswell

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Food inflation in the UK might finally have slowed down in recent months, but unfortunately, food prices are still up.

Data from ONS shows that food costs have increased by over 17% in 12 months, and predictions from industry experts are that they’re unlikely to fall anytime soon.

Unsurprisingly then, consumers are having to change the way they shop, as well as the way they engage with the brands they buy from, in a bid to keep costs to a minimum.

So, what are some of the changes the food and beverage industry is currently seeing? And what do these mean for food and drink brands?

  1. A fancy for frozen food

Many consumers are turning their backs on fresh food, in favour of their frozen (and cheaper) counterparts. Data from Kantar shows that, in the 12 weeks to 20th March, demand for items such as frozen chicken rose by 5.9%, frozen prepared foods, such as ready meals, pizzas and chips, increased by 2.6%, and frozen vegetables grew by 1.3%

As new customers are forced into the category as a result of rising food costs, this offers a great opportunity for frozen food brands to keep these new customers in the category for the long-run.

The key for brands here is to demonstrate the numerous benefits that frozen food offers – from convenience and quality, to nutrition and of course, value for money.

Through our work with the British Growers Association on its Yes Peas! campaign, which promotes the benefits of frozen peas, we focus on championing the vegetable to make it the star of the show (rather than an after-thought), through recipe creation where peas are the hero ingredient.

Alongside this, we work with Yes Peas! to educate consumers on the wider health and environmental benefits of the frozen pea. Because not only are they packed with nutrients from being frozen within just 2.5 hours of being harvested – they’re also by far the most environmentally friendly vegetable in the UK.

  1. A love for loyalty schemes

With shoppers continuously looking for ways to save money, for many, the answer is in reward schemes. In fact, data from GWI, shows that the number of UK food shoppers who use loyalty and reward schemes is up from 52% in Q3 last year to 57% now.

Within this, consumers highlight that special price discounts are the promotions that are most influential on where they shop, while data from NIQ reports that 44% of shoppers say retailer vouchers and coupons are important in determining where they shop.

Given these findings, loyalty schemes clearly pose a great opportunity to benefit both the shopper and the brand. By offering savings to customers, it helps to retain your existing customer base whilst also attracting new consumers to show with you over your competitor.

However many brands, such as Tesco, are actually decreasing the value of their reward schemes – opening up an opportunity for other brands to offer competing and enticing benefits for shoppers.

  1. But a blow for brand loyalty

While consumers’ love for loyalty rewards is clear to see, the cost of living crisis has caused consumer brand loyalty as a whole to wane.

In a bid to cut the cost of their weekly shop, customers are turning their back on the brands that they’ve bought from for years, in favour of cheaper alternatives – whether that’s own-brand labels, or a brand that’s on special offer.

And this doesn’t just apply to the products they buy, but where they buy them from too, as data from Paragon Bank shows that 12% of people switched their supermarket for their main weekly shop in the first half of 2023.

Even those customers who haven’t switched supermarkets are still swapping between brands to save some cash. And only one in seven say they plan to return to their previous habits when food price inflation eases.

Therefore, it’s evident that brands need to place greater focus on keeping an engaged and loyal customer base who will choose their brand time and time again. To do this, brands need to communicate why shoppers should keep choosing them.

But it’s not simply shouting about your brand’s eco-credentials or health benefits – people like to buy from people, so you need to communicate with your audience in a way customers can feel a personal connection to your brand.

So, what are Hatch’s top three tips for food and beverage brands to stay ahead of the changing consumer climate?

  • Communicate your USPs – be it health benefits or sustainability credentials, make sure consumers know why your products are better than your competitors’. This is particularly important for premium brands where a brand’s USPs need to communicate the incentive to pay a higher price and trade up over a cheaper alternative.
  • Offer incentives – consumers are counting the pennies more than ever before. If your brand can provide discounts or rewards, it will help you to retain existing customers, as well as attract new shoppers – ultimately driving overall sales. Beyond just discounting products, explore opportunities such as partnering with influencers to offer unique discount codes to their followers, or partnering with publications to offer reader discounts, which can help to drive sales and awareness at the same time.
  • Show you’re human – customers don’t like faceless brands; they want to buy from brands that hold similar values to themselves. Make sure you’re communicating what your brand’s values are, and showing that you care about your customers, to increase your brand loyalty. But most importantly be authentic. Consumers can see straight through tactics like greenwashing, so if it’s not true to your values, you could see customers losing trust and abandoning your brand instead.

If you’re a food or drink brand looking to stand out against your competitors and improve your sales, get in touch with us at hello@hatch.group

We have also recently launched our 2023 trends report which looks back at the first part of the year and predicts what’s going to be trending as we head into 2024. The full report can be viewed HERE.

Food inflation in the UK might finally have slowed down in recent months, but unfortunately, food prices are still up.

Data from ONS shows that food costs have increased by over 17% in 12 months, and predictions from industry experts are that they’re unlikely to fall anytime soon.

Unsurprisingly then, consumers are having to change the way they shop, as well as the way they engage with the brands they buy from, in a bid to keep costs to a minimum.

So, what are some of the changes the food and beverage industry is currently seeing? And what do these mean for food and drink brands?

  1. A fancy for frozen food

Many consumers are turning their backs on fresh food, in favour of their frozen (and cheaper) counterparts. Data from Kantar shows that, in the 12 weeks to 20th March, demand for items such as frozen chicken rose by 5.9%, frozen prepared foods, such as ready meals, pizzas and chips, increased by 2.6%, and frozen vegetables grew by 1.3%

As new customers are forced into the category as a result of rising food costs, this offers a great opportunity for frozen food brands to keep these new customers in the category for the long-run.

The key for brands here is to demonstrate the numerous benefits that frozen food offers – from convenience and quality, to nutrition and of course, value for money.

Through our work with the British Growers Association on its Yes Peas! campaign, which promotes the benefits of frozen peas, we focus on championing the vegetable to make it the star of the show (rather than an after-thought), through recipe creation where peas are the hero ingredient.

Alongside this, we work with Yes Peas! to educate consumers on the wider health and environmental benefits of the frozen pea. Because not only are they packed with nutrients from being frozen within just 2.5 hours of being harvested – they’re also by far the most environmentally friendly vegetable in the UK.

  1. A love for loyalty schemes

With shoppers continuously looking for ways to save money, for many, the answer is in reward schemes. In fact, data from GWI, shows that the number of UK food shoppers who use loyalty and reward schemes is up from 52% in Q3 last year to 57% now.

Within this, consumers highlight that special price discounts are the promotions that are most influential on where they shop, while data from NIQ reports that 44% of shoppers say retailer vouchers and coupons are important in determining where they shop.

Given these findings, loyalty schemes clearly pose a great opportunity to benefit both the shopper and the brand. By offering savings to customers, it helps to retain your existing customer base whilst also attracting new consumers to show with you over your competitor.

However many brands, such as Tesco, are actually decreasing the value of their reward schemes – opening up an opportunity for other brands to offer competing and enticing benefits for shoppers.

  1. But a blow for brand loyalty

While consumers’ love for loyalty rewards is clear to see, the cost of living crisis has caused consumer brand loyalty as a whole to wane.

In a bid to cut the cost of their weekly shop, customers are turning their back on the brands that they’ve bought from for years, in favour of cheaper alternatives – whether that’s own-brand labels, or a brand that’s on special offer.

And this doesn’t just apply to the products they buy, but where they buy them from too, as data from Paragon Bank shows that 12% of people switched their supermarket for their main weekly shop in the first half of 2023.

Even those customers who haven’t switched supermarkets are still swapping between brands to save some cash. And only one in seven say they plan to return to their previous habits when food price inflation eases.

Therefore, it’s evident that brands need to place greater focus on keeping an engaged and loyal customer base who will choose their brand time and time again. To do this, brands need to communicate why shoppers should keep choosing them.

But it’s not simply shouting about your brand’s eco-credentials or health benefits – people like to buy from people, so you need to communicate with your audience in a way customers can feel a personal connection to your brand.

So, what are Hatch’s top three tips for food and beverage brands to stay ahead of the changing consumer climate?

  • Communicate your USPs – be it health benefits or sustainability credentials, make sure consumers know why your products are better than your competitors’. This is particularly important for premium brands where a brand’s USPs need to communicate the incentive to pay a higher price and trade up over a cheaper alternative.
  • Offer incentives – consumers are counting the pennies more than ever before. If your brand can provide discounts or rewards, it will help you to retain existing customers, as well as attract new shoppers – ultimately driving overall sales. Beyond just discounting products, explore opportunities such as partnering with influencers to offer unique discount codes to their followers, or partnering with publications to offer reader discounts, which can help to drive sales and awareness at the same time.
  • Show you’re human – customers don’t like faceless brands; they want to buy from brands that hold similar values to themselves. Make sure you’re communicating what your brand’s values are, and showing that you care about your customers, to increase your brand loyalty. But most importantly be authentic. Consumers can see straight through tactics like greenwashing, so if it’s not true to your values, you could see customers losing trust and abandoning your brand instead.

If you’re a food or drink brand looking to stand out against your competitors and improve your sales, get in touch with us at hello@hatch.group

We have also recently launched our 2023 trends report which looks back at the first part of the year and predicts what’s going to be trending as we head into 2024. The full report can be viewed HERE.

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