While the recent global economic downturn had a comparatively minimal impact on packaged food sales, continued economic anxiety and the spectre of public spending cuts across much of Europe mean that the future growth prospects are far from guaranteed.
However, some categories within the packaged food industry have benefited from the recent downturn. As consumers have been encouraged to try relatively cheaper offerings and have invariably continued to purchase them even as economic conditions have started to improve, their interest in private label products has risen dramatically.
Go deeper with GlobalData
The increase in sales of packaged food via supermarkets and hypermarkets is set to boost private label encroachment. Retailers in developed markets are likely to devote more shelf space devoted to private label products as private label products in these countries are more sophisticated. In this channel, retailers continue to implement a tiered pricing strategy to differentiate added-value private label ranges from the basic value-for-money product portfolio. Despite the increasing sophistication of private label, however, consumers remain reluctant to buy private label brands in certain product categories such as chocolate boxed assortments or baby milk formula, where quality, presentation and/or health properties tend to override most price considerations.
Supermarkets and hypermarkets collectively remained the single largest purveyor of packaged food in 2010, accounting for almost 53% of global retail value sales. Price-cutting campaigns, other forms of heavy discounting and a greater focus on private label ranges, will continue to be used by international and local players alike to maintain and broaden their customer base. Retail volumes will also be bolstered, as more consumers in developing markets substitute unpackaged and fresh food for the perceived benefits of packaged food.
Another category creating growth opportunities for packaged food manufacturers are ethical and Fairtrade options. The category that is expected to register among the strongest gains of all ethical food options is organic confectionery, with global retail sales forecast to rise by around 38% in constant value terms from 2009 to 2014. Overall, global Fairtrade chocolate sales are set to grow strongly in 2011, albeit from a relatively modest consumer base. This expansion will be driven by higher awareness of ethical food items in developed markets and intense promotional activity from mainstream manufacturers. Organic confectionery sales will be driven by strong demand for premium dark chocolate in Western Europe and North America, which is likely to be matched by strong promotional and innovation activity from key brands.
See Also:
Improving economic prospects – should they continue – will have a two-pronged effect on consumer behaviour and preferences for milk in Western Europe. An increase in disposable income will encourage consumers to buy more premium and value-added products, shifting the current focus on price to a more quality, ethical and health-minded orientation. This shift in consumer behaviour will benefit manufacturers positioned at the higher end of the market, and will pave the way for future developments including functional milk fortified with ingredients such as omega-3, calcium and vitamins. This trend will also impact other dairy categories such as yoghurt, cheese and desserts, creating more opportunities for suppliers of functional milk to diversify their scope and portfolios.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataOverall, weak economic growth and increasing unemployment levels are forcing European consumers to reduce their expenditure on restaurants and outdoor leisure, which has in turn resulted in an increase in snack consumption at home. Sweet and savoury snacks in Western Europe will continue to lose ground to snack bars and, to a lesser extent, fresh food, as it is considered a healthier alternative in most developed countries. Innovation is continuing to focus on the introduction of healthier snack lines and exotic flavours at the higher end of the market and is regarded by many manufacturers as an effective strategy for market survival.
