circanaSarkana Compass, an advisor on the complexity of consumer behavior, has announced new insights, providing a comprehensive update on the global retail food and beverage (F&B) industry’s 2024 performance and 2025 outlook. Following Sarcana’s 2024 forecast from a year ago, the market is largely trending in line with the forecast in its recent mid-year update. Overall, 2024 dollar sales increased by 2.6%, price/mix increased by 1.6%, and sales volume increased by 1.1%.
As expected, price mix growth in 2024 was below historical averages as base prices continued to rise modestly, offset by higher promotional rates. Further contributing to the change in average prices is a change in the mix of food and beverage products sold, as consumers replace existing products while many are attracted to more premium innovations in new products. It is to do. Retail volumes increased as the post-pandemic situation stabilized, and rising prices for eating out prompted consumers to return some volumes to consumption at home.
Sarcana Compass: Opportunities for Growth
Although the market size has improved in 2024 compared to 2023 and consumers are still constrained by increased at-home spending, trends in the retail food & beverage industry remain challenging and overall growth will continue to be slow. It will be.
“Consumers are driven by demand for value, which influences both volume and price/mix growth,” said Sally Lyons Wyatt, Global Executive Vice President and Chief Counsel, Circana. . “We are seeing the increasing influence of channels that deliver everyday value. E-commerce solutions are also increasing convenience and price transparency, even though they only have a 10% market share. However, online transactions currently account for 35% of food and beverage sales We expect consumers to continue to lean toward private labels, increasing sales volumes from mainstream brands in favor of premium brands that offer the right value (+3% volume). decreased by 1% compared to last year, while sales volume increased by 3%.
Lyons-Wyatt added: “At the same time, unscripted consumer behavior is complicating market trends: from outdoor dining with a 2% drop in traffic to in-home dining with a 1% increase in volume. Shopping patterns are also changing, with consumers taking more trips, up 8.9%, but buying fewer items per trip, down 11%. Main store (0.6% As consumers adopt more selective buying habits, they are increasingly buying and stocking up on some products. Delay certain purchases, review spending as needed, and switch to alternatives to create more room for discretionary items.”
Circana Compass: Predictions for 2025
Circana expects the F&B industry’s dollar sales to grow between 2.0% and 4.0% in 2025. We expect the price mix to increase by 1.5% to 3.5%, reflecting continued moderate base price inflation, stabilizing promotion levels and continued demand for value. We offer more premium benefits at the right price. Uncertainty surrounding potential new government policies could have far-reaching effects on costs for the industry (e.g. immigration bills and tariffs impacting wages, production capacity, import costs); Careful monitoring is required to plan accordingly. Retailers and manufacturers are facing both margin pressure and increased public scrutiny of grocery prices, forcing them to balance value and incremental offerings.
Volume growth is likely to be between 0% and 1%, as we expect continued strength in stay-at-home demand as food service traffic improves (e.g., more employees return to the office). Ongoing channel migration and changes in value-based shopping behavior are likely to continue to change where opportunities for volume growth lie.
Sarcana’s outlook is based on a consensus among macroeconomists that growth in gross domestic product (GDP) and disposable income in 2025 will be slower than in 2024, some weakness in the job market, and consumer confidence. It is assumed that the economic situation will gradually slow down, including stabilization of the economy. If economic conditions are stronger than expected, volume growth could decline slightly as consumers eat out more and demand for premium experiences strengthens the price structure. Conversely, if conditions are weaker than expected, the preference for eating at home will increase, but the willingness to pay for premium products may decline.
Sarcana Compass: Global Perspective
Circana expects F&B value sales across the EMEA region to continue growing at around 4% in 2025, with a similar trend in 2024. This growth is primarily driven by a 3% price/mix increase, with sales volume expected to increase between 0 and 0. % and 1%. A key trend in EMEA is the growing presence of generic brands and private labels, which now account for 39% of F&B sales, up from 37% four years ago.
In the Asia-Pacific region, Circana predicts that unit sales will trend up by 1.6% following a flat performance in 2024. This increase, combined with slower price/mix trends, is expected to result in sales growth of 4% in 2025, reflecting a positive outlook for consumer confidence. It is driven by expected interest rate cuts and a gradual shift in spending from food services to retail.
Circana’s F&B outlook is developed using econometric demand models powered by Circana’s demand forecasting platform. Over 100 variables are analyzed to test each model’s hypotheses, supported by machine learning algorithms and over 500 random forest models to identify the most important causal factors. Forward-looking input variable assumptions are made using historical trends and insights from industry experts. The platform allows Circana to run scenarios, predict future sales, and analyze sales by driver.
