CHICAGO — At-home food and beverage inflation was up 13.2 percent in the fourth quarter of 2022 vs. the same quarter in 2021, according to IRI's latest report, Impact of Inflation on Consumer Behavior.
At the same time, the report also notes that while consumption levels are continuing to soften, at-home food spend remains strong, with center store sales up 11.1 percent and perimeter sales up 6.3 percent in Q4 2022.
"The [consumer packaged goods] space has proven to be less volatile and more resilient during economic downturns than other sectors," said Alastair Steel, IRI executive, Client Engagement. "However, shoppers are feeling the impact of high prices and are shying away from discretionary purchases. Multiple tactics are being used to reduce spend and manage budgets, with value channels performing well."
The report leverages IRI's latest point-of-sale data to analyze both prices and consumer spending. Other key insights from the paper include:
- Price inflation across the store varies widely, with products in the alcohol and fresh meat and seafood categories only up 5.4 percent and 3.4 percent respectively. Meanwhile, bakery and dairy products experienced larger increases, up 18 percent and 23.2 percent in Q4 2022.
- Shoppers are seeking value and convenience, with online, dollar and club channels up 16 percent, 14 percent and 12 percent respectively over a year ago.
- Private label and promotions are on the rise, while premium purchases are on the decline. Premium food and beverage brands lost 0.6 share points for the 12 weeks ending Nov. 27, 2022.
- Multifunctional products and at-home cooking are increasing in popularity, with shoppers opting for beverages that offer functional hydration and health benefits. Meanwhile, high-quality meals and healthy snacks that are easy to make are on the rise.
- Food and beverage dollar sales growth will likely moderate in 2023 as a result of easing inflation and price stability. However, inflation is expected to remain relatively high compared to historical standards, even as consumers look for premium home experiences and better-for-you products that offer both taste and convenience.
Additional details from the full report can be read here.
IRI is a global leader in innovative solutions and services for consumer, retail, and media companies. It merged with the NPD Group, a global provider of market information and advisory services to more than 20 industries, in 2022.