LONDON — Indulgent foods, including chocolates, confectioneries, savory snacks and ice cream, are likely to see a notable dip in retail sales as a result of inflation, according to market research firm GlobalData.
Recent research by the company has shown that the category is “high risk,” with some products’ volumes set to decrease from a compound annual growth rate (CAGR) of 2.1% from 2016-2019 to a CAGR of 1.5% between 2021-24.
“As these products are often positioned as treats and rewards and not staple parts of weekly meals, they are more likely to be compromised in consumers’ shopping baskets as household budgets continue to get tighter and consumers consider their health priorities,” said Jenny Questier, senior analyst at GlobalData.
All indulgent food categories are seeing growth in value over volume, indicating the prices have increased rather than unit sales and mirroring the trend seen across the entire food and beverage industry.
GlobalData’s report also showed US consumers that purchased large amounts of chocolates and confectioneries decreased 12% in the third fiscal quarter of 2022 compared to the first quarter.
Ms. Questier said businesses should look to lower price points by revisiting innovation opportunities, especially smaller pack sizes or cross-promotions with more essential products.
At the root of many of these price increases are supply-side issues, which seemingly have affected ice cream prices more than most, she said.“Ice cream specifically has associated manufacturing, logistics and storage costs around freezing that will have to be passed on to the consumer as energy costs continue to rise,” she said. “Added costs combined with the seasonality of these products will further dampen peoples’ desire to purchase these in the future as they focus on essential items.”