NEW YORK — The loyalty that consumers have held for food and beverage brands is beginning to fade, according to research from Ernst & Young (EY).

The findings come from the business management consultancy’s recent Future Consumer Index report, which surveys approximately 20,000 consumers globally and 1,500 US shoppers to track changing consumer sentiment and behaviors.

“Retailers have always dealt with varying degrees of geopolitical uncertainty, inflation and supply chain disruptions, but what’s different now more than ever is the acute ability to measure their connection with consumers and how these external influences are impacting their day-to-day buying habits,” said Mark Chambers, Americas retail sector leader for EY. “We’ve observed the changing expectations of more value-conscious consumers, and retailers need to keep pace by evaluating and leveraging a mix of the tools available to them like pricing strategies, customer intelligence platforms and inventory optimization.”

EY’s study found that price, value and quality have become more prioritized factors in purchasing decisions, with 35% of consumers saying that brand considerations no longer play a significant role in their product choices. The increased abundance of higher quality, cost-oriented private label options also has presented an appealing alternative for a variety of consumers.

Nearly 60% of US consumers surveyed said they consider purchasing private label options in the fresh food category, along with 55% in snacks and confectionery, and 51% in processed foods. In the soft drink and alcoholic beverage categories, however, consumers are less likely to be open to private label offerings and more likely to prioritize familiar brands.

Consumer trust in value-addition efforts by brands is also lower than in the past. Over 40% of respondents indicated that they believe “improvements” in product innovation are merely disguised cost-reduction measures, with only 26% stating they feel positive about such “improvements.” The report identified shrinkflation as “damaging trust and diminishing brand value,” as 78% of respondents said they had noticed product downsizing efforts.

Don Johnson, principal of strategy and execution at EY, attributed the change in consumer sentiment toward brands to a mix of factors.

Consumer trust in value-addition efforts by brands is lower than it has been in the past, according to EY.

Source: Ferrero North America

“You have a higher price environment that we’ve been in in the last year/year and a half, so that’s one factor,” Johnson said. “You have generational shifts, particularly sort of the younger generations … that are getting used to stores that are largely made up of sort of own brands, so Trader Joe’s, etc., of the world.

“And then you have the emergence of more traditional retailers of high end or higher quality private label and own brands all coming together to make what I would call this perfect storm of better quality, worth trying (private label products) at the same time that consumers are looking for choices.”

Opportunities for brands to reestablish their loyalty among consumers do remain open though, according to the report. More than 60% of respondents still identify brands as important, and 55% of shoppers report switching back to brands after trying private label offerings due to quality, value and reliability factors. Johnson identified satisfying consumer’s desires while matching price concerns will be important for brands looking to retain consumer share.

“It’s getting that price-value equation right for whichever segments you’re targeting, and part of that is a product’s feature function, so to speak,” Johnson said. “Does it taste good? Does it do what it says? Does it have the ingredients that I’m seeking out? If you’re a manufacturer and you can find ways to innovate and surprise and delight, that will also help win back a lot of these consumers.”