Food manufacturers, retailers and foodservice operators get a lot of credit for holding the line on price increases. All through the recession, retailers fought with suppliers rather than pass along the hikes. It’s a promise supermarkets have been able to keep right up until the present day.
How much longer can it go on? At some point, there’s going to have to be an increase, particularly with inflation creeping up and the federal government predicting higher commodity and transportation costs through the first half of 2011.
Harry Balzer, the lead analyst for the NPD Group, is predicting that the mere mention of the word inflation is propelling American consumers towards making “well thought-out choices this year on how they’ll feed themselves.” This means continuing to buy private label, patronizing low-price banners, using coupons and eating home.
According to the firm’s own research, 72% of meals are prepared in homes, 18% come from restaurants, 8% are “skipped” and 2% are tagged as “from unknown sources.”
Naturally, the recession drove many families into the kitchen, with the foodservice industry losing nearly 2.5 billion visits a year between Nov. 2008 and Nov. 2010. At the same time, NPD points out that food deflation enticed many shoppers to buy their food in the supermarket.
“Supermarket prices are still below the levels of 2008,” says Balzer. “This is really a story about the upheaval created by the 2008 food price increases. We have yet to see how it will play out this time.”
It’s not all about money, either. A separate study from the American Dietetic Association that’s just out shows that last year, 92% of children responding to questions stated they were eating meals at home with their parents, up from 78% in 2003. The percentage was even more pronounced among those who said they ate home with their folks every night: 73% vs. 52% for the same period.
Here’s more: Supermarkets were the only venue that logged an increase in questions about where kids were buying food three or more days a week. Food delivery, convenience stores, restaurants and vending machines all decreased anywhere from 3% to 9%, while food store purchases increased a solid 6%, between 2003 and 2010.
The ADA study is part of a much larger report on the nation’s progress in promoting family activity and good nutrition. The poll found kids more physically active with their parents three or more days a week. In 2003, the figure was 165. Last year, the number nearly doubled to 31%.
The studies looked at different reasons why families might be eating home more, but food retailers can easily conclude from both that it’ll be important to minimize price increases going forward if they wish to maintain the volumes they’re currently seeing.
They also find that their influence over how families shop and what they buy is growing weekly. Check out our Wal-Mart story to see how the world’s biggest retailer is handling that insight.