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- Consumers can’t resist out-of-home spending, despite financial concerns: Grain market daily
Consumers can’t resist out-of-home spending, despite financial concerns: Grain market daily
Thursday, 6 June 2024
Market commentary
- UK feed wheat futures (Nov-24) fell £1.75/t yesterday, closing at £214.25/t.
- Domestic wheat futures followed global wheat markets down yesterday. Markets were pressured as the US winter wheat harvest progressed and concerns eased over the Russian crop (LSEG). On Monday, the USDA reported that 6% of the US winter wheat crop had been harvested, ahead of the five-year average pace.
- Paris rapeseed futures (Nov-24) ended yesterday’s session at €476.25/t, down €3.25/t from Tuesday’s close.
- European rapeseed prices followed US soyabean prices down yesterday on the back of favourable weather in the US and heavy South American supplies. In the USDA’s crop progress report on Monday, US soyabean plantings were in line with analysts’ expectations, with more dry windows forecast. In May, soyabean sales in Argentina were nearly double those in the previous month, pressuring global prices.
Consumers can’t resist out-of-home spending, despite financial concerns
Concerns over what impact the cost-of-living crisis would have on UK cereals demand have been key watchpoints over the last couple of years. This season (2023/24), usage in the milling and distilling sectors has remained stable, though demand for brewing is said to be relatively lacklustre. Demand for animal feed is also impacted by consumer demand for meat, and as such, it’s important to look at consumer spending habits.
AHDB’s consumer insight team look at out-of-home spending:
Foodservice, such as restaurants, take-aways and ‘to-go’ food options, remains an important channel for consumers, even for households with financial concerns. Over the last year, consumers have visited food service venues more often and spent more on food service overall.
According to Kantar, a quarter of consumers are still struggling financially, and 66% are concerned about the rising cost of food. Despite this, people spent 15% more on foodservice in the 52 weeks ending (w/e) 17 March 2024. Since the number of occasions (visits) grew by 12% over the same period, this foodservice growth is not just inflationary.
Total OOH Method Number of Consumption Occasions (millions) v. 2019 Average
Source: Kantar Out of Home Usage | Consumption Method | Occasions (millions) | rolling 12 w/e 17th March 2024
Although prices rose, beef, lamb and pork all saw an increase in the volumes sold out-of-home (OOH). AHDB calculations based on Kantar data show that the growth in red meat volume growth was largely driven by dine in and on the go options, overcompensating for a slight fall in takeaway volumes.
Breakfast and afternoon snacking gained share in the 52 weeks ending October 29, 2023, likely due to more people increasing their levels of activity out of the home.
Kantar reported that working week trips grew throughout 2023. However, the normalisation of flexible working has meant that the way in which consumers are engaging with OOH eating has not fully reverted to pre-Covid trends. The most spend on food per shopper comes from shoppers who commute one or two days a week, highlighting that consumers who commute less frequently are willing to spend more when they do eat out.
In terms of consumer sentiment, the greatest spend increase has come from consumers who are managing financially, above those who are comfortable. Surprisingly, those who reported to be struggling with their finances have increased their level of spend out of home.
Not missing out, but trading down:
- Recovery of total out-of-home growth was driven by more affordable channels. Consumers have been trading down by channel from full service to quick service (QSR), and from there to supermarket on-the-go options. During the 52 weeks ending 24 December 2023, supermarkets received the joint most value growth YoY, as consumers reach for convenient, affordable options, such as meal deals. High Street saw the same strong growth during this period.
- This is particularly evident during the lunch occasion, as it has become a new battleground for brands to win shoppers’ wallets. Notably, QSR brands like KFC and Domino’s are pushing back against the grocery multiples by creating their own lunch meal deal offerings. Even more recently, McDonalds have continued this trend introducing their ‘3 for £3 mix-n-match’ offer.
- Consumers also trade down in the form of meal choice when eating out by reducing the number of items within a meal. For example, by foregoing side dishes and desserts, or through choosing cheaper options, such as a burger rather than a steak. In terms of beef occasions per dish in foodservice, burgers dominate.
Looking ahead
As inflation slows, we expect to see some return on consumer willingness to spend. There may be greater opportunities for more premium products in a more stable economic landscape, where sustainability and health claims could boost sales. Uplift in Premium lines and channels is expected to be gradual, as much of the consumer money saving habits have become embedded in their decisions.
Get more details about the trends in consumer spending on food retail here.
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