The mass consumer sector holds its breath at how consumer spending may react in the coming months, in the midst of an inflationary spiral that, in recent times, has particularly affected food and beverages, with a CPI in the environment of 14%.
Distribution companies, industries and the primary sector remember what happened as a result of the financial crisis that began in 2008. One year later, in 2009, final consumption spending by Spanish households fell 5% in value and almost 4% in volume, according to data from the National Institute of Statistics (INE) and the Bank of Spain. They are the most important falls since then, if the extraordinary effect of the pandemic in 2020 is excluded.
The differences are notable compared to then. That year the country’s economy closed with a 3.6% recession. For this, the Government forecasts a GDP growth of 4.4%, and 2.1% in 2022. And the unemployment rate in 2009 reached 18.8%, compared to the current 12.6%. Essential factors that allow companies not to enter a scenario of maximum alert.
Sales in mass consumption are currently growing in double digits in value, due to the effect of inflation, according to data from NielsenIQ. However, the impact that the general rises in prices are having in the shopping basket is beginning to cause falls in the volume purchased in food, and is motivating substantial changes in the routines of consumers, who are looking for formulas so that their purchasing power does not disappear when they return from the supermarket.
A main change has to do with the value of the basket, that is, with what the consumer now spends on the list of products considered essential. In this case, that value not only does not grow at the same rate as prices, but in some cases it is falling. This is confirmed by operators such as Carrefour, Dia or Eroski.
Fragmentation
The French group points to the Spanish market as the country where this trend is being more accentuated The company speaks of a shift, which began in the second quarter of the year, towards “more fragmented” spending and a “lower” average basketas a result of “a growth in sales of products with lower unit values“.
In other words, the consumer’s choice in that list of basic items is going to the lower priced references. And there the private label has a key weight, used by distribution operators as an anti-inflation tool, although its price is rising in line with the rest of the banners.
In the specific case of Carrefour, the sale of its own brand items already represented 33% of the total at the end of the third quarter. In the sector as a whole in Spain, its weight in food sales now exceeds 48.4%, and reaches 42% among all categories of mass consumption, six points more than the European average, according to NielsenIQ.
“Our own brand grew four points, and that means that the value of our average basket decreases,” explains Ricardo Álvarez, CEO of Dia España, to Cinco Días. His private label accounts for almost 52% of sales until September. The choice of products that are, on average, between 30% and 40% cheaper means that the average basket has fallen, among all its markets, by 1.3%.
“The mix is moving to lower unit price products. Customers are looking for savings by going to our brand, in addition to taking advantage of the promotions that we do,” says Álvarez. At the beginning of September, the company estimated the value of the promotions that it had carried out until then at 130 million.
Eroski estimates these savings at 150 million, and the growth of its white label at around 1.5 percentage points. “Like everyone, we have raised prices. But if the average inflation that has been transferred to the linear as a whole may be 10%, the average ticket has had a much lower rise, of 3.5%”, explained its CEO , Rosa Carabel, at the last congress held by Aecoc. “Those promotions, the growth of the weight of the own brand and the decisions that the consumer makes,” she added.
The value of the basket falls, but the number of tickets grows. In the case of Dia, 8.4% in the third quarter. Carrefour also points to an increase in store visits. That is to say, the customer is going more to the supermarket, a trend that is general. According to NielsenIQ, the number of visits to the store has grown by 5% as a measure to better control your spending.
The Christmas campaign, which the sector expects will take place with normal spending levels, will curb possible more aggressive trends in spending cuts. On the other hand, the celebration of the World Cup in Qatar between November and December adds a factor of uncertainty. What seems clear is that the slope of next January will be steep.
Buying fresh food, chopped
Statistics. The CEO and president of Aecoc, Ignacio González, exemplified a few days ago the type of choices that the consumer is now making. “They are choosing between cheaper references and categories. Instead of beef, the customer chooses chicken. And instead of fresh fish, surimi.” This type of arbitrage is having a direct consequence: the purchase of fresh food is falling. According to statistics from the Ministry of Agriculture, with the latest data updated until July, when the CPI for food was already climbing 14%, the consumption of fresh meat fell by 13%, more markedly in beef (-18% ), than in chicken (-13.9%) or pork (-10.6%). Fish did so by 14.5%, with a greater decline in fresh (-15.9%) than in frozen (-14.8%), while canned fish only fell by 7.7%.
Fruit. Fruit was not saved either, with a total decline of 10.6%, nor vegetables (-13.2%). The comparison with 2021 must be taken into account, which in its first half was still marked by the restrictions linked to the pandemic. However, consumption in all these categories was below 2019 levels, averaging 7%.
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