The North American food and beverage market, after enduring nearly four years of economic upheaval due to the COVID-19 pandemic, supply chain issues, labour shortages, and severe inflation, is showing signs of returning to a state of normalcy by 2024.
However, this ‘normal’ is more indicative of market predictability rather than universal benefits.
Circana, a market research firm, predicts that after three consecutive years of declining food and beverage volume sales, the market will experience modest growth in 2024. Factors contributing to this growth include diminishing inflation, an improving macroeconomic environment, and increased promotional investments by food and beverage manufacturers to attract consumers.
Sally Lyons Wyatt, Executive Vice President and Practice Leader at Circana, expressed a cautiously optimistic outlook for the industry, highlighting potential growth opportunities in 2024. This optimism comes after several challenging years for the industry.
The question of whether branded manufacturers or private labels will capture this growth remains open. Despite positive economic indicators, the University of Michigan’s Survey of Consumers reveals a persistent pessimism among U.S. consumers.
The survey noted a decline in consumer sentiment for the fourth consecutive month in November, with concerns about higher interest rates and ongoing global conflicts affecting the long-term economic outlook.
Private brands are gaining traction, as evidenced by a report from FMI – The Food Industry Association. The report shows that 95% of shoppers occasionally buy private brands, with 46% opting for store-brand items most or all of the time. This trend is reflected in the first half of 2023, where private label dollar sales grew by 8.3%, and their market share reached a record high of 18%.
Furthermore, a Bank of America analysis suggests that the restaurant industry will continue to recover, with consumers showing a preference for experiences over material purchases.
Roger Matthews, Managing Director in Bank of America’s Consumer and Retail Investment Banking Group, anticipates a shift in spending patterns within the restaurant sector, with some consumers moving from fine dining to more casual or quick-service restaurants.
These developments suggest a shift from the high degree of uncertainty that has characterised the past few years to a more predictable environment. While challenges remain in food and beverage manufacturing and marketing, the industry is poised to embrace a more stable future.
