In a landscape marked by dynamic shifts in consumer behavior, retailers and food manufacturers are poised to adapt to emerging trends to compete effectively in the ever-evolving food market. Recent data from a collaborative report by FMI – The Food Industry Association, Circana, and Oliver Wyman sheds light on the transformational patterns influencing consumer spending in the food and beverage sector.

The report reveals a noteworthy surge in foodservice spending, outpacing retail food and beverage expenditure among younger shopping cohorts and high-income households over the past year. This trend has persisted despite an increase in the retail food and beverage share by eating occasion, relative to pre-pandemic levels.

A confluence of factors underpins this seismic shift, including the burgeoning popularity of online delivery platforms and the gradual return of workers to office settings, prompting a resurgence in out-of-home dining experiences. To counterbalance this expenditure drift, retailers are urged to harness opportunities arising from the burgeoning emphasis on food's role in health and wellness, alongside the escalating demand for convenience.

"To win more customer purchases, food and beverage retailers and their suppliers need a better understanding of current consumer preferences," remarked FMI. "Shifts toward spend for foodservice, the rise of digitalization, and return-to-office all provide food and beverage retail with opportunities to improve how they deliver on what matters most to consumers."

Central to this transformation is consumers' growing recognition of the pivotal role of food and beverage choices in fostering physical and mental well-being. Notably, an overwhelming majority of Americans acknowledge the significant impact of their dietary choices on mental and emotional wellness, paving the way for a burgeoning "food as medicine" paradigm.

This heightened health consciousness has propelled a surge in demand for fresh produce and functional food products. Research conducted by 84.51, the market research arm of Kroger Co., underscores a remarkable uptick in sales of pre-cut and pre-washed vegetables and fruits, alongside products fortified with immune-boosting and prebiotic properties.

Commenting on this trend, Alexandra Trott, Director of Insights at 84.51, observed a palpable shift in consumer preferences towards products offering multifaceted health benefits. "Now it's these different functional benefits that people are gravitating toward, where they still get that good taste, good texture… in a similar experience, but it has better benefits as defined by this generation," noted Trott.

In response to evolving consumer demands, retailers and manufacturers are advised to develop and accentuate food solutions that prioritize convenience and time-saving attributes. Embracing the convenience ethos, retailers are urged to innovate with offerings such as pre-cut produce items and in-store meal kits, catering to the modern consumer's fast-paced lifestyle.

Moreover, the report underscores consumers' steadfast preference for expeditious meal options, with nearly 60% of midday meals and 65% of morning meals prepared in under five minutes. Accordingly, products featuring ready-to-eat packaging and all-in-one meal solutions resonate strongly with contemporary shoppers seeking hassle-free dining experiences.

The advent of omnichannel shopping further reshapes the retail landscape, with online platforms witnessing a significant uptick in popularity. While in-store shopping remains predominant, omnichannel shoppers increasingly express a preference for the convenience and efficiency of online shopping.

As Alexandra Trott elucidated, "Omnichannel shoppers say this is their preferred method of shopping, and we've seen a big jump in shoppers saying that they prefer to shop online."

In light of these transformative trends, the imperative for food retailers and manufacturers lies in attuning their offerings to align with evolving consumer preferences, ensuring relevance and competitiveness in an increasingly dynamic marketplace.