Shift to shelf-stable food amid volatile prices

By Sarah Hills

- Last updated on GMT

Related tags Nutrition

Consumers are expected to switch from fresh food to more shelf-stable goods in 2009, but the food and beverage sector has a rocky road ahead, according to an industry analyst.

The global financial situation, volatile markets, food safety issues and rising raw material costs are taking their toll, according to Christopher Shanahan, research analyst, Global Chemicals, Materials and Food, at Frost & Sullivan.

And as 2008 comes to a close the analyst has offered his insights on what is in store for the US food and beverage (F&B) industry in 2009.

Shanahan said: "The expected effect of the global financial situation and volatile food prices is that a growing number of consumers will begin to switch away from fresh meats, fresh fruits and vegetables, and value-added food products, and begin to consume more shelf-stable and relatively more affordable alternatives.

"Private label food products are clearly a benefactor to the global financial situation and volatile food prices because they are statistically less expensive relative to the national brands."

He said that continuing economic difficulties are likely to eat into consumer demand in 2009 and added: “Supply chain issues such as ingredient availability and vendor pricing will also continue to put pressure on F&B manufacturer margins.

“In turn, many ingredient manufacturers face diminishing demand from its end users as product manufacturers increasingly adjust production levels downward and streamline inventory levels.”

Profits

Shanahan predicted above normal profit levels in the short term because of the wholesale increase in consumer food prices in 2008 and the recent drop in commodity prices.

But he said: “In the long run these same manufacturers will endure increased pressure to lower its prices and may face increased competition from low-cost private label producers."

Trends

The analyst outlined three trends expected to impact the F&B manufacturing industry in 2009.

The first is limited consumer knowledge and taste perceptions as key barriers to healthier eating.

He said that while awareness is growing, consumers are still in the dark regarding the functional benefits of some ingredients, such as prebiotics, sterols, glusoamines as compared to Omega-3, probiotics and antioxidants. They may also perceive that taste could be compromised.

The second is legislative restrictions challenging market growth. Shanahan said that obtaining government-endorsed qualified health claims for various ingredients poses a major challenge to the growth of the value-added/specialty food and beverage ingredients market.

And the third is the curb on growth that the economic slowdown may have in the functional food ingredient markets.

Shanahan believes that the growth in value functional food and beverage categories may be constrained as the average consumer’s food budget shrinks, particularly where premium pricing strategies are usually employed and where coupons and store/private label brands choices are limited.

Related news

Related products

show more

Consumer Attitudes on Ultra-Processed Foods Revealed

Consumer Attitudes on Ultra-Processed Foods Revealed

Content provided by Ayana Bio | 12-Jan-2024 | White Paper

Ayana Bio conducted the Ultra-Processed Food (UPF) Pulse survey, offering insight into consumers’ willingness to consume UPFs, as well as the variables...

Future Food-Tech San Francisco, March 21-22, 2024

Future Food-Tech San Francisco, March 21-22, 2024

Content provided by Rethink Events Ltd | 11-Jan-2024 | Event Programme

Future Food-Tech is the go-to meeting place for the food-tech industry to collaborate towards a healthier food system for people and planet.

Palate Predictions: Top Flavor Trends for 2024

Palate Predictions: Top Flavor Trends for 2024

Content provided by T. Hasegawa USA | 08-Jan-2024 | Application Note

As consumers seek increased value and experience from food and beverages, the industry relies on research to predict category trends. Studying trends that...

Oat Groats – Heat-treated Oat Kernels

Oat Groats – Heat-treated Oat Kernels

Content provided by Lantmännen Biorefineries AB | 06-Dec-2023 | Product Brochure

Lantmännen offers now Oat Groats: Heat-treated oat kernels, also known as oat groats or kilned oats, undergo heat treatment to inhibit enzymes that could...

Related suppliers

Follow us

Products

View more

Webinars