“We’re operating in a fairly uncertain climate in terms of consumer sentiment,” said Jordan Rost, vice president of US consumer insights at Nielsen during a webinar titled ‘What’s in Store’ on 2017 CPG/Retail Predictions.
“On the whole, consumer confidence has climbed in the last years and it seems very much true in the first half of 2016. We saw consumer confidence rose to a high in the US, above the global consumer confidence average,” he added.
For the next year, Rost said it’s too soon to tell whether or not consumers will be happily spending their extra income or what their spending habits overall will look like. “We don’t really know what America will look like next year, some of that is obviously related to the political climate,” he said, adding that surveyed consumers responded they were less likely to pay for entertainment, paying down debt and loans, or shopping for new clothes.
But what about food and beverage?
Nielsen found that the prospects of growth for the top 5 CPG departments —alcohol, dairy, dry grocery, health and beauty, and non-food grocery— “sort of have eroded.
“We’ve seen essentially flat growth across these five departments in 2015 and 2016,” he said. And in terms of projections, Nielsen is far from bullish. Dairy had a -4.1% change in store sales growth from 2015-2016, with Nielsen projecting a paltry 0.6% in the next year. Dry grocery had a 0.2% sales increase from 2015 to 2016, with 0.5% projected for next year.
“What we’re projecting for the next year is a return back to growth but certainly not at the level that any of us would hope across these five departments,” he said.
Shifts in health and wellness perceptions
There are five main areas Nielsen said are experiencing the most rapid changes, which industries should look into taking advantage of and change the premise of growth. These are changing views of health and wellness, the shifting multicultural landscape, innovation across categories, what it means to be a brand, and what it means to be a retailer.
Rost zoomed in on food and beverage when he talked about health and wellness and multiculturalism. “Health is really top of mind for Americans,” he said, reflecting a report released in September that examined how consumers are thinking about health and wellness.
Driven by an aging population, rising healthcare costs, and increase in chronic diseases, many US consumers are now adapting a food as medicine outlook, Rost said. Moreover, 51% of US consumers are following a diet that limits or prohibits consumption of certain foods or ingredients.
He also found that US consumers associate 'homemade' as healthier. Around 75% of respondents agreed that food made at home is healthier than industrially-prepared food, and only 43% said they trust industrially prepared foods.
“This very much align with the push for clean, simple, raw products,” Rost said.