Inflation: four out of five households will reduce their food expenditure

Inflation is starting to be felt hard in France. Even if it is less strong than in other European countries. At +7.5% in September, according to Nielsen forecasts, it should reach 10% by the end of the year. Be that as it may, “this is THE main cause for concern today”, says the panelist and behaviors are affected . The question, still unanswered today, is to know from what price increase, the consumer picks up. Decisive information for players in the agri-food industry, which Nielsen studies.

For the general manager of Nielsen, Xavier Segalié, “four out of five households will now be very careful with their food expenses”. The analysis firm has classified the French into four categories from this point of view. The “constrained households” whose difficulties predate the current crisis. They are 4 million out of a total of 28 million. The “weakened households” because their income has fallen or will fall are 12 million, or 7 million more than in December 2021. These people “will make strong arbitrations”, estimates Xavier Ségalié. To this category are added two others. The “prudent” (9 million), who “put the soft pedal on their purchases” and the “preserved” (4 million) who “have not changed their habits”.

Tourists limit breakage

For the moment the turnover of food distribution has not fallen (+1.6%), but it is only because the prices on the shelves have increased (+3.1%). “The phenomenon is new”, underlines the general manager of Nielsen. “In all previous years, the engine of growth was the mix effect. In 2022, the engine is flat, because 4 out of 5 households arbitrate. As a result, the volumes sold are down (-1.7%) without it being possible yet to speak of “general deconsumption”, because the quantities are still higher than in 2019. But, if this is the case, it is also due to the huge influx of tourists this summer and their very high consumption, which limited the breakage.

“Weaker, low-income households alone are responsible for three-quarters of the volume declines,” says Xavier Segalié. Significantly, it is households with children who are reducing their purchases the most (-5.1%) in supermarkets this year. It is also families who reduce their consumption of fresh produce the most. This can be seen especially in the butcher’s and fishmonger’s departments with respective drops of 14.5% and 12.5%. But it is also true in the cheese department (-9%), fruits and vegetables (-8.8%). Charcuterie is less affected with, despite everything, a decline in sales of 5%.

First prizes, MDD, promotions…

French households have also changed their attitude towards brands. Their choices are more likely to go to private labels, whereas they had been “in decline for ten years”. They are looking for the first prizes and promotions. “Never in a long time have we seen so much turnover (21.2%) under promotion. It’s an effect of inflation,” says Xavier Segalié. The importance of the promotions is worth a shortfall of 3 billion euros to the food industry.

Distribution channels are also changing as a result. Hypermarkets and supermarkets are losing market share to local shops and online sales, both stimulated by teleworking. One in five households telework at least part of the week. It should be noted that tourists are more likely to frequent local shops.

…and discount stores

Discount stores, such as Gifi and Action, are attracting more and more people, including for food. A redistribution of the cards is also to be expected between the brands due to the large migration of the French to the West of the country. Not all are equally well represented in this part of the country. “Companies will have to take this into account,” says Xavier Segalié.

As for the shelf shortages that so worried the public authorities at the time of Covid, they are starting to show. “Shelf availability hit its lowest level in 2022, a shortfall of 2.7 billion euros,” according to Nielsen.