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Battle of Ethics and Price in Consumer Choice

13 February 2015

ANALYSIS - Consumers in the future are expected to have a renewed focus on ethical issues, but this will not be too much at the expense of price.

Consumers will more and more seek transparency when shopping for meat and dairy products according to Richard Nicholls from the market analysts Future Foundation.

Speaking at the AHDB Outlook conference in London said that the changing market tastes will see consumers also seeking new experiences in their purchases and will be buying meat and dairy products for special and unusual occasions.

This desire to seek special occasions as a reason for choosing high value products will also drive innovation.

The global consumer trends will see tastes evolve in the emerging markets with more westernised diets for a growing global middle class with more sophisticated tastes.

Mr Nichols said that since the economic crisis there had been a widening in the gap between the general cost of living and the cost of eating, with food prices in the UK rising more quickly than the overall retail price index.

He said that while this year wages are expected to start rising, the high inflation between 2006 and 2013 has eaten away at the real value of wages at a time when they were not rising.

“It is going to take several years to undo the effect of high food prices,” he said.

He said that food sales for in-home eating had seen a 10 per cent fall, taking into account population growth, and this was largely driven by consumers slowing down the amount of food that is wasted.

The war on waste and the growth of the discounters on the high street are helping to bring food spending down.

“Consumers are taking greater care in managing their budgets,” he said.

“And careful budgeting is here to stay.”

Spending on food for eating out of home is now expected to grow.

Globally, Mr Nicholls said, the emerging markets are leading the way and also offering the greatest opportunities.

While Brazil and Russia are at present seeing a slowdown in their economies, the leaders are expected to be India and China.

He said that the US and China are expected to provide half the global growth in potential consumer spending opportunities over the next five years and the US is taking a lead purely because of the size of the market.

India is also a very strong growth economy offering consumer potential at present.

Between 2015 and 2020, India is expected to see a growth in total spending of 39 per cent China’s spending growth will be 37 per cent over the same period, Indonesia 33 per Cent and Nigeria 30 per cent.

Russia and Brazil will be held back seeing 15 and 10 per cent growth respectively.

Mr Nicholls said that for the growing middle class in countries such as China, eating good quality food is seen as a luxury and this will present food processors and producers with opportunities for development. Of these luxury items, meet is top of the list for consumers to consider paying more.

He said that the desire to eat good quality food and the perception that paying more provides quality will present opportunities, although at the same time the question of quality is answered in provenance and assurances of authenticity.

The health aspects of eating meat and dairy products will have a limited influence on consumer purchases although more people are expected to question the healthiness of processed products compared to red meat and dairy.

However, more and more consumers are asking for greater transparency and more nutritional information to be displayed on labels.

Technology is also expected to help consumers in their choices and also help to drive food trends and more consumers are using phones in store to research nutrition, provenance, price, recipes and consumer reviews.

Ethical issues are expected to be a key driver in the future with up to 71 per cent of people questioned in a survey last year prepared to pay up to 10 per cent more for food that was ethically sourced and environmentally friendly, compared with 62 per cent two years previously.

While more consumers are taking ethical issues into account, the slow economic recovery and the difficulties over the slow rise in disposable incomes are expected to temper the drive for more ethically produced foods.

Chris Harris

Chris Harris



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