Packaged Food Sellers Emphasizing Value for First Time Since Pandemic

Makers and retailers of packaged foods and drinks are reportedly emphasizing value and discounts to a greater degree than they’ve done since the pandemic.

This trend marks a reversal of the strategy companies have pursued since the beginning of the pandemic, which was to focus on premium products to justify their increasingly higher prices, Reuters reported Monday (April 8).

This change comes as low-income consumers seek alternatives, such as cooking from scratch, due to the higher cost of prepared foods, according to the report.

Dollar Tree recently told investors that the company expects to face a headwind due to the government’s reduction of Supplemental Nutrition Assistance Program (SNAP) benefits, the report said. Similarly, Circle K reported that its sales to people using food stamps were down 40% from a year earlier.

In response to this decline, makers of packaged foods and beverages are rolling out new products and offers, per the report. For example, Hershey has introduced larger bags of Skinnypop popcorn with a lower price per volume than smaller bags; Nissin Foods is offering buy one, get one free deals on Cup Noodles; and Conagra is promoting more frequent discounts.

Manufacturers are also seeing consumers shift to foods that include protein and corn, which is more filling, the report said. These include canned meats, corn-based snacks and sunflower seeds.

PYMNTS Intelligence has found that consumers are looking for budget-friendly food options.

For example, 57% of consumers reported having cut down on nonessential grocery spending, 47% traded down to grocers with lower prices and one-third downgraded from their favorite brands to private label, according to “Consumer Inflation Sentiment Report: Consumers Cut Back by Trading Down.”

It was reported Thursday (April 4) that food inflation has led some shoppers to become creative. For example, one shopper told The Wall Street Journal that she tries to think of trips to the supermarket like raids “depicted in apocalyptic novels,” where the object is to restock her kitchen while spending as little as possible.

The Federal Trade Commission (FTC) said in March that large players in the grocery industry took advantage of the pandemic’s supply chain problems to raise prices and profits and keep them high.