Report: Food and Beverage spending anticipated to rise during holidays4 Dec 2020
The Consumer Brands Association releases a report stating that spending in the food and beverage sector will be up 9.5-11.5% for the season. This forecast jump in spending is in line with CPG sales over three of the last four months which were reported to be up an average of 10%. Last year, CPG spending rose 3% in November and December.
A double-digit increase in spending for the months of November and December will translate to an approximate gain of between $134 billion to $162 billion over last year’s sales figures for the food and beverage industry. This forecast reflects the elevated savings rates identified in large areas of the U.S. population and the well-reported phenomena of reduced travel, limited eating out and curtailed event attendance leading to increased levels of disposable income for individuals. Disposable personal income increased 6.9% in September on a year-over-year basis, after hitting its low water mark of 2% in March.
Although there is generally more money available for people to spend in food and beverage, not everyone is experiencing well-lined pockets during the 2020 holiday season.
Only 15% of those surveyed expect to spend more during this upcoming holiday season while 44% expect to spend about the same. A full 40% expect their spending to be lower during this holiday season than last year due to fewer expenses this year (56%); fewer guests in their home (31%); and concerns about their financial stability and are looking to save where possible (23%). The majority of those who said they plan on spending more this season (54%) anticipate doing so because the cost of grocery products is higher and they do not plan to cut expenses.
Since February, The Washington Post reported that Bureau of Economic Analysis data show nearly every food category has experienced raised prices. Prices for beef and veal increased 20.2%, eggs jumped 10.4%, poultry was up 8.6% and pork rose 8.5% since the pandemic hit.
Even with these price increases, the demand for food and beverage at supermarkets has continued to increase as people have stayed at home and sought their nourishment through recipes that they can cook themselves. Although eating at home remains commonplace, the percentage of foods prepared and eaten at home has declined from 74% in April to 71% in October. Still, the result is “For CPG, it has been the equivalent of peak season since the pandemic started,” said Tom Madrecki, vice president of supply chain at Consumer Brands in a statement.
Fielding peak season demand for nine months has led to struggles for American supply chains as companies contend with truck driver shortages, transportation limitations and varying infrastructure requirement alterations. These difficulties are so apparent that the Consumer Brands Association survey found that 46% of consumers are at least a little worried about access to food and beverage products over the holiday season.
To allay these fears the trade association encouraged manufacturers to focus on supply chain coordination through flexibility and agreement between government regulatory agencies and company policies to ensure worker safety as well as the timely flow of products to the consumers.
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