The global downturn continues to exert a substantial impact on the grocery buying behaviour of many consumers. Moreover, its effects are likely to be felt for several years to come as economies take time to recover lost output and employment. The initial market shock phase of recession in Europe and the US has now subsided as recovery appears to be underway. Nevertheless, recession has caused significant changes in buying food and drink, in terms of product formats and brands as well as where and how consumers shop for groceries.

This report looks at how the recession has impacted consumer demand and buying behaviour, and how the grocery industry is evolving strategies to suit the challenging business environment in Europe and the US. Analysis is centred on how companies are adapting marketing strategy and developing new products for more budget-conscious, stay-at-home consumers.

Key features of this report

• Survey data showing how the industry expects the grocery market to evolve in the next 5 years.
• Analysis of private label market share growth in Europe and the US and how private label is being developed to meet consumer needs.
• Draws on an extensive database of new food and drink launches in 2009, including products aimed at budget-conscious consumers and others targeted at the growing home consumption sector.
• Coverage and analysis of sectors benefiting from the downturn, and discussion of the recovery path for areas hard-hit by recession.

Scope of this report

• Assess how the economic climate is affecting demand and the structure of food and drink markets.
• Understand specific opportunities in the food and drink market linked to recession’s impact on current and future buying behaviour.
• Evaluate which territories and market sectors offer most potential in the post-recessionary environment.
• Inform your marketing and NPD teams how other companies are developing products and strategies more suited to challenging conditions.

Key Market Issues

• Investment, product development and marketing effort is expected to shift further towards developing economies as a result of deep recession in many developed countries. North America and Europe remain the key consumer markets, but the downturn will significantly reduce the strategic importance of these economies.
• Retailers have benefited from the generally lower prices of private label lines as well as in developing more choice at the budget end of the market. Leading brands can continue to rely on price and value-led promotions whilst anticipating rapid reversion to pre-recessionary demand patterns. A weak recovery coupled with low growth or stagnation may well favour extending band franchises with better value sub-ranges and developing budget brands.
• When, if, and to what extent demand for grocery reverts to a pattern similar to that of the first half of the 2000s is the key determinant of future strategy. The nature and the impact of the recession has varied widely between different marketing territories. Different recovery patterns may well favour development of more localised strategies.

Key findings from this report

• Discount retailers accounted for an average of 16% of the European grocery market in 2008. The discount sector increased market share during the growth years of the 2000s and recession is acting to further boost discounter sales.
• The industry expects price and value to remain a key focus of consumers for years to come. Developing more choice at the lower end of the market and value/price promotional activity are viewed as the most important strategies for targeting budget-conscious consumers.
• Private label share peaks in Switzerland at half of total grocery sales in 2009, and is rising in other European countries. Recession is boosting share of private label as consumers trade down.
• The industry consensus is that North America and Europe will be the regions most affected by the impact of the global downturn over the next 5 years.


Key questions answered


• Which sectors of the market are most resilient to the impact of the recession.
• How the industry expects the recession to impact demand in the future.
• To what extent is private label and hard discounting likely to develop.
• What are the most important strategies for the industry in addressing recessionary or low growth conditions.
• How new branded and private label products are being developed to meet changing consumer needs.