Katy Gallagher identifies the key shifts in consumer behaviour that are set to shape F&B company strategies in 2025
The food and beverage (F&B) industry has experienced profound shifts since early 2023.
While geopolitical tensions persist, effective monetary policies and improved supply chain management have alleviated recessionary pressures, signalling a more resilient economy. Reflecting this change, F&B inflation has plummeted from its peak of 19.2 percent in March 2023 to 1.5 percent by July 2024 (ONS, 2024). Despite this, the impact on consumer behaviour remains significant, prompting a shift in shopping habits, brand loyalties, and product preferences.
Drawing insights from the 4C Associates 2024 F&B Survey, which gathered responses from 646 participants, this article explores how evolving economic conditions are reshaping consumer choices. The survey revealed a significant 11.8 percent drop in cost-consciousness, with consumers increasingly prioritising product range and sustainability – factors that now play a crucial role in purchasing decisions.
As inflationary pressures ease, these shifts present both challenges and opportunities for F&B companies striving to stay competitive in an ever more dynamic market.
From cost-conscious to value-seeking: the evolving consumer landscape
The 4C 2024 F&B Consumer Survey reveals a significant shift in consumer priorities. While cost remains a key factor influencing purchases, its dominance has notably waned. In 2023, a substantial 72.3 percent of consumers cited cost as their primary concern; however, this figure dropped to 63.8 percent in 2024, reflecting a clear move towards a more value-seeking mindset.
This transition can be largely attributed to a combination of factors that have stabilised the economic environment. Over the past year, 35 percent of consumers reported an increase in their household income, driven by easing inflation, stable interest rates, and modest but steady wage growth. This improved financial situation has allowed consumers to shift their focus from purely price-driven decisions to evaluating the overall value of their purchases, including product variety and sustainability.
Additionally, the GfK Consumer Confidence index, a key indicator of consumer sentiment, showed a significant improvement, rising 31 points from January to June 2024. This increase underscores a growing sense of optimism among consumers, who are now more willing to explore diverse product offerings and consider factors beyond just cost. As a result, the importance of product range has surged, with 16.5 percent of respondents now viewing it as the most crucial factor in their purchasing decisions – a remarkable 126 percent increase from the previous year.
These findings suggest that as economic conditions stabilise, consumers are adopting a more holistic approach to their purchasing decisions, valuing quality, variety, and sustainability alongside price. For F&B companies, this shift presents both a challenge and an opportunity: the challenge of meeting these evolving demands without compromising on price, and the opportunity to differentiate through enhanced product offerings and sustainable practices.
Consumer product preferences: a complex picture
Health and sustainability continue to be significant to consumers, though with evolving priorities. High-protein products and locally produced items have gained importance, with the latter becoming the top sustainability-related choice for 27.8 percent of consumers. However, the ‘say-pay gap’ persists: while 61.3 percent of consumers express willingness to pay premiums for whole foods, this intention often doesn’t materialise at the checkout.
Surprisingly, low-calorie options and whole foods remain low on consumer priority lists, despite rising health awareness. This discrepancy highlights the complex nature of consumer behaviour, where general health trends don’t always align with specific product preferences.
Sustainability: a growing concern with pricing challenges
The importance of sustainability is rising, with locally produced goods gaining prominence. However, consumer reluctance to pay extra for sustainable products has grown.
Compared to 2023, there has been a significant increase in consumers unwilling to pay premiums for recyclable packaging and Fairtrade products, reflecting a shift in expectations that these practices should be standard rather than premium.
What this means for F&B brands
This all signals that the landscape for F&B brands is shifting rapidly. Consumers are not only becoming more selective in their purchases, but are also redefining what it is that they value most. While cost remains a significant factor, its influence is waning as other considerations such as product range and sustainability take greater prominence.
For F&B companies, this evolving consumer mindset presents both some immense challenges, as well as unique opportunities that require strategic adaptation. To navigate this changing environment successfully, brands need to adopt a multifaceted approach that balances cost management with innovation, embraces sustainability without increasing prices, and leverages omnichannel strategies to enhance brand loyalty.
Below are three key strategies that F&B brands need to consider as the landscape shifts and changes:
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Balancing cost management with product diversification:
While cost remains a key factor, its influence is declining. F&B companies must strike a balance between competitive pricing and expanding product ranges. This requires effective cost management strategies, such as optimising supply chains and streamlining procurement, to maintain profitability while meeting evolving consumer demands. By reducing operational costs, companies can free up resources to innovate and diversify their product and ranges, ensuring they’re able to offer both value and variety to increasingly discerning consumers.
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Embracing evolving sustainability trends
With 59.4 percent of consumers stating they are unwilling to pay extra for sustainability, F&B brands must integrate environmentally conscious practices without passing on costs to consumers. This could involve localising production to reduce and offset carbon footprints, optimising resource use, or exploring partnerships with local suppliers to improve sustainability. By doing so, companies are able to better align with consumer preferences for eco-friendly products while also bolstering supply chain resilience and maintaining cost effectiveness.
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Sustaining brand loyalty through omnichannel efforts:
Brand loyalty is on the rise, with 72.5 percent of consumers sticking to their preferred brands. F&B companies need to embrace this as an opportunity to invest in personalised experiences and seamless omnichannel strategies that maintain and grow this loyalty. Consumers today expect more than just a product; they demand a holistic and seamless experience that spans multiple touchpoints, both online and offline. Brands should consider strategies that leverage personalised social media and app promotions, along with integrated online-to-offline shopping experiences to keep consumers engaged and loyal.
The food and beverage industry faces a transformed consumer landscape, where product variety, health attributes, and sustainability are increasingly prioritised – without the accompanying willingness to pay a premium for those features. To thrive in this fast-evolving market, businesses must strike a delicate balance between cost management and product diversification, embrace sustainability without premium pricing, and leverage omnichannel strategies as a means to strengthen brand loyalty.
As economic recovery continues and consumer priorities necessarily evolve, agility and strategic adaptation will be key to success in the F&B sector.
Katy Gallagher is the Head of Consumer Products at 4C Associates
