Cost-of-living pressures continue to challenge Australian consumers in 2023, despite recent falls in inflation and the (perhaps temporary) stalling of interest rate increases by the Reserve Bank of Australia. Previous rises in the headline rate placed greater pressure on mortgage holders, with property investors hiking rents at a time of heightened demand driven by a simultaneous recovery in post-pandemic immigration. In this context, affordability remains key, but other global trends are playing an important role.
The evolution of health-conscious eating
Despite high obesity levels among sections of the population, health-consciousness in eating has been a prevalent trend in Australia over the past decade, exacerbated by pandemic concerns. Consumers have become increasingly mindful of what they are putting into their bodies, driving demand for functional foods, reduced sugar/calorie options, and natural products containing “no nasties”; the latter has become a common claim on food labels in the country.
With ingredients lists and labels growing increasingly complex, transparent labelling with clear and compelling communication is key to driving value for consumers. According to Euromonitor International’s Voice of the Consumer: Health and Nutrition Survey 2023, 17% of Australians show a preference for a short ingredient list However, a dichotomy is also evident, as consumers look for indulgent and sensorial food experiences, such as dessert-inspired snack foods which are bridging the gap for aspirational consumers. For example, plant-based food company Snackboy has launched a range of new ice creams and snack bites that offer healthy but decadent treats.
Rethinking food sourcing
The food industry will increasingly look to localise and build resilience within supply chains, both to prepare for future shocks and to further support sustainability efforts. In Australia, the trend for localism has strengthened, with crises such as bush fires, flooding, and the pandemic spurring a desire to support local business and communities. In food and nutrition, there is growing consumer interest in provenance and sourcing.
Locally sourced or manufactured ranks highest in terms of preference when respondents are asked about sustainability product claims
Source: Euromonitor Internationl Voice of the Consumer: Sustainability Survey 2023
Some companies have found unique ways to differentiate themselves by providing QR codes which enable consumers to track the origin of ingredients and even the timing of harvest, making it easier to establish trust by offering detailed traceability information. One recent example is Melons Australia using QR codes to trace products from the supplier to the supermarket.
The evolution of snacking and eating occasions
Snacking and eating occasions in Australia have been transformed by the move towards hybrid working and increasingly home-centric lifestyles post-pandemic. Consumers are snacking more frequently throughout the day, leading to a growing need for permissible indulgence and treat-sized and portion-controlled formats. According to Euromonitor International’s Voice of the Consumer: Lifestyles Survey (fielded in February 2023), 52% of Australian consumers say that they typically eat snacks at home, a high figure showing stickiness from habits formed during the pandemic.
These trends are also increasing the number of meals consumed at home, driving a need for convenience. However, consumers are also looking to elevate their culinary experience at home, and hence restaurants increasingly offer signature in-house sauces and products directly to consumers.
Habits in ordering food to-go and the strengthening of digital and delivery infrastructures supporting remote consumption remain.
In 2019, 68% of Australia’s consumer foodservice sales were eat-in, with this declining to 45% in 2020; by 2025, this is set to recover to 60%
Source: Euromonitor International
Despite consumer foodservice sales set to remain below pre-pandemic levels by 2025, the improvement shows a desire among Australians to go out more, which may accelerate if cost-of-living pressures ease. There are also signs of demand for eat-at-home takeaways falling, with the exit of Deliveroo from the Australian market in late-2022 one high-profile victim of this trend.
Premiumisation and affordability in food
While there are signs of inflation falling in Australia, cost-of-living pressures continue to drive consumers to save money. Purchasing private label products and using less expensive retailers such as Aldi have increased, often so smaller luxuries can be afforded (the “lipstick effect”) or money can be spent on going out or saving for long-awaited travel.
Manufacturers and retailers have responded in several ways. Vittoria, the premium Australian coffee brand, entered instant coffee for the first time to broaden its potential consumer base. Retailer Coles has expanded its private label range with a focus on convenience, including ready meal solutions and (in a move away from traditional private label products) a new range of nutritional snacks with low sugar content. Coles Joyful includes Protein Bars and Muesli Bars among others, tapping into consumer desire for healthy snacking and small luxuries.
The future of eating in Australia
In the short term, cost-of-living pressures are expected to continue in Australia, with consumer habits reflecting this and manufacturers and retailers tasked with creating interesting but accessible products.
Over 30% of Australians said they plan to increase their visits to discount stores in 2023, a 9-percentage point increase on 2022
Source: Euromonitor International Voice of the Consumer: Lifestyles Survey, fielded February 2023
In addition to plans by Australians to increase their visits to discounters, 42% anticipate spending more on groceries in 2023, compared to 25% in 2022. This demonstrates that price will continue to be a key factor in Australians’ purchasing decisions in 2023, and manufacturers and retailers will need to be innovative and affordable to gain customer loyalty.
Learn more about one of our four key topics in our report The Evolution of Health-Conscious Eating.