This briefing provides updates on Euromonitor’s December 2021 forecast restatement for the packaged food industry, deciphering how the industry is navigating the pandemic, changes from baseline projections and highlighting future risks and opportunities.
The packaged food industry overall benefited from a slight upgrade in GDP in the last quarter of 2021. As many countries got a respite from the spread of COVID-19, upwards revisions to GDP forecasts played in favour of sales of snacks and dairy globally.
The ongoing pandemic has caused major supply chain disruptions in packaged food, in turn leading to spikes in commodity and ingredient prices, and thus higher inflation in the last quarter. Bread, pasta, cereals and milk are among the most exposed categories. Whilst food businesses have absorbed much of the pressure, retail price increases are expected to be more evident in 2022.
Coupled with the positive effect of major vaccination programmes on consumer confidence, the re-opening of many cafés, restaurants and impulse channels in summer 2021 boosted packaged food sales growth. Snacks particularly benefited, with, for example, out-of-home ice cream consumption resuming in India.
After several major lockdown periods, sales growth of cooking ingredients slowed and were downgraded, as the trend for at-home cooking waned. This played in favour of meal kits, which were upgraded, with many consumers not yet able or ready to eat out and preferring to treat themselves with an easy, high-quality experience at home.
GDP upgrades have generally had a minor positive impact on dairy and dairy product alternatives. More M&A activity and innovation are pushing sales expansion for yoghurt and drinking milk products in Asia Pacific. However, the complex dairy supply chain and the industry’s reliance on milk, and rising cereal prices for dairy alternatives indicate new challenges in early 2022.
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