Staple Foods: Half-Year Update H1 2023

Delivery

This report comes in PPT.

Key findings

Inflationary pressure remains strong, although it is easing

Staple foods have come under intense pressure from inflation, which has resulted from to the energy crisis, labour shortages and tight supplies of raw materials amid the war in Ukraine, animal diseases and adverse weather conditions. Although global general inflation is moderating in 2023, it is still expected to remain significantly higher than pre-pandemic.

Western Europe faces significant staple foods volume sales contraction

In Western Europe, there has been a strong downwards revision in sales volumes across the largest markets, as inflation rates have only fallen slightly compared to 2022. This has forced price-sensitive consumers to reduce the frequency of staple foods consumption. Baked goods, pasta and noodles are among the categories that have seen volume sales decline, as wheat shortages have increased input costs.

Processed meat records poor performance

The short-term outlook for processed meat remains pessimistic, as many consumers’ limited disposable incomes force them to switch to cheaper protein sources. Animal diseases, as well as increased demand from the foodservice sector, have led to shortages in the retail channel.

Sales of meat and seafood substitutes slow down in developed markets

Following a weak performance by meat and seafood substitutes in some developed markets, a number of players are entirely exiting the industry, such as JBS’s Planterra Foods in the US and Nestlé’s Garden Gourmet in the UK. Whilst there are still great opportunities for plant-based meat in the future, due to its health and sustainability characteristics, growth is expected to be slower than initially anticipated.