Expect modest food and beverage volume growth in 2024 after three consecutive years of volume declines, according to a new outlook report from Circana, the Chicago-based company that was formerly IRI and The NPD Group.
“Amid shifting consumer preferences and evolving market dynamics, our food and beverage outlook not only highlights key growth opportunities for 2024 but reveals a cautiously optimistic outlook as we emerge from a myriad of challenges that the industry has faced over the past several years,” said Sally Lyons Wyatt, executive vice president and practice leader at Circana. “With continued innovation and adaptability, retailers and manufacturers will be poised to position themselves for success in the coming year and beyond.”
The report points to a more favorable landscape as several headwinds that weighed down 2023 are expected to recede, Circana said.
“High inflation is anticipated to ease considerably next year, and the impact of increased mobility on retail food and beverage consumption will likely be less pronounced,” the company said. “In addition, our research shows that several factors will impact food and beverage growth throughout 2024, including an improving macroeconomic environment and growing promotional investments.
Circana predicts the beverage and deli sectors will continue outperforming overall food and beverage unit sales in 2024. “One factor likely driving beverage growth is an increase in health-conscious consumers seeking more protein and energy options in their diet,” the company said. “Another likely factor fueling beverage sales increase is that it has had more innovation than other departments, which delivered excitement and encouraged category exploration.”
In the deli aisle, convenient grab-and-go options will likely continue driving sales as consumers prioritize meal options that address diverse needs, Circana continued.
“Shifting consumer preferences in other departments throughout the store will likely put pressure on unit growth,” Circana said. “To succeed in 2024, our research indicates that perimeter aisles will need to optimize turnkey options for on-the-go consumers.”
Meanwhile, in the frozen department, retailers should re-evaluate assortments in the store and online to ensure there’s a variety to meet consumers’ needs.
“Consumers will likely look to the center store for solutions that deliver convenience, quality and value,” Circana said.
Circana’s 2024 food and beverage outlook was developed using econometric demand models leveraging Circana’s Demand Forecasting Platform. It analyzed more than 100 variables to test hypotheses for each model, supported by a machine-learning algorithm and more than 500 random forest models to determine the most important causal factors. It finalized the models based on their best fit, significance levels and intuitive insights. And it developed forward-looking input variable assumptions using historical trends and insight from industry experts. This platform allows Circana to run scenarios and estimate future sales, breaking them down by their driving factors.
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