Recession fear drives the purse strings
Less than half (43 per cent ) of adults in Britain claim to have been personally affected by the recession but 71 per cent have cut down on their spending due to the current economic situation, said a Mintel report called “British Lifestyles”.
This is being seen in the food industry with consumers switching to private label products and buying less premium goods.
James McCoy, head of consumer research at Mintel said: "Fear alone can cause major spending adjustments.
“In these difficult times, it is evident that consumers are changing their spending behaviour and adapting, whether or not it's necessary.
However, McCoy added: “The challenge for manufacturers and retailers is to overcome this fear and make consumers feel safe about spending again".
Michelle Strutton, a Mintel senior consumer analyst, food and drink, told FoodNavigator.com that one way food manufacturers can tackle spending cuts was to build on consumer trust in brands and show they are addressing the healthy eating trend.
She explained that manufacturers need to encourage trust in the ingredients they use, showing that there are no artificial additives, for example, and that products are more natural or address ethical issues such as animal welfare.
She added: “They can show that they are taking these kinds of issues on board which helps improve their image and encourage people to spend on these products.”
Strutton also gave the example of ready meals which “have taken a bit of a battering with a health backlash”.
She added: “Manufacturers do need to see an improvement with the product image to fit in with the healthy eating trend.”
Meanwhile Strutton, said: “We have already seen that people are starting to trade down in all sorts of areas.
“Premium is one of the areas that have been affected.
“Sausages with a higher meat content and things like that are still doing quite well because it is still a cheap source of protein.
“But organic for example has been declining and that is likely to continue.
However, she added that Fairtrade products are performing better than organic, possibly because of the charitable element.
And hot beverages such as herbal teas were also performing well.
In 2008, consumers in the UK spent £62.3bn on in-home food, with each household spending an average of £45 on food per week.
The average British household spends £30 per week on alcohol, amounting to as much as a bottle of wine per night per household.
The report showed that, when asked which items consumers would cut back on in the recession, 74 per cent said spending on clothing and 66 per cent would spend less on restaurants.
Just 26 per cent said they would cut back on spending on drinking at home and 59 per cent said they were cutting back on drinking at the pub to splash out on alcohol for home consumption instead.