65 percent of consumers switched brands “frequently” or “very often” in the previous three months
According to recent study from Inmar Intelligence, more than eight out of ten consumers purchased a different brand than the one they regularly purchase in the last three months. More than 65 percent of customers were affected by lower alternative brand costs, while 51 percent were impacted by out-of-stocks for the original brand.
According to the survey, 65 percent of consumers switched brands “frequently” or “very often” in the previous three months. Even if the original favorite brand were available again, 44 percent of buyers who switched indicated they would repurchase the new brand, while 36 percent said they would return to the original brand.
Labor and ingredient shortages, shipping delays, and fuel price rises have wreaked havoc on the CPG supply chain, leaving many retail shelves with insufficient stock. Meanwhile, producers have been passing on increasing costs to consumers, who appear to be paying attention and changing their shopping habits.
In 2021, supply chain bottlenecks and out-of-stocks will be a major concern for food and beverage producers. Because of this instability, many customers have switched to other brands on the shelf.
According to Inmar, brand flipping is especially noticeable in categories like dry grocery goods (crackers, cookies, and cereals), where roughly 66 percent of consumers have switched brands. Consumers who committed to breakfast at home during the pandemic sparked out-of-stocks for brands like Post’s Grape-Nuts and Kellogg’s Frosted Flakes, causing cereal producers to see a surge in demand. Kellogg stated last week that it would invest $45 million over the next three years to restructure its North American supply chain in order to meet demand for its ready-to-eat cereals.
Frozen meals (55 percent), nonalcoholic beverages (46 percent), and alcohol (42 percent) round out the categories where the majority of consumers have purchased different brands than usual. Conagra, the maker of frozen brands like Healthy Choice, Marie Callender’s, Birdseye, and Banquet, has incurred millions of dollars in costs as it restructured its delivery network to meet demand and decrease out-of-stocks.
Smaller companies have become more appealing to buyers as large manufacturers try to keep up with out-of-stocks. According to IRI, Big Food would lose $12.1 billion in sales to smaller CPGs and private label in 2020, as well as market share in alcohol, frozen foods, and center-store foods.
According to Inmar data, it can be difficult for manufacturers to reclaim customers once they have switched. According to the survey, the producer must persuade customers of the original brand’s superior quality in order to encourage them to return. Given that the majority of buyers have recently experienced out-of-stocks and been forced to switch brands, selling this item will be challenging.
When a chosen brand becomes available, it will almost certainly cost more. According to the US Bureau of Labor Statistics, food costs increased 3.4 percent in July compared to the previous year. Consumers are taking notice: Over 84 percent of respondents to the Inmar study said they had seen a rise in the pricing of grocery and home items they buy on a regular basis. And 78 percent indicated it had prompted them to examine other brands.
Despite this, CPG companies such as Coca-Cola, Unilever, Nestlé, Mondelez International, and General Mills have chosen to pass on their greater costs to their suppliers. While these actions are important to safeguard profit margins, they appear to be putting brand loyalty to the test.
