Analysis highlights key trends and growth opportunities as the sector stabilizes and prepares for future challenges
Chicago, Aug. 28, 2024 (GLOBE NEWSWIRE) — Circana™, a leading advisor on the complexity of consumer behavior, today released new insights from the Circana Compass, providing a comprehensive update on the performance of the global retail food and beverage (F&B) industry in 2024 and an outlook for 2025. The data shows a strong alignment between Circana’s previous forecasts and current market realities, providing valuable guidance to industry players as they navigate the second half of the year and plan for the next.
In November 2023, Circana forecast that 2024 would signal a return to growth in food and beverage retail after three years of volume declines. Circana’s expected volume increase of 1.0% was above historical norms, following a 1.0% decline in 2023, coupled with the historically low price increase of 1.6%, down from 5.7% in 2023 and 11.4% in 2022. As a result, revenue growth was expected to slow to 2.3%, compared to 4.7% in 2023 and 9.5% in 2022.
Circana Compass: Today’s View
As of mid-2024, Circana’s forecasts have proven to be extremely accurate: the food and beverage industry experienced volume growth of 0.8%, price increases of 1.4%, and revenue growth of 2.2%, all in close line with the original forecast.
“After several years of economic volatility, we are now seeing signs of stabilization across several sectors, including food and beverage,” said Sally Lyons Wyatt, global executive vice president and principal advisor at Circana. “While we expected greater support from an improving economy, the shift from out-of-home to in-home consumption has helped keep our forecasts on track. Manufacturers need to strategically assess how to stimulate demand and drive profitable growth, and Circana provides the data-driven insights needed to make these decisions.”
Inflation has eased across the food and beverage sector in 2024, impacting all segments. Despite ongoing concerns about pricing, a bifurcation in food and beverage purchases persists – some consumers are moving to high-priced products and super-premium items, while others are opting for own-label brands.
As consumers increasingly value just-in-time convenience and quality in their food choices, they are shopping more frequently and for shorter periods of time, preferring quick-to-prepare options from the produce, refrigerated and deli departments. The frozen and refrigerated segments have exceeded initial expectations, with refrigerated aisle being the leading department in volume growth so far in 2024, behind only produce. On the other hand, the seafood and spirits segments have seen volume declines.
Lyons Wyatt added: “As we approach the end of 2024, we expect the year to end close to our half-year forecasts. We expect volume growth to moderate to 0.5-1.0%, with some moderation possible later in the year as the fast food ‘price war’ could impact food and beverage retail growth, assuming current economic conditions persist. Year-on-year price realisation is expected to increase slightly to 1.5-2.0%, reflecting the slowdown in promotional investment and the introduction of new price increases. This will result in total revenue growth of 2.2-2.7% for 2024.”
Comparing the U.S. to other global regions, Circana expects grocery retail growth in EMEA and APAC to outpace the U.S. in terms of revenue growth in 2024. Both regions are forecast to grow 4.0% to 5.0%. In APAC, this growth is expected to be entirely price-driven, with unit volumes flat. In EMEA, the strength of revenue growth is primarily due to increased price realization, with volume growth comparable to U.S. levels.
Circana Compass: Outlook 2025
For 2025, Circana forecasts a slight increase in revenue growth in dollar terms, expected to be between 2.5% and 3.5%. This increase will be primarily driven by higher price realization between 2.0% and 3.0%, while volume growth is expected to be between 0% and 1.0%.
Circana’s F&B outlook is developed using econometric demand models leveraging Circana’s Demand Forecasting Platform. Over 100 variables are analyzed to test hypotheses for each model, supported by a machine learning algorithm and over 500 random forest models to identify key causal factors. Forward-looking assumptions on input variables are developed using historical trends and insights from industry experts. This platform enables Circana to run scenarios and estimate future revenues by breaking them down into their drivers.
About Circana
Circana is a leading advisor on the complexity of consumer behavior. Through superior technology, advanced analytics, cross-industry data and deep domain expertise, we provide clarity that helps nearly 7,000 of the world’s leading brands and retailers take action and enable business growth. We better understand the whole consumer, the whole business and the whole wallet, so our clients can go beyond the data to apply insights, drive innovation, meet consumer demand and stay ahead of the competition. For more information, visit circana.com.
Media contact
Shelley Hughes
[email protected]
312-731-1782
CONTACT: Shelley Hughes Circana +1 312-731-1782 [email protected]
