Consumer trends amidst economic uncertainty

SAN DIEGO — After noting that “there are so many shocks to our system right now,” Sherry Frey, vice president of total wellness for NielsenIQ, outlined the key trends she sees impacting food and beverage manufacturers.  

“I’m probably not going to surprise anyone with the fact that consumers are not feeling great,” she said Jan. 11 during an education session at the Winter FancyFaire conference. “They are actually feeling less financially secure than they have in the past.”

NielsenIQ has been tracking consumer sentiment for years and during the past six months the market researcher has seen consumers become more anxious.

“The real challenge is they have consistently been concerned about food prices; that has been at the top of their list,” Frey said. “But what we have found in the latest six months is that their concerns are beyond what they can control. It’s the economy; it’s different global crises that have increased their uncertainty.”

She said the reason the sentiment is significant for food and beverage manufacturers is because when people start to get afraid about things that they can’t control, they become cautious.

Adding to the uncertainty some consumers are feeling are upcoming changes to programs like the Supplemental Nutrition Assistance Program (SNAP).

“There are two things happening with SNAP right now,” Frey said. “One is you have the One Big, Beautiful Bill that will lead to a pullback over the next few years of how much money is going to be allocated to SNAP. That’s going to be a real challenge for people in terms of actually just being able to afford food.

“But the other piece … is that different states, for the first time ever, are getting waivers from the USDA, where they’re basically saying, well, in Nebraska, we actually don’t want to allow people to buy this on SNAP. And in Arkansas we don’t want them to buy this.

“So, there are a lot of nuances state by state, which is really going to be hard, quite frankly, for your retail partners to manage this. It’s going to be a big change.”

The impact of GLP-1s

Frey said NielsenIQ has been tracking consumer usage of GLP-1s since late 2023 and that she is frequently asked if the drugs will be a long-term, impactful trend.

“The addressable market for the GLP-1s is half of American adults,” she said. “So, 50% of American adults is the potential.”

And, she added, the past few years have not gone smoothly for GLP-1 manufacturers as they dealt with supply shortages.

The addressable market for the GLP-1s is half of American adults, according to Sherry Frey of NielsenIQ.

| Photo: ©ZIMMYTWS – STOCK.ADOBE.COM

“(But) many of you are probably tracking the fact that now it’s going to go from injections to orals,” Frey said “And the reality is the drugs are approved for conditions beyond weight loss, including cardiovascular health and cognitive function. The reality is that this is going to continue to grow.”

 She added that some categories may benefit, including organic. Consumers on GLP-1s also tend to lead toward a clean label diet, one that doesn’t include ingredients perceived as artificial. GLP-1 consumers also don’t completely walk away from indulgent products.

“What we see with these consumers is they tend to say, ‘if I’m going to get a cookie, I’m going to have the best cookie,’” Frey said. “So, it becomes that quality element.”

Regulations in the spotlight

She said another “fascinating” thing about consumers today is they are paying attention to regulatory issues like those related to artificial colors and the Dietary Guidelines for Americans.

“We’ve never seen a consumer that has been paying so much attention to food regulations, to who is our Secretary of Health.”

She said that when the Food and Drug Administration banned Red No. 3 last January, NielsenIQ had never seen consumers react so quickly.

“They stopped buying Red No. 3 and also Red No. 40, even though it wasn’t banned.

NielsenIQ also sees the shifting retail landscape in the US and the rise of private label as a key trend going forward.

“Over the last few years, we’ve really seen retailers invest heavily in their private label – from a wellness standpoint, from a clean label standpoint, from a premium and specialty food item standpoint,” Frey said. “And consumers are saying, I think it’s just as good; I think these (products) are, these are just as good.

She added that the greatest “acceptance” of private label products is coming from younger and higher income consumers.

“So, I think this something to watch as you’re thinking about your products and what’s happening from the competitive setting in your category.”

Frey also said she sees food and beverage marketing undergoing a significant shift.

“When it comes to selling products in the future, we are going to be marketing to AI agents,” she said. “And, so, for you and your brands, it is going to be really important that you’re thinking about if you are accessible through AI agents and large language models.”