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ISSUE 04/22


Trust amidst turmoil      17/09/2022 by Sarah Pursey


A clutch of disruptive dynamics – the Covid-19 pandemic, supply chain strains and a string of climatic events – were already forcing up food prices prior to Russia’s invasion of neighbouring Ukraine in late–February. Today, prolonged conflict in one of the world’s main breadbasket regions, and in the Black Sea – a critical supply and transit hub for grain and fertilisers – is pushing the state of global food security into even riskier territory.

While the price of grain may have actually come down a bit recently – off the back of a deal signed to free up 20 million

tonnes held up in Black Sea Ports – everything is comparative: monetary and fiscal policies worldwide aimed at alleviating the financial hit of the pandemic pushed up commodity prices from mid-2020 onwards. Indeed, even pre-conflict price levels for wheat and corn were some 40–50% higher than their average over the past decade. Looking ahead, McKinsey & Co predicts that Ukraine’s meagre 2022–23 harvest, combined with those unimpressive yields brought in across drought-stricken India and Western Europe, will likely reduce global grain supply by at least 40 million tons this year, further driving up prices on the horizon. The rapid rise in energy costs, plus eye-watering shipping charges clearly exacerbate the problem.


Lamentably, the resultant inflation in many countries currently outstrips any rise in nominal wages, precipitating a cost of living crisis that’s already crippling consumers across the planet. Indeed, the extent to which this crisis impacts consumer confidence is revealed in an ambitious new survey – carried out by Datapraxis, YouGov, amongst others, and covering 21,000+ people in 22 countries. The study reveals high levels of anxiety about potential food shortages in low- and middle-income countries. In the three Latin American countries surveyed (Brazil, Colombia and Mexico), 80% of respondents said they “often worry about whether my family will go hungry”, compared to 77% in the four sub-Saharan countries surveyed (Kenya, Nigeria, Senegal and South Africa) and 56% in India. Even in the US (39%), the UK (29%) and Western Europe (33%), significant minorities worry about their family going hungry “to some extent”.

Such anxieties clearly manifest in modified shopping, cooking and eating habits – in emerging and developed countries alike. Indeed, in a recent McKinsey & Co survey of Western European shoppers, around 40% said the biggest recent change they had made was to try new private label products. Last year, Private Label accounted for 29% of all staple food products sold in the region, and few would bet against the cost of living crisis turbo-charging this already buoyant market segment. While facing the same cost pressures as their branded product rivals, own label manufacturers have the advantage of guaranteed demand from retailers who specify what goes into the product, how it’s packaged and how much it will cost. Retailers are also more likely to swallow price hikes on own label products, as these are more profitable for them than branded items.

In light of the shrinking budgets of consumers, what can brands do to maintain their market position? Being open and transparent with consumers is one key way to retain loyalty, indicates research from Mintel in India, where two-in-five consumers (42%) say they would remain loyal to brands that are transparent on price increases. In the difficult months (and years) ahead, communicating openly with consumers and gaining their trust will become a pressing priority for brands – not only when it comes to price, but also on the enduringly important clean label and sustainability claims. With ‘clean’ also increasingly meaning ‘green’, an opportunity exists for ingredients and products to formulate in a way that enables them to communicate a ‘Good for me, Good for the planet’ message. Certainly, ‘standing for something’ could be key to standing out on the shelves, and giving consumers greater decision-making control at a time when many may feel this to be dwindling.

Latest issue – Vol 1/23
– Health & Nutrition focus
– Gulfood 2023 Special
– Next level legume – The rise of the chickpea
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