Freshincite December 2014

Season’s greetings from the Freshlogic teamTop

A merry Christmas and a happy New Year from the team at Freshlogic to all our colleagues and clients. We hope those of you heading into the busiest time of the year still find time with family and friends, and we wish everyone a successful and prosperous 2015.

What We’re Seeing

Christmas spread under pressureTop

Christmas pavlovaFor many of us Christmas is the peak in food consumption, and the peak in food spending. Australian households’ spending on fresh food over the last two weeks of the year is approximately 10% higher than average, and the seasonal boom in sales is vastly higher than that for some categories.

This year, despite treasurer Joe Hockey encouraging Australians to “not let Santa down” by spending up big in stores, many financial analysts are predicting lower than usual consumer spending this Christmas, largely the result of fears about the economy. Longer term, the trends aren’t in favour of the traditional seasonal peak, either.

Apart from a number of Christmases in the past decade that have experienced low spending levels, there are some key changes in consumer sentiment that factor in for food. Consumer concerns are growing about waste; a major issue over the festive season, with estimates that one third of food bought for Christmas is wasted. Consumer interest in healthy eating also continues its steady growth – a signal they’re more likely to reconsider the size of the Christmas spread.

There are signals that suppliers and retailers need to explore options to pick up those festive food sales at other times of the year. These consumer trends have particular implications for categories which are seasonally strong over this period, such as turkey, cherries or fresh herbs.

What are the drivers of festive food sales spikes, and are they still the influence they once were?Top

Christmas fruit treeWe buy more food; more than what we need, and likely more than we can eat over the festive season. Smaller households may mean the traditional big-ticket items like a whole ham overshoot today’s requirements. In the face of consumer concerns about waste that behaviour is likely to scale back to smaller portions, shifting from a whole turkey to a rolled breast roast. Smaller portions may mean a better price per kg for some suppliers, but it may challenge utilisation rates for others as consumers look for just a premium cut.

We buy food to decorate the table as well as eat. Fruit is a big beneficiary of this behaviour, and with consumers still wanting to ‘wow’ their relatives with an impressive-looking spread this is likely to continue. Fruits like cherries are tapping into this with more attractive ‘table ready’ packaging.

There are more courses at festivities than we usually have over the rest of the year. That hasn’t eased and is linked to the typically long-duration of festive get-togethers, and it’s still a driver of sales volume.

We include several proteins in the one meal, with combinations of seafood, lamb, smallgoods and beef not uncommon in Australian Christmas or New Year meals. This lifts sales, but traditional large portions may be challenged by smaller family sizes, which still want range but don’t need the volume.

Open on ChristmasWe think retailers will be closed so we stock up, but increasingly stores are actually open over most of the festive season, with more and more looking to open their doors on Christmas and Boxing Day. For consumers wanting to have the freshest food on the day, will that lead more shoppers to buy last minute on Christmas, with all the logistical challenges attached?

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Freshincite is a publication prepared by Freshlogic

Freshlogic is a specialised provider of food market insights and analysis, with deep expertise in the dynamics of fresh foods. We deliver a range of services to industry and corporate clients, which aim to interpret market and supply chain conditions, or address challenges faced in food supply chains associated with changes in the preferences of consumers, supply dynamics, and economic settings.

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