Survey reveals deficit in brand loyalty

Price increases and supply chain restrictions have been major challenges for food and beverage producers in 2021

Many customers have switched to other brands because of the volatility of their preferred brands.

According to Inmar, brand switching is especially prevalent in categories like dry grocery items (crackers, cookies, and cereals), where approximately 66% of customers have chosen to buy an alternate brand. In the wake of the epidemic, demand for cereal has surged, with brands like Post Grape-Nuts and Kellogg’s Frosted Flakes running low due to customer commitment to eating breakfast at home. In fact, Kellogg has announced a three-year investment of around $45 million in revamping its North American supply chain to satisfy demand for its ready-to-eat cereals.

A total of 55% of customers have purchased frozen meals, 46% have purchased nonalcoholic drinks, and 42% have purchased alcohol from brands other than their usual. To keep up with demand and eliminate out-of-stocks, Conagra, a frozen food company, had to make millions of dollars in changes to its delivery network.

Smaller brands took advantage of the situation and worked on increasing their market share whilst the larger manufacturers were scrambling to fix their stock issues. According to IRI, Big Food lost $12.1 billion in sales to smaller CPGs and private labels, and will also lose market share in the alcohol, frozen, and center-store food categories.

According to Inmar research, manufacturers may have a difficult time regaining customers after they’ve switched. According to the results of the study, manufacturers must persuade buyers of the superior quality of their product before they return to the original brand. Making this sale will be challenging in light of the recent out-of-stocks and brand switching experienced by the majority of customers.

When a preferred brand finally becomes available, expect to pay a premium for it. According to the U.S. Bureau of Labor Statistics, food costs climbed 3.4% in July over the prior year. Customers have taken notice: Over 8 out of every 10 people polled claimed they had observed a rise in the pricing of the food and home goods they bought on a regular basis. And 78% of those polled indicated it’s prompted them to look at other options.

Despite this, several CPG companies, such as Coca-Cola, Unilever, Nestlé, Mondelez International, and General Mills, are opting to pass along their greater costs to customers. While these actions are required to keep profit margins intact, they appear to be putting customers’ trust in the brand to the test.

SiGMA iGathering

Join us for the next SiGMA iGathering networking event in Barcelona on the 21st of September at 19:30. Indulge in a delish dinner at the El Restaurant Barceloneta while interacting with like-minded individuals as well as the region’s top industry leaders.

For more information on the event please contact Emily on [email protected] or visit our website to find out more about upcoming iGathering events on the SiGMA calendar.