Shoppers prefer to frame budgeting as their choice rather than a necessity, offering an opportunity for health and wellness brands, he told an audience at Vitafoods Europe 2023.
Six in ten consumers believe their country is in recession
Whatever the official definition, 59% of consumers now believe that their country of residence in a recession, according to FMCG Gurus – “so it doesn't matter about GDP from a consumer perspective; it’s based on what they feel”, said Hughes.
Just 25% of consumers are confident about the global economic outlook over the next 12 months.
The current increase in food costs “is going to herald an era of high prices over the next 10 years because we know crude oil prices are rising and when crude oil prices rise, everything rises”, he added. “We know that distribution channels are being impacted, there's less global co-operation; we know that there's population growth and food shortages.”
As many as 63% of global consumers are concerned that rising costs will have an impact on their health, with their main priorities falling into two areas: diet and mental wellbeing.
Pandemic has driven proactive attitudes to health
The pandemic has “fundamentally shaped” the way that consumers think about health, said Hughes, with continued evolution of e-commerce platforms, continued innovation in functional markets, and the ongoing influence of social media over purchasing habits.
According to FMCG Gurus, 63% of consumers classify themselves as proactive health consumers – people who are actively looking to address their health even if they are not experiencing symptoms of any kind. This increased focus on wellness means that despite all the negativity of the past two years, 41% of consumers feel that their health has improved – something that is “really important for the health and wellness market because consumers will want to maintain those gains”, said Hughes.
Consumers also claim they would be more likely to cut down on indulgent treats as opposed to healthy products. While many respondents place a strong emphasis on their mental wellbeing, waistlines and physical appearance are coming front of mind once again.
“It shows that consumers are going back to evaluating their health based off what they see in the mirror,” said Hughes. “[…T]his is going to be a big issue over the next couple of years because we know that consumers feel that their ability to lead a healthy diet may be impacted by rising costs, but also consumers will also comfort eat more in an era of uncertainty.”
Sleep, mood, and emotional wellbeing continue to be a priority
Which categories offer the most opportunities during a cost-of-living crisis?
Addressing emotional wellness will continue to be a priority: when asked about their priorities over the next 12 months, respondents who identified as proactive consumers listed sleep, mood, and mental wellbeing among their top concerns.
Digestive health and immunity were also high on the list; these will become “more and more important” as consumers become aware of the microbiome, according to Hughes.
“Our research shows only about 15% of people have heard of the gut microbiome, but they understand the concept of beneficial bacteria,” he said.
They are also beginning to recognise that digestive health and immunity are interlinked.
“While that initial fear of Covid-19 has gone, consumers still remain concerned about vulnerability to disease and illness because of the lifestyles that they lead,” he explained.
Self-entitled shoppers don't like to feel compromised
“We know consumers have high levels of self-entitlement, and even though they know they have to budget, they don't like to do so,” said Hughes.
Rather than questioning whether some items are non-essential, they are more likely to focus on value for money, he explained.
“There will be reduced brand and retailer loyalty,” he said. “Consumers will shop around to get the best possible deals; they will also focus on private label more.”
Many consumers – particularly those from the middle- and upper-class income brackets – don't like to admit that they are suffering from a deterioration in financial wellness. Hughes used the example of UK consumers switching to discounters during the 2008 financial crisis and how they framed this as a consequence of their own “savvy” shopping habits.
“Consumers wanted to feel that they were making that choice,” he added “And this is going to have a positive impact on the health and wellness market because what consumers will do is say, ‘Well, I have to cut down on certain products; if I cut down on less healthy products, I'm doing this by choice as opposed to financial obligation.’”
The importance of transparency and authenticity
While sustainability claims offer an opportunity for brands to appeal to consumers who “want to feel good by doing good”, Hughes urged caution, saying consumers also want “maximum transparency”.
“In an era of uncertainty, consumers tend to become more sceptical,” he said. “So they question the practices and policies of brands, particularly major brands, where they see them raking in big profits when consumers are struggling… [O]ne thing that is really important when we're talking about naturalness, sustainability, or functional claims, particularly, is transparency.”
People want multiple benefits on a product that they associate with overall health and wellness, offering maximum efficacy, maximum convenience and, crucially, maximum value for money, said Hughes.
“When you look at the incredible innovation around us and the continued growth in the health and wellness market, it’s absolutely crucial that brands focus on the right type of innovation, as opposed to the mass innovation,” he added. “Only say something if you can back it up with evidence because […otherwise] it not only undermines your brand, but it also undermines the whole industry.”