Report: Stabilization in the Food and Beverage Sector

New data from Circana indicates a return to growth for the retail food and beverage (F&B) sector after three years of volume decline. According to Circana’s latest report, stabilization in the food and beverage sector is underway, with a projected volume increase of 1% in 2024. This comes after a 1% drop in 2023, accompanied by a historically low price increase of 1.6%, down from 5.7% in 2023 and 11.4% in 2022. As a result, top-line growth is expected to slow to 2.3%, compared to 4.7% in 2023 and 9.5% in 2022.

By mid-2024, Circana’s projections have proven accurate, showing volume growth of 0.8%, a price increase of 1.4%, and top-line growth of 2.2%, all closely aligning with the forecast.

“Following several years of economic volatility, we’re now seeing signs of stabilization across various sectors, including food and beverage,” said Sally Lyons Wyatt, global executive vice president and chief advisor at Circana. She also noted that while an improving economy was expected to support this growth, the shift from away-from-home to in-home consumption has helped keep projections on track. However, manufacturers still face the challenge of stimulating demand to drive profitable growth.

Inflation in the F&B sector has eased in 2024, with pricing concerns still present but less intense. A bifurcation in consumer purchasing habits continues—while some are trading up to premium and super-premium products, others are opting for private-label brands to manage costs. Consumers are also showing a growing preference for convenience and quality, leading to smaller, more frequent shopping trips and quick-prep food choices, particularly from produce, refrigerated, and deli departments. Notably, the frozen and refrigerated segments have outperformed expectations, with refrigerated items only trailing produce in volume growth in 2024.

Lyons Wyatt added that the year is expected to close near Circana’s mid-year projections, with volume growth easing to 0.5-1.0%. She noted that fast food “price wars” could soften retail F&B growth in late 2024 if current economic conditions persist. Additionally, year-over-year price realization is expected to rise slightly to 1.5-2.0%, driven by reduced promotional activity and new price increases, leading to overall top-line growth of 2.2-2.7% for the year.

Globally, Circana expects the U.S. retail F&B sector to lag behind the EMEA and APAC regions in top-line growth for 2024. EMEA and APAC are projected to achieve 4.0-5.0% growth, with APAC’s growth being entirely price-driven and unit sales remaining flat. EMEA’s top-line growth will primarily come from increased price realization, with volume growth comparable to U.S. levels.