As higher commodity prices become "the new normal" rather than a temporary peak, we may see a greater impact on consumer behaviour and retailer and supplier strategies than has been apparent so far, according to Food and Beverage 2012 – a taste of things to come, a report from Deloitte Touche Tohmatsu.
While current food commodity prices may come down from their current peaks, the increases already seen in the real cost of food represent a permanent step change. With consumers also being effected by higher energy costs, economic uncertainty and a reduction in the availability of cheap credit, the effect could be significant.
Bruce Westbrook, Deloitte consumer products consulting leader, said higher food prices will push consumers to buying food for at-home consumption over eating meals in restaurants, and at-home purchases will shift toward private label, discount products and low-priced retailers.
Retailers in price-competitive markets, such as the US and UK, will need to absorb costs that they may struggle to cover or they'll have to pass on higher prices and provide "real product differentiation, strong brand equity, innovative products and services and a superior customer experiences".
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