Circana™, formerly IRI and The NPD Group, released its 2024 food and beverage outlook, revealing that modest food and beverage volume growth is expected next year after three consecutive years of volume declines. The forward-looking outlook provides insight into the anticipated performance of the food and beverage industry throughout 2024, pointing to a more favorable landscape as several headwinds that weighed down 2023 are expected to recede.
High inflation is anticipated to ease considerably next year, and the impact of increased mobility on retail food and beverage consumption will likely be less pronounced. In addition, our research shows that several factors will impact food and beverage growth throughout 2024, including an improving macroeconomic environment and growing promotional investments.
“Amid shifting consumer preferences and evolving market dynamics, our food and beverage outlook not only highlights key growth opportunities for 2024 but reveals a cautiously optimistic outlook as we emerge from a myriad of challenges that the industry has faced over the past several years,” said Sally Lyons Wyatt, executive vice president and practice leader, Circana. “With continued innovation and adaptability, retailers and manufacturers will be poised to position themselves for success in the coming year and beyond.”
Our research indicates that specific departments are expected to lead the pack in volume growth. Circana predicts the beverage and deli sectors will carry on outperforming overall food and beverage unit sales in 2024. One factor likely driving beverage growth is an increase in health-conscious consumers seeking more protein and energy options in their diet. Another likely factor fueling beverage sales increase is that it has had more innovation than other departments, which delivered excitement and encouraged category exploration.
In the deli aisle, convenient grab-and-go options will likely continue driving sales as consumers prioritize meal options that address diverse needs. Shifting consumer preferences in other departments throughout the store will likely put pressure on unit growth. To succeed in 2024, our research indicates that perimeter aisles will need to optimize turnkey options for on-the-go consumers. In the frozen department, assortments should be reevaluated both in-store and online to ensure a variety of products are available to meet consumers’ needs. Consumers will likely look to the center store for solutions that deliver convenience, quality, and value.
Circana’s 2024 food and beverage outlook was developed using econometric demand models leveraging Circana’s Demand Forecasting Platform. Over 100 variables were analyzed to test hypotheses for each model, supported by a machine-learning algorithm and over 500 random forest models to determine the most important causal factors. The models were finalized based on their best fit, significance levels, and intuitive insights. Forward-looking input variable assumptions were developed using historical trends and insight from industry experts. This platform allows Circana to run scenarios and estimate future sales, breaking them down by their driving factors.
