01.
Re-defining Pantry Essentials
The market dynamic
Of the sectors in FMCG, food was most impacted by price increases resulting in the growth of this sector is not driven by volume. Pantry essentials were no exception and volume slowed during the price surge as shoppers tried to reduce their overall spend to cope with inflationary pressures. In 2022, growth was solely driven by price increases as shoppers were forced to absorb the rises. This year, volume has already decreased by 7% alongside 11% price increases, which suggests that basket size and frequency may suffer.
As well as inflationary pressures, home cooking was also affected by people getting back to normal life after the pandemic. With more demands on time, people are seeking convenient options as a way to save time when cooking at home, especially in urban cities.
Hence the categories which can help consumers save time will be preferred. Also the General Trade channels remained key due to their convenience and proximity. Opportunities still exist for channels to grow and increase their buyer base via street shops (toko/warung), wet markets, and peddlers.
Within pantry essentials, the slump in volume because of price increases can be seen in both the cooking oil and instant noodles segments, which suggests these categories are more price-sensitive. These categories are the most mature with almost 100% penetration and shoppers chose to keep these household staples in their shopping basket despite price rises. As a result, shoppers are adjusting their frequency to maintain the presence of these categories in their basket, hence every shopping trip matters for brands and manufacturers.
We’ve seen three major trends within pantry essentialsin Staples, Cooking Aid and Processed Foods
Shoppers have been forced to cope with the price increases in staple categories, which has limited volume growth. Price is the main driver of growth in cooking ingredients and the segment only managed modest volume growth. In contrast, volume growth and sales of processed foods remained steady – likely because they are both practical and convenient.
