Chapter 2
The big question
for everyone

Will shoppers stop reducing the

volume they purchase, or keep

on rationing their spend?

Have we reached a point where shoppers will stop decreasing volume sales due to the baseline need for FMCG products, OR will consumers still react to price increases by rationing their spend?

To emphasise the importance of understanding shoppers’ reactions within your specific category and brand, we have analysed two essential categories where we see widely varying responses to price increases.

The flour categoryInflated pricing began to impact the flour category in Q2 of 2022. Consumers’ initial reactions were to switch spend towards cheaper brands, with some decrease in volume usage. However, consumers have largely absorbed the inflated pricing within the category. The recent trend of a decrease in volume shrinkage indicates that the category is reaching a Volume Tipoff Point at the current price points. This is where volume sales left in the category are genuine sales from regular/loyal buyers, who will be less reactive to marginal price increases in the short term.

The cooking oil categoryWithin cooking oil, however, inflated pricing has been present since 2021. Shoppers’ initial reaction was a mixture of switching to cheaper brands and dropping volume purchases, with higher average prices keeping value sales consistent. In recent periods, volume decreases have accelerated, despite a downturn in inflated pricing. This indicates that even though cooking oil is essential, the category is reaching a Value/Price Tipoff Point where, even if prices stabilise at the current price points, consumers will continue to ration usage and buy less volume.

For the two scenarios outlined above, what would the optimal, winning response from manufacturers look like?

What about your category in the next three months?Scenario 1
Your category/brand is approaching a Volume Tipoff PointIncreasing pricing/premiumisation strategies will bring incremental value to your brand.Scenario 2
Your category/brand is approaching a Value/Price Tipoff PointSpecific targeted activations will minimise volume sales losses and keep your brand relevant.