Unpacking the Drivers of Global Packaged Food Demand

September 2024

Accurately forecasting the future of packaged food demand requires predicting a mix of stable drivers that can be guessed at with a high degree of confidence (for example, population growth), moderate levels of confidence (pricing, long-term economic growth) and highly variable ones (lifestyle trends, marketing campaigns). Understanding changing demand patterns requires looking at all of these at once.

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Key Findings

Packaged food growth can be explained by a simple bucket of drivers

Using Euromonitor International’s Industry Forecasting Models, future consumer demand patterns in packaged food can be broken down into a few key areas, with population, income, prices and “soft” drivers being the most important. How confidently these can be predicted in advance varies.

Declining numbers of children and rising numbers of older adults define the impact of population

Population is the most stable of the drivers of packaged food growth, contributing roughly 0.5% to total industry expansion every year globally, though the relative impact by market is very different. Rising life spans and declining fertility rates mean that, as the population increases, its composition shifts, and with it, food consumption patterns.

Income growth benefits volumes up to a point, then the benefits move to value

At lower levels of income, increasing per capita GDP is associated with higher volume consumption of packaged food. As incomes rise, the effect of GDP becomes more value-based, affecting brand choices, eating outside the home and the desire for premium attributes more than it affects volume.

The future of premiumisation has been made more complex by rising prices

Premiumisation is a goal for many segments of the packaged food industry, and much potential still remains, but it is becoming harder to achieve as rising prices make consumers less inclined to spend additional money on top of the price increases that they are already being asked to absorb.

“Soft” drivers add an element of unpredictability to the long-term forecasts of food categories

Much of food growth depends on the least predictable factors, like legislative action, marketing investment and wellness trends. A mix of looking at long-term trends and historical experience has to be used to provide a hint of what these factors will end up looking like.

Why read this report?
Key findings
Introduction: The drivers of packaged food growth
What drives demand growth in packaged food?
Population is the most predictable driver, soft drivers are the least
Habit persistence exerts a stabilising effect on long-term growth patterns
How important a role do the drivers each play by category?
Population is the most stable growth driver for packaged food
Children’s food categories face a tough demographic outlook
Permanently low fertility rates will re-shape many aspects of the food industry
The older population, meanwhile, is swelling in size
Children’s categories are re-invented to appeal to older demographics
Population growth will present a challenge for volumes indefinitely
Ice cream and baby food are most reliant on rising personal incomes for growth
Snack foods are noticeably more income-elastic than the other categories of food
This places snacks at highest risk from future recessions
More of future income increases will go towards food than was historically the case
Where does the untapped volume potential for packaged food exist?
Prices are increasing, putting pressure on premiumisation as a growth driver
Map: Price elasticity of packaged food by country
The impact of rising prices does not fall equally
Commodity price growth will continue in many industries
Product innovation is becoming harder in this new cost environment
Luxury spending will be mostly protected from rising food costs
Soft drivers are the most susceptible to sudden shifts
Healthy eating trends are among the more predictable soft drivers
The looming possibility of mass GLP-1 adoption could significantly shift eating habits
“Ultra-processed foods” (UPFs) could move the lifestyle trends or legislative needle
TikTok and the collapse of the traditional trend cycle
Recommendations/opportunities for growth
Euromonitor’s research spans 210 countries and 99.9% of the world’s consumers
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