Pandemic has caused a major shift in public’s food spending

Shoppers may have been stocking up on toilet paper and paper towels when the coronavirus lockdowns were first announced, but those weren’t the only items in people’s grocery carts — whether metal or digital.

“We sold more yeast in the first two months of COVID than we have in the prior four years combined,” said Tom Charley, vice president of Charley Family

Shop ’n Save with locations in Greensburg and Murrysville.

Whether driven by uncertainty about what supplies would be available at the store or a new hope to get Instagram-worthy shots of fresh baked bread while in self-isolation, the pandemic shutdowns changed the way many people spend their grocery budgets.

For years, more consumers have steadily moved more of their

dollars to restaurants and away from their local supermarket. But lockdowns aimed at stemming the spread of the COVID-19 pandemic shifted that trend, according to the Food Marketing Institute, an Arlington, Va.-based trade group.

“In most recent years, it has even appeared that food service spending might even overtake food retail spending in the U.S. for the very first time,” FMI said in its most recent U.S. Grocery Shopper Trends 2020 report.

Retail turnaround

In March — as the reality of the first pandemic in a century hit America — “monthly revenue at food retail jumped by more than 25 percent compared to February, collapsing more than eight years of dollar growth into a few tumultuous weeks. As of April, it has remained more than 10 percent higher than pre-pandemic levels,” FMI reported.

“Food retail’s share of food spending jumped from 50 percent in February to 63 percent in March, returning to levels not seen since March 1995,” the trade group continued. “April’s 68 percent has turned back the clock even further.”

At Giant Eagle, there’s been a noticeable spike in people snapping up essential items “not unlike when a snowstorm is projected,” said Jannah Jablonowski, a spokeswoman for the O’Hara-based grocery chain.

Beyond the Yinzer musthaves of milk, toilet paper and beer, consumers are spending on different ingredients that mean they want a culinary experience at home.

“We’ve really seen an increase in items like produce, which is reflective of frequent in-home cooking, along with pantry items — rice, soup, pasta, sauces. Those have been moving off of our shelves,” Ms. Jablonowski said.

Some folks might be missing dining out and experiencing new dishes.

“We’re seeing guests become more adventurous in their kitchens,” Ms. Jablonowski said. “So from produce, deli, the frozen food aisle, we’re seeing that fullstore shopping experience, rather than the trending shopping of the perimeter of the store.”

The perimeter — where things like fresh fruit and vegetables, the fresh meat and seafood departments are traditionally found — had been seeing growth for years, as pre-packaged goods typically found in the center aisles of grocery stores were losing sales.

But that has been shifting since the pandemic hit. Kraft Heinz, for instance, last week reported net sales rose almost 4% in the three months that ended June 27. Net sales in the U.S. segment of the business alone were up 8.5% for the company that sells macaroni and cheese and Heinz ketchup.

Snack sales of all sorts have seen a big upswing, especially with kids spending more time at home and people looking for a little comfort. That has been true in previous recessions and economic downturns.

“In the past, challenging economic times led to growth in snack foods as most meal occasions shifted to the home,” according to the Port Washington, N.Y.based research firm NPD Group. “Snacks were used as small, affordable indulgences or as meal stand-ins and accompaniments.”

Snack food consumption grew 8% in April as consumers sought comfort from savory and sweet snacks while staying at home, NPD Group found.

PepsiCo recently reported that sales of snacks at home increased while beverages declined as fewer shoppers picked up a drink at a gas station or a vending machine at work. Globally, PepsiCo’s snack category saw 5% organic revenue growth, led by Frito-Lay and Quaker brands, while global beverages dipped 7%.

“Frito’s net revenue growth was broad-based across all our major brands including double-digit growth in Tostitos, Fritos and Cheetos, high singledigit growth in Ruffles and mid-single-digit growth in Doritos. Emerging brands such as Bare and Off the Eaten Path also delivered double-digit growth,” the company said.

Watching budgets

Still, consumers have concerns to factor into their trip to the grocery store and how much they put in their carts. They’re watching their budgets closely as ongoing uncertainty about the overall economy — and the security of their own jobs — comes into play.

“Consumers will adjust how they allocate their available spend depending on their circumstances,” according to analytics firm Nielsen. “For some, initial cutback measures will be precautionary, but as living restriction horizons extend, these measures will become mandatory as incomes are further compressed and strained.”

For those in the middleto higher-income brackets whose jobs aren’t under immediate pressure, they “will have more freedom to buy what they want and need, and may even trade up in certain categories to replace the ‘out of home’ experience that has been out of reach amidst restrictions.

“However, as horizons expand, even this group will become increasingly cautious with their spend, thinking ‘They may be next,’ resulting in a focus on savings and cutting back on higher-value discretionary spend,” according to Nielsen.

That, the firm said, could intensify the focus on getting good deals and saving money.

The pandemic fueled a contraction of the U.S. economy by a record-shattering 32.9% annual rate last quarter. Meanwhile, more than 1.4 million laidoff Americans applied for unemployment benefits — the 19th consecutive week that more than 1 million people have applied for jobless aid.

“As their uncertainty extends depending on the length of this situation,” Nielsen’s report said, “their cutbacks will start to become more desperate and even small indulgences will be scaled back as they seek cheaper alternatives or avoid certain purchases altogether.”