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Nielsen: 88 Percent Of Taiwan Online Respondents Say Rising Food Prices Will Impact Their Grocery Choices

Top 3 Actions Taiwanese Consumers Take When Facing Food Price Increase: Buy Only Sale Price Items, Look For Deals Online And Stock Up On Regular Use Items When They Are On Sale

Eight-five percent of global consumers, 88 percent of Taiwanese respondents, in an online survey say rising food prices will impact their choice of grocery products, according to a new study by Nielsen, a leading global provider of information and insights into what consumers watch and buy.

“With the global middle class growing by 70 million each year and food prices expected to more than double within 20 years, fast-moving consumer goods (FMCG) companies in many markets are preparing for an unprecedented period of rising demand, economic pressures and aspirationally-driven buying behavior,” said Terri Kang, Associate Director, Retailer Services, Nielsen Taiwan. “FMCG companies focusing solely on consumer income as a barometer of spending habits, however, are unlikely to fulfill their business growth expectations because this is not a middle class only trend. Food inflation impacts all consumer incomes. By looking instead at consumer diversity, spending flexibility and the consumer demand landscape, FMCG companies can better understand real-world buying potential and more accurately scale goods and services to meet the needs of consumers in both developed and developing markets around the world.”

The Nielsen Global Survey of Inflation Impact surveyed more than 29,000 Internet respondents in 58 countries to understand how respondents around the world of all income ranges adjust to rising food prices.

Nielsen’s information shows that in-home food products were not the only areas of spending impacted by rising food prices. Areas where all respondents would change their spending include dining out (64%), buying new clothes (55%), spending on snack food (45%), paying for recreation and entertainment (44%) and traveling for vacation (39%). As for Taiwanese consumers, dining out (67%), spending on snack food (60%), paying for recreation and entertainment (53%), buying new clothes (50%), and Beverage at home (44%) are the top 5 areas Taiwanese consumers change their spending.

“Traditional trade is still dominant in many countries, and in these markets, commodity purchases are part of consumers’ daily lives,” said Kang. “The challenge for marketers will be introducing new brands and products when food inflation is supressing the ability for these consumers to grow their shopping baskets. And yet the new products and brands are indeed the key drivers for growth.”

During times of rising food prices, 41 percent of global consumers surveyed said they would purchase only sale-priced items. Thirty-two percent of respondents said they would look for deals online, and 29 percent said they would purchase larger pack sizes. Other saving strategies varied, based on regionally-motivated shopping patterns. For example, transportation and storage/refrigeration space was not an issue for 50 percent of North American respondents that would stock up while items were on sale, compared with 34 percent of Asia-Pacific respondents.

How rising food prices may affect Taiwanese consumers’ grocery item shopping behaviour? Close to half (48%) purchase only sale price items, 46% look for deals online, 41% stock up on regular use items when they are on sale, and 37% use social media to find specials. “Taiwanese consumers are now tend to be ‘planned shoppers’. Thus, in order to increase basket size, retailers should create seasonal assortment products and attractive promotion to encourage shoppers to buy extra items beside their shopping list,” said Kang.

According to Nielsen, private label or store brand products account for approximately 16 percent of global FMCG dollar share. In regions where private label is well established, Nielsen’s survey shows that in North America, 46 percent of respondents said they would shop more for private label brands when food prices rise, compared with 7 percent that would increase shopping frequency for national brands. In developed European countries, 35 percent would shop more for private label brands, compared with 8 percent that would buy more national brands.

Facing rising food prices, Taiwanese consumers prefer to choose private label. Eighteen percent of Taiwan respondents would purchase more private label store brand products while only five percent claim they would shop more mass brand products. In contrast, half consumers said they would shop less mass brand products.

“Private label brands have a potential advantage during inflationary times,” said Kang. “However, the price must be right and marketing must be effective for private label brands to succeed. Packaging impacts trust and quality perceptions, especially when private labels extend beyond commodity or low-risk product categories,” said Kang. “Providing the opportunities of product trials can build up consumers’ confidence toward private labels’ quality.”

When asked about how rising food prices may affect where they purchase grocery items, one-third (33%) of global respondents indicated they would shop more at discount/dollar stores, 28 percent would shop more at de-stocking/clearance stores and 23 percent would shop more at hypermarkets/mass merchandisers (23%). One-fifth of global respondents would shop more at warehouse club stores (21%), supermarkets (20%), fresh food farmers markets (20%) and outlet stores (20%) as prices rise. Twenty-one percent said they intended to grow more of their own food and 17 percent would shop more at local neighborhood stores.

De-Stocking/Clearance Store (39%), Hypermarkets/Mass Merchandisers (35%) and Warehouse Club Stores (29%) are the top 3 channels where Taiwanese consumers would shop more while facing rising food price.

In the past year, in order to avoid food wastage, 43 percent of Taiwanese respondents have ever purchased food and beverages with a longer expiration, 41 percent bought smaller packs/quantities of food, 39 percent said buying less perishable foods and beverages. “Retailers and manufacturers should work together to monitor the expiring date of the products and also provide a ‘expiring items promotion’ for those about to be expired products,” said Kang.

Nielsen’s information shows that nearly half of respondents in Singapore (48%), South Korea (47%) and Ireland (47%) intend to shop at more discount/dollar stores. Destocking/clearance stores were preferred by 45 percent of respondents in Israel and 44 percent in Greece. Forty percent of respondents in Chile and 36 percent in China would shop more at hypermarkets/mass merchandisers. Fresh was preferred among 46 percent of New Zealanders and 33 percent of South Africans, who intend to grow more of their own food and increase shopping frequency at fresh food markets, respectively.

When asked about likely spending changes to specific food categories, 14 percent of global respondents indicated they would buy more loose, unpackaged, unbranded cereal (such as rice, wheat and grains). Eleven percent said they would stock up on fresh or frozen fruits and vegetables, and 8 percent said they would buy more canned fruits and vegetables. More than half of global respondents had no plans to change their spending on staple categories like dairy products (68%), meat and poultry (62%), bread and bakery goods (60%), packaged foods (55%) and fish and seafood (52%). Half of all respondents said they would buy fewer products such as candies, cookies and other sweets (59%), chips and other snack foods (58%), carbonated beverages (53%), alcoholic beverages (49%), prepared meals (48%) and convenience foods (45%).

“When it comes to rising food prices, nearly everyone feels the pain,” said Kang. “Determining which product categories have staying power and which are more vulnerable is critical as consumers make trade-offs and tough in-store decisions. Likewise, as consumers continually look for ways to stretch their budgets and find the best value for money, marketers need to identify retailers that will satisfy the unique demands of consumers around the world.”

About the Nielsen Global Survey

The Nielsen Global Survey of Inflation Impact was conducted between February 18 and March 8, 2013, and polled more than 29,000 online consumers in 58 countries throughout Asia-Pacific, Europe, Latin America, the Middle East, Africa, and North America. The sample has quotas based on age and sex for each country based on their Internet users, is weighted to be representative of Internet consumers, and has a maximum margin of error of ±0.6%. This Nielsen survey is based on the behavior of respondents with online access only. Internet penetration rates vary by country. Nielsen uses a minimum reporting standard of 60 percent Internet penetration or 10M online population for survey inclusion. The Nielsen Global Survey, which includes the Global Consumer Confidence Index, was established in 2005.

About Nielsen

Nielsen Holdings N.V. (NYSE: NLSN) is a global information and measurement company with leading market positions in marketing and consumer information, television and other media measurement, online intelligence and mobile measurement. Nielsen has a presence in approximately 100 countries, with headquarters in New York, USA, and Diemen, the Netherlands. For more information, visit www.nielsen.com.