Study Confirms Inflation Is Consumers’ Greatest Concern
MIDA Radiography Reveals Changes in Behavior
SAN JUAN – The food industry has returned in force to in-person events, with more than 1,400 people attending the presentation of the 2021 Consumer Radiography study by the Chamber of Food Marketing, Industry and Distribution (MIDA by its Spanish acronym).
The study marked the beginning of the entity’s annual convention, an event that had not been held since the summer of 2019. According to MIDA President Ferdysac Márquez, support for the event was extraordinary. “In addition to the Radiography, we have over 320 exhibitors, a solid educational program, an awards lunch, networking activities and the long-awaited Business Roundtable. After two years, the industry was eager to meet again and share experiences,” he said.
The market study, commissioned by MIDA to research firm Lighthouse Strategies, was carried out in three parts: a home-to-home quantitative study and two qualitative phases; one where 110 secondary consumers were interviewed and a global phase with six interviews of consumers in Argentina, Spain, the United States, Mexico, Puerto Rico and the Dominican Republic.
“In the 2021 Consumer Radiography, we see consumers causing changes. They are no longer willing to sacrifice the convenience of being able to ‘pick up’ and shop online and return to their routine without those services.”
–Richard Valdés, Chair, Consumer Radiography Committee, and Marketing and New Business Development Director, The Retail Group
The study comprises interviews with 1,350 people from the eight regions of Puerto Rico: San Juan, Ponce, Mayagüez, Arecibo, Bayamón, Carolina, Humacao and Guayama. Its results had a confidence level of 95 percent and a margin of error +/-2.67.
The people responsible for food purchases in their household were interviewed. Fifty-four percent of those surveyed were women and 46 percent were men. Twenty-six percent of respondents were age 65 or older. Thirty-eight percent were married and 49 percent were nutritional assistance plan, or PAN, card users. This coincides with Family Department data.
“Consumer Radiography found that 94 percent of those interviewed have a great concern about the increase in prices, especially people ages 45 to 54 and those age 65 and over,” said Richard Valdés, chairman of the Consumer Radiography Committee and director of marketing and new business development for The Retail Group. “In addition, 77 percent of those surveyed indicated they were not sure they had enough money to buy food, and 36 percent reported that family income has dropped since the beginning of the pandemic.”
The vice president of MIDA, Manuel Reyes Alfonso, also provided some detail, explaining that “the price issue is a global one and Puerto Rico is no exception. But we have other added aggravating factors here, such as trucker strikes and increases in ground transportation [and] the closure, increases and the monopolization of the [ports]. Added to these are increases in electricity [bills] and service interruptions, among others. All this is combined and contributes to the out-of-stock problem, or shortages on [store] shelves that causes concern and changes in consumer behavior, such as the increase we are seeing in purchases in order to stockpile.”
The study also found that consumers have made significant changes related to their store visits. The frequency of visits has decreased from 5.8 times a month in 2019 to three times a month today. One of the reasons given was a fear of infection, with 72 percent of interviewees saying it was the main reason for reducing the number of times they went to stores and the time spent in them.
However, pharmacy visits increased from one visit a month in 2019 to nearly seven today, while membership clubs, which on average were visited only once a month in 2019, are now gone to 4.3 a month. The increased number of visits to membership clubs may explain why half of respondents claimed storing more products than before the pandemic, given these big-box retail stores offer products in bulk.
The study also found that 39 percent of the surveyed sample was planning more healthy meals, 29 percent were not buying snacks and unhealthy drinks, and 30 percent were reading product labels more. The findings suggest consumers are more concerned about their health and are taking action.
Mario Rodríguez, president of Rodz Digital and member of the committee, said the average monthly expense for food is $407, a slight reduction compared with 2020, when people spent $434. “Although there was evidence of a net reduction in total monthly spending, there was an increase in some categories, such as beer, bottled water and snacks. During the months of the field study, federal [pandemic] aid was reduced, thus people had less money to make purchases and, therefore, a reduction in spending was reflected,” Rodríguez said.
“We see how demographics have a direct impact on monthly spending. For example, the population 65 and older continues to grow, but their monthly spending is lower: $342 compared to the average $407. Today, this segment represents 21.3 percent of the population and it is projected that in five years it will be 27 percent. This will impact overall monthly spending. In fact, Puerto Rico is currently the jurisdiction in the United States with the highest population percentage that is age 65 and over. This is reflected in segments such as adult diapers and nutritional supplements, which have seen double-digit growth. Demographic dynamics are already having an impact on the categories, with a 23 percent increase in adult diapers. If the trend continues, these will overtake infant diapers,” Rodríguez said.
PAN users are spending $312 a month on their food purchases. With the benefits starting in October, a 23 percent increase in the monthly income of this group is projected.
“Also, we see significant changes in the basic food basket. We compare this with that of five years ago (2016). At the time, the three main products were rice, milk and beans. Currently, they are water, meat and/or chicken and fruits and/or vegetables. Water and vegetables were not in the top 10 products in 2016,” Rodríguez said.
The study also analyzed payment methods and found that debit cards have become the main way to make payments. This method dethroned cash, which in 2017 was the preferred payment method for 43 percent of those surveyed and is currently positioned as the third most utilized, at 26 percent. Family Card use changed from 19 percent in 2017 to 42 percent today.
“Consumers indicated that the main methods they prefer that we communicate with them are ‘the shopper,’ at 29 percent; social networks, 25 percent; and TV, 15 percent. Thirty-one percent of men prefer shoppers and 27 percent of women favor social networks. Fifty percent of those surveyed confirmed that shelf signage continues to be an effective way to get their attention,” Rodríguez added.
People continue to value ratings and reviews on digital platforms. In 2020, 50 percent of respondents said these were important to them. In 2021, this grew to 59 percent.
According to the study, in 2021, three out of four respondents, or 77 percent, said they did not include the purchase of prepared food in their budgets. For 60 percent of them, their average spending of $104 a month on prepared foods was done impulsively, as a matter of convenience.
“One of the qualitative components focused on defining what the Consumer Radiography called the ‘secondary buyer.’ This means that one in three ‘primary’ buyers shares food shopping with another person in the household. Meanwhile, 41 percent indicated that they will continue this practice, even after the pandemic. Eighty-five percent of the secondary buyers indicated that the frequency with which they purchase food will be equal or greater once the pandemic is over,” said Ernie Soto, market development head at Mars Wrigley.
“In the 2021 Consumer Radiography, we see consumers causing changes. They are no longer willing to sacrifice the convenience of being able to pick up and shop online and return to their routine without those services,” Valdés said.
He added that the challenges for the industry continue. “Retailers are seeking to develop new strategies to work on the issue of shortages; also, how to make shopping easier for the elderly segment, since this group represents 21.3 percent of the population in Puerto Rico. Manufacturers have the challenge of limited raw material and how to maintain loyalty,” the committee chairman pointed out.
“Trends and the industry have traditionally caused changes in consumer habits and the dynamics have been unilateral. For the first time, we are living moments when changes arise in both directions,” Valdés concluded.