Source:  Tom Johnston, MEATINGPLACE.COM, 5/9/11

Some 84 percent of consumers believe that grocery prices have risen in the past three months and 62 percent believe restaurant prices also have risen in that time period, Chicago-based research firm Technomic Inc. found in its most recent consumer sentiment and behavior survey. Not good, says the firm’s executive vice president, Bob Goldin, in an interview with Meatingplace, especially when consumers sense they’re not getting a fair deal.

Consumers’ belief that gas and grocery prices have risen is not just a perception, right?
Yes, there have been price increases. The point is, they’re very noticeable to consumers, and I think the big issue is that consumers also believe that portion sizes are shrinking (the survey said 50 percent of consumers believe packaged food sizes have shrunk, and 32 percent said the same of restaurant portions; only 10 percent attribute the downsizing to improving the product’s healthfulness). The other problem is that consumers are feeling that their propensity to spend at grocery stores and on restaurant meals is less.

Regarding smaller portions, isn’t that a trend driven by what consumers say they want?
I think there’s mixed evidence on that. When we asked consumers why you think companies are reducing packaging and portion size, they say that companies want to make a profit but also keep retail prices the same. They’re not saying that companies are doing it to make food healthier.

So how is it best to go about the package and portion size dilemma?
I think the thing you have to avoid is creating the perception that you’re getting less for the same amount. As you downsize, there are other things food companies must do to add value, be it better ingredients, new packaging or new marketing. Consumers haven’t been as wise as they have been lately; downsizing has gone on a long time, but it’s been subtle. I think [consumers] are so economically constrained that it seems more noticeable.

You say that given rising gas and food prices, consumers are likely to reduce spending on groceries and restaurant meals. Is there evidence showing that such a reduction is already happening?
It’s hard to prove cause and effect. The (restaurant) industry has recovered a bit, the business has been somewhat better, but our view is that rising food prices and gas prices are really dampening demand. Consumers are still spending, but that spending is much less robust and we think it’s going to catch up to the industry quickly. It’s not a good-news scenario.

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