How Food Marketing Tactics Impact Low-Income Shoppers

As a result of Americans cutting back on their spending on food and other necessities, food manufacturers like Kraft-Heinz and Conagra Brands have redesigned their goods and business plans in the wake of years of price increases.

Impact of Declining Sales Volumes

Sales volumes of many of the largest manufacturers of packaged foods and beverages are declining, in part because low-income consumers-who generally earn less than $35,000 annually-are cooking at home, using leftovers, or simply purchasing fewer items.

Based on the most recent U.S. census statistics available, about 33% of Black American families and 21% of White American households were included in this group in 2022.

Food stamp users' sales at Circle K convenience stores decreased by 40% over the previous year.

Conagra will launch new Banquet chicken patties in late May, priced at $6.99 for six, in an effort to attract Americans who can no longer afford fast food, a company official said. At fast-food restaurants, chicken sandwiches are a popular choice.

Richer customers consume more fresh meat and produce than low-income consumers, according to Sherry Frey, vice president of health at NielsenIQ.

"Whatever is on the shelf that you can stretch longer and further to feed the many mouths that might be sitting around the table" is what people who are having financial difficulties are purchasing, according to Carlos Rodriguez, chief policy and operations officer of City Harvest, a fresh food distribution company in New York City.

In contrast to their approach during and shortly following the pandemic, when they concentrated on luxury items and touted new tastes and alternatives in an attempt to justify rising pricing, consumer corporations are now emphasizing value and reductions.

Strategies to Attract Value Buyers

According to Duleep Rodrigo, U.S. consumer and retail sector head at KPMG, food firms now need to "make sure they are attracting the value buyer back into the fold." "They need this crucial part in order to get volume."

Executives have stated that some consumers are switching from low-calorie snacks like popcorn to more substantial ones. Larger bags of Skinny Pop, which cost less per ounce than smaller ones, were introduced by Hershey. According to a spokesman, PepsiCo is developing new marketing initiatives to support its rival Smartfood brand.

According to a Coca-Cola representative, the manufacturer of soft drinks has been extending the number of weeks that merchants provide 1.25-liter sodas as a part of a value bundle meant to entice budget-conscious and lower-class customers.

According to Brian Huff, CEO of Nissin Foods' U.S. business, the Japanese firm reported a fall in unit sales last year in its category. Nissin Foods sells items like Cup Noodles for less than $1. Huff made this statement in an interview on March 18.

According to Huff, the corporation is spending money on various marketing and buy-one-get-one-free offers at Publix, a store located in Florida, to promote "pantry loading."

Food companies ramping up discounts after a years-long hiatus during the pandemic include Kraft macaroni and cheese maker Kraft Heinz, cereal company WK Kellogg, and Kellanova, which sells Pringles chips, according to an April 3 research note from investment bank Jefferies.

CEO Sean Connolly stated in an interview on April 4 that Conagra's strategy for discounts is to increase their frequency rather than their depth.

According to executives, low-income consumers' financial stress is evident in the foods they purchase, such as more substantial corn-based snacks and proteins.