As we kick off the new year, we’re covering trends from key markets in 2022. We’ll recap the state of each industry over the past year, the ad strategies of its biggest players, and what we predict 2023 will hold.
What do eggs and GUCCI have in common?
They’re both luxury items—apparently.
While eggs aren’t making their way to Rodeo Drive, their rising price tag recently caught people’s attention.
According to the Consumer Price Index, the price of a carton of eggs increased by more than 49% in November 2022.
Eggs aren’t the only food item making headlines.
The price of groceries has gone up considerably. Through November 2022, prices increased by 12%.
But people still need to eat, so how are food advertisers responding?
MediaRadar Insights on Food Advertising in 2022
In 2022, food advertisers spent $5.7b to promote everything from snacks and breakfast foods to subscription boxes and meat.
Overall, spending was flat YoY, with the only increase coming in Q4 when advertisers invested 29% more. This increase makes sense, given advertisers’ desire to get in front of consumers leading up to the holidays.
The remaining quarters all saw budgets decrease or remain flat.
In Q1, for example, spending dropped by 12% YoY to $1.3b, while Q2 did so by 12%. Spending in Q3 was flat and down by 2% QoQ.
While food advertisers felt the brunt of inflation in 2022, a reversal of fortunes may be on the horizon.
In January 2023, spending increased by 10% YoY as inflation slowed slightly.
Food Advertising Drivers in 2022
Food advertisers from six categories made the most noise in 2022: snacks & desserts, meat, seafood & poultry, breakfast foods, food companies, and food subscription boxes. These advertisers combined to spend $3.9b or 65% of the investment from food advertisers.
Most of that spending came from advertisers promoting snacks & desserts, accounting for 40% of the food advertising investment ($2.3b). These advertisers increased spending by 6% YoY as people snacked more than ever; three-quarters of Americans snack at least once daily.
While non-snack-and-dessert advertisers spent considerably less, those in two categories increased spending in 2022: meat, seafood & poultry (up by 22% YoY to ~$496mm) and food companies (up by 65% YoY to $353mm).
Advertisers for food subscription boxes—which many households view as an extra or a luxury—saw their budgets drop by 13%.
The rest of the spending ($1.75b) came from advertisers in 25 other categories, which decreased by 8% YoY. We can attribute much of that to dairy and condiment advertisers who reduced spending by 30% ($289mm) and 18% YoY ($188mm).
Food Advertisers Get Off to a Hot Start in 2023
Rumblings of a recession persisted for much of 2022. However, those rumblings may have been for naught.
National Retail Federation Chief Economist Jack Kleinhenz said, “A month into 2023, the economy is facing stiff headwinds and—with the exception of easing inflation—will likely face more challenges before it gets better.”
He continued, “The debate on whether we are in a recession will heighten over the next few months, just like last year. But while households will probably feel recession-like conditions this year, I do not expect that the downturn will be severe enough to become an official recession.”
Those words were reason enough for food advertisers to turn spending up a notch. In January 2023, food advertisers increased spending by 10% YoY.
As they did the previous year, advertisers driving the category promoted snacks & desserts, breakfast foods, meat, seafood & poultry, dairy, and food subscription. These advertisers spent nearly $286mm or 65% of the spending from food advertisers in January.
Snacks & desserts
Snack & dessert advertisers started 2023 by investing nearly $149mm, representing a 14% YoY increase.
Nearly 40% of those dollars came from advertisers promoting chocolate.
Americans purchase approximately 58mm pounds of chocolate for Valentine’s Day every year. During the build-up to the holiday, advertisers for Ferrero (Brand) increased spending by nearly 50%.
Advertisers for crackers and candy also spent big, increasing their budgets by 12% and 9%, respectively.
Collectively, advertisers promoting chocolate, crackers, and candy spent almost $90mm in January—The Hershey Company, Mondelez International (Oreo, Ritz, Triscuits, etc.), and Ferrero International accounted for 41%.
If Valentine’s Day was anything like last year, the ad investment from chocolate advertisers paid off. In 2022, Ferrero and Fannie May sold $57mm of chocolate, a 17% increase from Valentine’s Day in 2021.
For Ferrero, Fannie May, and other chocolate advertisers, spending will likely increase as we approach other consumer holidays, including Easter and Halloween.
Advertisers for breakfast foods spent more than $46mm, representing a 96% YoY increase.
Almost all of those dollars (89%) came from advertisers at General Mills (Cheerios, Cinnamon Toast Crunch, Pillsbury Breakfast, etc.), Kellogg Company (Raisin Bran, Pop-Tarts, Frosted Flakes, etc.) and Mondelez International (BelVita).
That said, advertisers for General Mills decreased spending to promote Cheerios by 7% YoY despite being the nation’s top-selling cereal. At the same time, they shifted dollars to another fan favorite: Cinnamon Toast Crunch.
General Mills’ CEO Jeff Harmening said, “We believe healthy investment in brands, even in periods of volatility, is critical for long-term growth.”
Other breakfast food advertisers will likely subscribe to the same train of thought.
Meat, seafood, & poultry
Meat, seafood, & poultry advertisers spent almost $36mm in January, representing a 34% YoY increase.
A level deeper, Tyson increased its investment in “brand” ads by 100% YoY, with 38% going to magazine.
Advertisers for Hormel Foods, Omaha Steaks, and Tyson Foods found themselves between a rock and a hard place in 2022. The price of a pound of chicken averaged $1.83 in 2022, the highest price in almost three decades.
As prices return to a palatable level, some of the category’s advertisers will maintain their spending patterns—others, not so much. In 2023, for example, the price of beef is expected to rise by 15%, while the cost of poultry will fall.
Spending from these advertisers will continue to mirror environmental factors. The rising price of beef is due to a summer drought that forced much of the cattle industry to sell their herds early.
Dairy advertisers invested $28.7mm in January, representing a 1% YoY increase. Spending in this category came from advertisers promoting yogurt (42%), cheese (30%), and a mix of dairy, butter/margarine and sour cream (28%).
For General Mills (Yoplait), ad spending jumped by nearly 40% YoY, with 87% dedicated to broadcast and cable TV ads.
Why are dairy advertisers embracing a reserved strategy when their contemporaries are firing on all cylinders?
It’s hard to say, but inflation is likely playing a role. It could also point to the level these advertisers will spend to promote dairy products in 2023. The spending will be there, but the substantial increases will go to other products in their catalogs.
Food subscription boxes
Spending from advertisers promoting food subscription boxes decreased by 47% YoY to $26.8mm.
While the lackluster increase from dairy advertisers is hard to pin down, the steep decline in food subscription boxes is understandable.
Inflation is causing financial hardships, and people are cutting the likes of Butcher Box, Daily Harvest, Hello Fresh, and Hungryroot from their budgets. (Advertisers from these four companies accounted for 82% of the spending from subscription box advertisers in January).
In fact, despite inflation, most Americans would rather cut back on food than cancel Netflix. It’s not a surprise, then, that advertisers for Butcher Box decreased spending by 50% YoY.
It’s a Waiting Game
Advertisers in every industry are at the whim of the environment. More often than not, factors outside their control influence how they invest their ad dollars.
That said, food advertisers find themselves in a particularly slippery situation.
While people must eat, many will seek alternatives to items that skyrocket in price—eggs are the perfect example. Unfortunately, for advertisers promoting these foods, there’s little they can do, and ad budgets will likely fall (or remain the same).
For other advertisers, including those promoting breakfast foods, inflation and ongoing financial concerns may not be a concern.
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