Since the beginning of 2008, the French have been suffering from declining purchasing power coupled with higher food prices and above-average inflation. However, the country's economy has been growing continuously since the second quarter of 2009, attaining a GDP of US$2.145 trillion in 2010, a growth of 1.5% (CIA Factbook). France's inflation sat at 1.5% in 2010, up from 0.1% in 2009.
Lack of consumer confidence has had a negative impact on the retail sector, with French consumers paying more attention to what and how they spend. Within the retail sector, this has been good news for discounters, as French consumers visited discounters much more frequently than in the past, resulting in value sales growth of 13% in 2008, followed by a further 3% growth in 2009.
Retail sales of sauces, dressings and condiments are expected to register a CAGR of 2.6% in value from 2011 to 2015, while volume consumption CAGR for the same time frame is forecast to increase 1.1%. Regular salad dressings and mayonnaise will continue to suffer from a negative nutritional image, which will impact sales as consumers seek healthier options. Dry sauces/powder mixes are also expected to show a decline in sales from 2011 to 2015, due to a lack of popularity with French consumers. On the other hand, herbs and spices, liquid stock and soy sauce are all predicted to continue growing in popularity given the renewed French interest in home cooking. Dip sales are expected to be the top performer with a value CAGR of 5.4% from 2011 to 2015.
Many consumers are being forced to cut down on non-essential spending, looking instead for the best private label alternatives where perceived quality is similar, and/or for quality products at lower prices. Private label competition will be fierce as manufacturers implement product diversification and utilize pricing strategies in an effort to attract the price-conscious, but educated consumer. Versatile and expansive offerings will continue to drive volume sales across the category. While French consumers will want to know that they are eating healthy food products that contain less added flavours and preservatives, they will not want to compromise on taste.
