Food and gas prices up; will consumers raise or fold?

April 19, 2011 | by Suzy Badaracco

When I was little, some of the games my brothers and sisters would play were card games – rummy, poker, gin, kings in the corner, etc. Mostly because there was such concentration involved – it kept us quiet, so was kind of a gift to our parents. Afterall, there were six of us.

The thing about little kids, or novices, playing cards is that they are hard to predict and therefore hard to bet against. Newbies don't know when they should fold or when to call. Their poker faces don't coincide with their actions. It also is why they get good at cards so fast...because they can study you but you cannot study them.

Now, there are wagers on whether consumers will call or fold their optimism since the recovery is being interrupted by high food and gas prices.

The Labor Department reported that while inflation hits gas and food it only grazes other items. Which means that many feel it is the end of the world now that food prices are higher and there is the worry that consumers will resort to crisis behaviors of spending; however, it is not the true picture. During the crisis remember many consumers' worlds collapsed fully, not just in one or two areas. They traded down across the board. The circumstances are different now.

But let's take a look at the worst case scenario first as there are some voices predicting this. What would that do to food and beverage trends? Well, it would be like the crisis we just came through and consumers would revert back to trade down from trade off (where they are now). Private label would again be in the spotlight, restaurant traffic would be down – you get the picture. I also would expect food and flavors to revert back to comfort and away from adventure. Lock down mode would be engaged again. Government and corporate forecasters are riding both sides of the fence with some saying this is exactly what consumers are going to do while others do not take such a doom and gloom stance.

But when you cross analyze research on current consumer mood and sentiment, spending behaviors, and the food and flavor scene, this is not what is happening. Consumers may have reinstated some caution and thought prior to action, but they seem unwilling to give up their new found optimism, playfulness, and courageous spirit. Trade off still trumps trade down, adventure continues to replace comfort, and cocktails carry on outshining cheap beer. And it is due to the fact that prices are affecting food and gas, but not all items in their lives as was the case with the economic crisis. Also, spring is here so heating bills are not in the equation for most. The USA also has shifted position in the last year in regard to the war,  which adds to the upswing in mood. Overall, we are in a more hopeful place than a year ago and that is being reflected in the spending behaviors and flavor patterns seen in the food industry.

There is the danger of a self fulfilling prophecy being created during this time however. Want to see consumers bury their heads in the sand again? Keep reporting how dire food and gas pricing is and how it is predicted to cause consumers to cower, and then sit back and watch the panic spread and their optimism fold against a pair of twos.

Instead, if consumers are trying to maintain their smiles and new found courage and future hopes then we must ask ourselves how we as an industry can foster this to protect playfulness, happy hours, brunches, rotating chefs/bartenders, tiki drinks, popup restaurants, entomophy, foraging, and all the other fantastically brave, silly, and somewhat crazy things drawing in consumers. In other words - don't let them read your poker face.

Suzy Badaracco / Suzy Badaracco is a toxicologist, chef, and registered dietitian. She holds a Bachelors of Science degree in Criminalistics, an Associates degree in Culinary Arts, and a Masters of Science degree in Human Nutrition.
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