Inflation and its impact
The retail landscape, driven by three quarters of distributors and major Spanish manufacturers, is leaning on aggressive promotional activity in the second half of the year to lift sales volumes. AECOC, the association that unites 33,000 sector companies including most supermarket chains and leading food producers, highlights this shift. Data shows promotions and offers will remain a standard through December, a signal that pricing and value campaigns will continue shaping consumer choices. [Source: AECOC market barometer]
The aim is to reverse a recent slide or, at minimum, halt the stagnation in sales. Latest figures from Idescat show food sales in supermarkets fell around 3 percent in Catalonia and about 1 percent across Spain by June. A further analysis from Weighbridge indicates that in June, 37% of consumers said they plan to cut back in the coming months. This pullback is expected to ease early next year, but the level remains well above the year earlier period. Food inflation is easing gradually, yet prices stay about 10.8% higher than a year ago. [Source: industry data and government releases]
Looking at company expectations, 38.9% of AECOC-discounted distributors expect sales volumes to drop by up to 5%. Another 27.8% foresee keeping volumes steady, while roughly one in three anticipate growth. On the manufacturing side, the share predicting a volume decline climbs to 56%. [Source: AECOC survey results]
In context, the AECOC Commercial Strategy and Marketing Committee, which gathers leading producers and distributors of mass consumption, notes the ongoing concern about falling sales volumes. The sector’s assessment highlights that the dynamics are unlikely to shift significantly in the second half of 2023 due to inflation and its impact on consumers. [Attribution: AECOC strategy briefing]
Consequently, about 70% of companies expect buyers to feel the squeeze in purchasing power and to adjust their buying behavior in the months ahead. Price pressures remain evident, with July prices up 2.3 percent year over year and food inflation near 10.8 percent. Within the food industry specifically, prices remain roughly 10 percent above July 2022 levels. Some voices in the sector note the prospect of a government VAT reduction on certain food items; others doubt a full return to normal conditions by 2024, though effects are already appearing gradually. [Source: government and industry commentary]
Industry observers continue to monitor the balance between promotions, consumer sentiment, and cost pressures as retailers and manufacturers navigate the second half of the year. The overarching thread is clear: promotional activity as a core strategy will persist to shield margins while responding to changing purchasing power and inflation dynamics. [Commentary: sector analyses and AECOC updates]