Gifting food will rise as practical option during coronavirus and beyond, Packaged Facts predicts

By Elizabeth Crawford contact

- Last updated on GMT

Source: Getty
Source: Getty

Related tags: coronavirus, gifting, Packaged facts

The convenience, practicality and comfort of offering food as tokens of recognition, appreciation and affection could help insulate the US food gifting market during the coronavirus pandemic, but it may not be enough to fully offset losses in 2020 from corporations pulling back on the practice in the short term, according to new research from Packaged Facts.

In the consumer research firm’s recently published report Consumer and Corporate Food Gifting in the US, 7th​ Edition​,​ Packaged Facts predicts that sales growth of food gifts will likely slow in 2020 due to social distancing and the economic fallout of measures designed to stop the spread of the coronavirus.

But, it expects food gifting will be “hit less hard by the economic uncertainty than other consumer-oriented product areas”​ and as a result still will grow at a 4.2% compound annual growth rate from $21.25bn in 2019 to $26.15bn in 2024.

Food gifts ‘preferable’ during pandemic

Unlike some segments of the food and beverage industry that have come to standstill, retail spending on food gifts will increase slightly in 2020 to reach $21.8bn – up from $21.25bn in 2019, Packaged Facts reports.

The bulk of this will come from consumer food gifting, estimated to reach $15.95bn in 2020 compared to $15.55bn in 2019. While this represents only a 2.6% increase over the prior year, which was up 5.4% from the year before, Packaged Facts suggests this is a victory given the economic uncertainty many are experiencing during the pandemic and with the thread of a recession on the horizon.

It explains the category’s resilience among consumers can be attributed to food gifts being viewed as “preferable options for gift giving during the pandemic because they are practical, easy to ship, comforting and a good way to send treats to someone who cannot be visited because of social distancing.”

In addition, gifting food is a convenient option because many retailers in the space already have a significant online businesses, allowing consumers to easily order from the safety of their homes “while store closures affect brick-and-mortar operations,”​ the report notes.  

Corporate food giving down in 2020

While consumer gifting may benefit from the pandemic, Package Facts predicts the economic upheaval caused by coronavirus will dampen corporate food gifting in 2020. But, it adds, as the economy recovers sales of corporate food gifts should jump.

In 2020, Packaged Facts predicts that corporate food gifting will account for $5.85bn – a 2.6% increase from 2019. By 2021, however, the growth should rise 6% to $6.2bn – the start of a growth trend the report predicts will continue through 2024, lifting the compound annual growth rate for the period to 5.4%.

“Corporate gifting is an important component of food gifting,”​ with 27% of employed adults reporting receiving food as a business gift in 2020, the report notes. Most of these gifts take place at employment-related parties, the winter holidays or for no specific reason.

While everyday gifting is important in corporate food giving, Package Facts warns that “due to coronavirus, businesses are shutting down and unemployment is expected to rise,”​ which means “businesses will also be spending less on food gifts for employees and have fewer people employed among their ranks”​ resulting in a “sharper stall in sales than consumer food gifting.”

Using a “best-case scenario”​ for when the economy will recover from the pandemic, Packaged Facts is predicting that a “sharp but short hit to the economy”​ will happen in the first half of 2020 but with the help of “the extraordinary scope of fiscal countermeasures already taking shape,”​ it is optimistic the impact will be at least partially offset by the second half of 2020.

Maximizing gifting potential

Companies looking to optimize food gifting can do so by increasing the premiumization of products and their presentation, according to Packaged Facts.

The report notes that “premium packaging with a luxury image increases the appeal of gourmet food gifts and bolsters brand recognition,”​ as well as helps justify higher prices. But, it cautions, this must be tempered with sustainability as consumers increasingly are turned off by excessive packaging.

Another way to boost sales of food gifts is to offer personalization and customization, which can range from allowing consumers to pick thematic wrapping to hand selecting everything that goes into a gift basket, the report notes.

Overall, Packaged Facts reports that food gifting is a resilient trend with significant room for growth for companies that are sensitive to the quickly evolving needs of consumers during these uncertain times.

Related topics: Retail & Shopper Insights

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