As the cost-of-living crisis continues, shoppers are making deliberate choices, prioritising value and essentials over luxury. For brands built on premium positioning or undiversified models, this change is both challenging and transformative – and adapting to this new reality will be critical for survival.
Cost pressures are adding to the challenges for the food and drink sector, with inflation continuing to squeeze margins and production costs climbing across the board. The food and drink industry is among the most energy-intensive and therefore bears the brunt of soaring energy prices. Coupled with underlying commodity inflation – particularly for imported goods – food and drink businesses face a tough balancing act. For many, price increases have become unavoidable, passing the impact directly to consumers and therefore contributing to changing consumer behaviours.
Value-driven brands are, however, gaining ground, proving that inflationary pressures can create opportunities for those who can adapt to evolving consumer expectations.
Turning pressure into opportunity
Cost inflation continues to strain the supply chain, particularly for products reliant on imported ingredients and energy-intensive production processes. Rising fuel, electricity and raw material costs – amplified by global instability and currency fluctuations – are driving up manufacturing and transport expenses. Items which are highly dependent on international sourcing, such as coffee, chocolate and exotic fruits, are among the most vulnerable, forcing brands to rethink sourcing and pricing strategies.
The food and drink sector is among the UK's most energy-intensive industries, with refrigeration, cooking and packaging all driving up operational costs. For many producers, this pressure has eroded margins and forced product reformulations.
Yet, some brands have turned challenge into opportunity. A prime example is Greggs, which has positioned itself as a budget-friendly choice for cost-conscious consumers. By embracing simplicity and scale, Greggs has turned economic pressure into a competitive advantage, proving that strong brand identity and smart pricing can deliver growth even in tough conditions.
From necessity to conscious choice
In 2025, UK consumers are making increasingly deliberate choices, with economic pressures and the cost-of-living crisis shifting priorities towards essentials. According to KPMG's Q2 Consumer Pulse Survey, more households are budgeting carefully, cutting back on luxury purchases and focusing on food, housing and transport.
This shift has hit the luxury goods sector, which saw its first contraction in over a decade. Aspirational spending is giving way to "mindful luxury", where quality and sustainability matter over status. For brands, this means rethinking pricing strategies and value propositions.
For businesses with undiversified models focused solely on premium segments of the market – including gourmet food producers and high-end hospitality brands, such as those specialising in premium wines, artisanal cheeses or luxury dining experiences – the impact is most severe. Without the flexibility of diversified supply chains, these operators face stagnation or decline in a market increasingly defined by necessity and conscious decision-making.
The message is clear: adaptability isn't optional and brands that fail to align with changing consumer priorities risk being left behind.
