Food demand is pulling in two opposite directions. On one side, households are watching every cent on everyday groceries and shifting hard into cheap basics, private label and discounters. On the other, the same shoppers are still willing to pay a clear premium for products that feel like a “small luxury” or deliver a tangible extra in quality, health or ethics. For food FMCG and grocery, this creates a barbell shape: growth at the very bottom of the price ladder and at the clearly defined top. The space in between, where many mid-priced brands used to live comfortably, is shrinking. Assortments, prices and innovations are increasingly designed for two poles: Price–Performance/Basic and Experience/Value-Added. Anyone stuck in the fuzzy middle needs a sharper profile to stay visible.
| Aspect | Details |
|---|---|
| Trend Name | Polarised Food Demand in Grocery |
| Key Components | Growth in value and premium tiers; mid-tier under pressure; sharper price roles |
| Spread | Global food FMCG and grocery, visible across categories and channels |
| Examples | Value pasta, rice, oil and frozen veg vs. specialty coffee, premium chocolate, chilled chef-style meals |
| Social Media | Budget-hack reels, “broke but bougie” memes, premium unboxings, price-per-kilo comparisons |
| Demographics | Budget-stressed households and aspirational shoppers using “save and splurge” strategies |
| Wow Factor | The same basket mixes rock-bottom basics with carefully chosen small luxuries |
| Trend Phase | Established and accelerating; shaping assortments, brand portfolios and innovation briefs |
Barbell Demand in Food: What Polarisation Really Means
Polarisation does not split consumers into two clean groups. The same person who hunts down the cheapest oil and frozen vegetables can also buy a high-end chocolate bar or a barista-style cold brew. The defining pattern is budget steering: shoppers treat parts of the grocery basket as places to save aggressively, and other parts as spaces where they allow themselves focused indulgence or added value.
According to Revenue Management Labs, price sensitivity has increased across income groups, and consumer behaviour is becoming more polarised by income and by mission, with clear growth in both value options and premium propositions. That fits what many retailers see in their data: more downtrading into private label and value tiers on staples, combined with resilient or growing demand for clearly differentiated products at the top.
Deloitte observes that consumer products companies, including food and beverage players, are preparing for a world where they can no longer rely on simply raising prices and must instead adjust portfolio mix and innovation to drive profitable growth. In a polarised environment, that means leaning into both ends of the barbell: building credible, efficient value propositions and creating compelling premium experiences.
On the retail side, McKinsey and EuroCommerce describe how European grocery is still impacted by inflation aftershocks and how shoppers’ trading-down behaviour has boosted private label and discounters, while some segments are starting to rebalance towards quality and organic choices as inflation eases. The net result is a grocery shelf where the bottom and the top become clearer and the middle looks increasingly like a zone without a strong reason to exist.
For food FMCG, that barbell has very concrete implications: brand roles must be crystal clear, price ladders need discipline, and innovation pipelines have to decide whether they are solving for affordability or experience. Products that are “kind of in the middle” with a vague quality promise and no sharp story are the ones that get squeezed.
Downshift Mode: Saving Hard on Basics and Private Label
At the lower pole of the barbell, the mission is simple: feed the household at the lowest acceptable cost. This is where value ranges, discounter formats and private label come into their own. Shoppers in downshift mode gravitate toward:
- Big packs of staples such as pasta, rice, flour, oil, frozen vegetables and canned goods
- Simple recipes with short ingredient lists and no “nice-to-have” extras
- Basic dairy (entry yogurts, milk, plain cheese slices)
- Entry-level snacks and beverages that deliver volume rather than novelty
The decision logic is rational and fast. People compare price-per-kilo or price-per-litre, lean on promo signage, and trust retailer brands they already know. Packaging can be plain. Brand heritage is less important than the sense that products are safe, consistent and good enough for everyday use.
In many markets, private label has shifted from “cheap compromise” to “smart default.” After several years of inflation pressure, a lot of households have tried retailer brands and discovered that the quality is often comparable to, or in some segments indistinguishable from, mid-tier branded products. McKinsey notes that private label is structurally stronger than before, supported by improved quality and range, and by retailer confidence in placing store brands more prominently on shelf. Once habits shift, they often stick: even when pressure eases, many shoppers keep their “smart savings” routines.
From an assortment perspective, the Price–Performance/Basic tier has a clear job: own the entry price point in each category and make the choice obvious. That can mean:
- A single simple SKU that anchors the category price image
- Large “family” or “XXL” formats that boost perceived value
- Uncomplicated promotions (“3 for…” or rounded price cuts) that are easy to understand
Product development here focuses on design-to-value: finding ways to reduce cost without sacrificing minimum quality thresholds. That might involve simplifying flavours, using more stable ingredients, standardising pack formats across markets or streamlining supplier bases. The emotional payoff for shoppers is not excitement but control: the feeling that “I am managing my budget well” and “I am not overpaying the basics.”
Upshift Mode: Affordable Luxury and Everyday Premium Food
At the upper pole, the mission flips. Shoppers look for small, high-impact upgrades that make everyday life feel richer, healthier or more meaningful. These products are often bought in smaller quantities, used for specific occasions and supported by stronger storytelling. They are willing to cost more because they promise something extra beyond basic nourishment.
Examples include:
- Specialty coffee with origin cues, craft roasting and barista-style formats
- Premium chocolate with higher cocoa content, single-origin positioning or interesting inclusions
- Better meat and cheese with visible quality and messaging around animal welfare or regional sourcing
- Chilled “restaurant at home” meals and components, such as fresh pastas, sauces and sides
- Higher-quality ready-to-drink beverages, from cold brew and kombucha to functional sodas
According to Deloitte, many consumer products companies are betting on mix and innovation rather than further price hikes, with premiumisation and value-added services as key levers. In food, that often translates into products that deliver a richer sensory experience, clear nutritional or ethical advantages, or a stronger lifestyle fit.
The psychology behind these purchases is distinct from the logic of basics. A shopper who has just filled the trolley with private label pasta, rice and frozen vegetables may feel justified in adding a small pack of high-end coffee or a better chocolate bar. The absolute spend remains controlled, but the emotional yield per euro is high. Social media reinforces this mindset: “little treat” rituals, premium unboxings and home latte-art clips normalise the idea that a few euros can buy a micro-moment of luxury.
For brands, winning this space means being precise. “Slightly nicer than average” is not enough. Products need sharp reasons to exist: a clearly higher quality of ingredients, a recognisable origin story, a distinct flavour profile, a credible health or sustainability angle, or a fun, limited-time twist that sparks curiosity. Packaging pulls its weight too; it has to stand out without looking wasteful, signal trust and make the occasion obvious (weeknight upgrade, special breakfast, movie-night treat and so on).
In many cases, the Experience/Value-Added tier also plays a role in trade-up paths. Someone who starts with a basic grocery basket might gradually adopt a premium yoghurt, a higher-welfare poultry line or a regional cheese after tasting demos or seeing friends post about them. Premium food then becomes part of identity: how you care for yourself or the people you cook for, even while staying frugal elsewhere.
The Squeezed Middle: Why “Average” Brands Are Losing Ground
Between the sharpened value tier and the energised premium tier sits the traditional mid-price segment: brands that are neither the cheapest nor meaningfully better than alternatives. Historically, these products benefited from inertia. They were the default choice—trusted, familiar, “good enough”—and often benefited from strong above-the-line advertising.
Polarisation disrupts this comfort zone. When shoppers consciously think in terms of “save here, treat there,” products in the middle can feel like the worst of both worlds: not cheap enough to be a smart saving, not special enough to be a rewarding treat. They risk becoming invisible.
Several mechanisms drive this squeeze:
- Price comparison is easier. Shelf labels, apps and online shopping make it obvious when a mid-tier product is only slightly cheaper than a premium alternative or significantly more expensive than a private label equivalent.
- Retailers are pruning assortments. To simplify operations and highlight clear price tiers, retailers delist or reduce facings for SKUs that don’t have a clear role, especially “me-too” products.
- Promotions become a trap. Mid-tier brands often rely on constant discounting to keep volume, which trains shoppers to buy only on deal and erodes long-term brand value.
McKinsey points out that European grocers are actively optimising assortments and pushing for more clarity in price tiers to support profitable growth, which naturally favours strong private labels and truly distinctive brands over undifferentiated mid-tier offers. When space is limited and logistics costs are high, every SKU has to justify its existence.
For food manufacturers, this creates a stark strategic question for mid-tier portfolios: stay in the middle and hope loyalty holds, or move decisively towards one of the poles. That can mean repositioning certain lines as smart, transparent value choices—simpler, slightly cheaper, more honest about what they deliver. Or it can mean pushing other lines upwards with clearer origin stories, recipes, health benefits or ethical credentials. Doing nothing is the riskiest option; the mid-tier that doesn’t move is the easiest target when retailers look for space.
How Retailers and Brands Can Play Both Ends
The good news: polarisation does not mean choosing either value or premium. The most resilient grocery players build a coherent barbell: strong, trustworthy basics at one end and well-curated “wow” products at the other, with a much leaner middle.
For retailers, a practical playbook includes:
- Defining price roles for each category. Which SKUs are pure price-image builders? Which are margin drivers? Which are traffic magnets or basket stretchers?
- Building a clear value corridor. Within staples, offering obvious entry price points, robust private labels and visible price-per-kilo advantages reassures shoppers that they can “shop smart” in one place.
- Curating hero premium ranges. Instead of a confusing spread of mid-tier options, focus on a smaller number of standout premium lines with strong stories and clear occasions.
Revenue Management Labs emphasises that growth comes from understanding how different tiers and packs interact, and from using pricing, pack architecture and promotion design in a coordinated way rather than in isolation. That thinking applies directly to polarised food portfolios.
For manufacturers, the barbell mindset translates into:
- Cleaner portfolio architecture. Fewer “grey zone” SKUs, more clearly defined value and premium propositions, and visible differences in ingredients, formats and packaging.
- Occasion-based innovation. Designing products explicitly for “weekday fuel,” “weekend treat,” “solo comfort,” “family share,” or “on-the-go upgrade,” then pricing and presenting them accordingly.
- Honest storytelling. At the value end, emphasising reliability and smart choices; at the premium end, highlighting what is genuinely better—flavour, nutrition, origin, welfare, or sustainability.
Well-executed, this approach helps shoppers feel supported rather than manipulated. They see that the store offers ways to save and ways to treat themselves, and they understand which products play which role. That clarity builds trust—and trust is the real currency when budgets are tight.
Innovation in a Barbell World: Designing for Value and Experience
Innovation used to live mostly in the middle: slightly improved recipes, new flavours on familiar products, moderate price premiums. In a polarised market, the action shifts to the extremes.
On the Price–Performance/Basic side, innovation focuses on doing more with less:
- Reformulating to manage cost volatility while protecting core taste and safety
- Designing versatile staples that work across many dishes (e.g. neutral bases that can be customised at home)
- Optimising pack formats for logistics, shelf life and minimal waste
- Using simple, recognisable ingredients that support shopper trust
This kind of innovation is quiet but vital. It protects affordability without asking consumers to accept a visible downgrade. It also gives retailers confidence to push private label and value propositions harder, knowing that they can compete on both price and quality perception.
On the Experience/Value-Added side, innovation is more visible and story-driven. Deloitte notes that consumer products companies are leaning into innovation and broader demand-generation capabilities to achieve profitable growth, rather than pushing price alone. For food FMCG, that often means:
- Combining culinary inspiration with convenience: ready sauces, chilled components and meal kits that feel restaurant-level but stay simple to use
- Integrating health and sustainability in credible ways: high-fibre or lower-sugar recipes, better fats, regenerative or regional sourcing, animal welfare standards that consumers can understand
- Creating limited-time experiences: seasonal flavours, collaborations with chefs or creators, small-batch editions that invite trial and sharing
The innovation brief, in short, becomes more polarised: either build the most robust, trustable basics you can, or build products that clearly light up specific moments in consumers’ lives. Everything in between will need a compelling reason to exist.
In a few years, the grocery shelf will likely look even more clearly “barbelled” than today: a solid backbone of value and private label staples; a lean but meaningful set of mid-tier anchors that have sharpened their identities; and a dynamic layer of premium, bio, regional and experience-driven products that rotate and refresh. Brands and retailers that embrace this reality now, instead of defending a disappearing middle, will have the best chance to shape what that future looks like.
And if you want to dive deeper into how private labels themselves are driving both value and premium growth in this polarised landscape, your next stop is here.