Hi, it’s Dan Frommer. I’m excited to launch this new monthly Consumer Trends publication, the latest in my ongoing collaboration with Coefficient Capital.

We’ve now published nine in-depth Consumer Trends reports since 2020, and we’ve just kicked off work on our tenth.

In between reports, we’ll use this newsletter to highlight the latest consumer data, trends, and charts — and whatever else captures our attention. As with our reports, our focus here is on profound shifts in the consumer landscape, always with an eye on where things are going.

On a personal note, the Consumer Trends franchise has become some of the most important (and popular) work of my career, and I’m thrilled to continue expanding it with Coefficient’s support.

Feel free to share this series widely — it’s free to read. If you’ve been forwarded this and want to receive our updates monthly, sign up for a free account at The New Consumer, or for more analysis and benefits, become a member.

We welcome your feedback and ideas — I’m dan@newconsumer.com. Thanks!

A strong US consumer

The big picture is that the US consumer continues to set new spending records: Up nearly 6% year over year in March to more than $19 trillion, in line with last year’s growth.

“Consumer spend across all segments, from low to high spend, has remained relatively stable,” Visa CFO Christopher Suh said on the company’s Q2 earnings call.

• E-commerce spending grew 7% year over year in the first four months of the year, to $332 billion, according to new figures from Adobe, which saw particular growth in online grocery spending. Meanwhile, Instacart reported 11% year over year growth in gross transaction value in the first quarter, an acceleration.
• Consumer sentiment also continues to build. The University of Michigan sentiment score passed 77 in April, up 21% year over year. That’s still roughly a quarter below pre-COVID levels, but up by around half from its low point two years ago.
• Rising prices — particularly food prices — continue to be a top issue for Americans, even as the pace of inflation has decelerated. Some 62% of households said they were “extremely concerned” about inflation in April — flat from March — according to the latest consumer research conducted by the grocery giant Kroger’s 8451 data group. Consumers increasingly say they’ll cook more meals at home, and eat fewer at restaurants, according to the survey.
• The Fed also thinks inflation is still too high. Goldman Sachs now expects interest rate trims to start in September, coming down to a terminal level of 3.25% to 3.5% in the medium term, according to a report sent to clients.
• Unemployment, meanwhile, remains low and steady: 3.9% in April, according to the US Bureau of Labor Statistics.

We continue to believe the new consumer economy is alive and well.

New data on TikTok Shop

TikTok’s future in the US is increasingly uncertain, as it has once again become a political target. But TikTok Shop — its relatively new in-app store — continues to grow, showing that it’s still one of the most important stories in e-commerce.

People spent 30% more on the platform in March than they did in February, according to Earnest Analytics, which tracks US consumer credit and debit card spending. April was about the same as March.

March, by the way, represented a return to spending growth on TikTok Shop after relatively flat spending between November (peak holiday shopping) and February. The average purchase remains around $40, according to Earnest data.

TikTok Shop was a major topic in our Consumer Trends 2024 report, which we released last December. Forbes recently interviewed me about the phenomenon, citing some of our analysis.

The big questions remain the same: Will TikTok Shop still work when the huge subsidies and discounts go away? Will it become a place where people actually come to shop on purpose — as opposed to impulse-purchasing the cheap, fun, sometimes weird stuff that goes viral in TikTok videos? And will TikTok users get sick of all the Shop placements, reducing their engagement? (They haven’t fled yet!)

But there’s also a new one now: Will the US government successfully force one of the fastest-growing e-commerce merchants to separate itself from its Chinese ownership — or shut down in protest?

Matcha Point

One bright spot from Starbucks’ otherwise forgettable Q2 earnings call this month: That its spring lineup of lavender-flavored beverages, especially an iced matcha latté, had performed well — nearly as well, the company said, as its iconic fall seasonal beverage, the pumpkin spice latté.

Matcha, a format of green tea most closely associated with Japan, has been in the US for decades (Starbucks was an early adopter). Its popularity has increased significantly over the past several years, according to Square, which powers point-of-sale terminals for a large number of US coffee shops and restaurants.

Boba and chai, two other Asian tea beverages, are also around their peak popularity in the US, according to Square data. But matcha has had the steepest growth trajectory among the three.

Scanning Ibotta’s IPO

Ibotta, a digital marketing platform for CPG brands, went public last month and now has a ~$3 billion market cap. The company operates at the intersection of retail media, targeted advertising, gamified consumer shopping, and deal-hunting. It’s a timely place to be in the age of food inflation, and yet another example of how the consumer journey is increasingly omnichannel.

During the fourth quarter of 2023, 13.6 million users redeemed almost 94 million offers through Ibotta — usually cash-back offers after purchasing an advertiser’s product at a major retailer — according to its S-1 filing. Users submit receipt photos or link their loyalty accounts, depending on the merchant.

Ibotta has about 2 million “direct to consumer” users who, on average, submit almost 20 redemptions through its app each quarter. (It’s the best game on my phone — I’ve already earned $227 from redemptions over the past few years, just for uploading receipts.)

But partnering with major retailers to power digital coupons on their websites — notably Walmart, which now has warrants for a stake in the company — has driven substantial distribution and revenue growth. In the fourth quarter of 2023, more than half of Ibotta’s redemptions happened via third-party publishers, up from 20% one year prior.

On the other side of the transaction, Ibotta works with more than 850 clients representing more than 2,400 brands, charging around $1 to process each redemption. It generated $38 million in profit on $320 million in sales (up 52%) last year.

Our latest report: The Food & Wellness Expo Special

Our most recent Consumer Trends report focuses on rising trends in food and wellness, including exclusive data supplied by Instacart. You can view the report here.

This time, we reveal what our proprietary Consumer Trends Survey panel of 3,000+ US consumers wants to consume more in 2024 (vegetables, protein) and less (sugar, alcohol); that Ozempic now has higher brand awareness than Lipitor; and how much most Americans say they would pay to live longer (less than $100 per month).

We remain obsessed with the impact Ozempic and other GLP-1 medications will have on consumption, including conducting one of the few surveys to actually poll GLP-1 users.

Morgan Stanley recently predicted that ice cream consumption could decline 5% by 2035, and that other categories of sugary products would also shrink.

What we would add from our research: While we also expect consumption volume to change over time, GLP-1 users say they shop differently. In our survey, they already say they’re “trading up” on what they buy — to more premium brands and products — at a much higher proportion than everyone else. And they’re more likely to try new grocery products and brands.

We’ve kicked off research for our next big report, due in July. Please get in touch if there’s a topic or question you’d like us to consider: dan@newconsumer.com.