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The latest grocery market share figures from Kantar Worldpanel for the 12 weeks ending 26 February 2017, show supermarket sales grew at their fastest rate since June 2014 – up by 2.3% compared to the same time last year.
Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, explains: “Like-for-like inflation has doubled since last month to stand at 1.4% during the past 12 weeks. However, when placed in their longer-term context, these price increases are still fairly minimal.
“Staples such as butter, tea and fish all saw prices rise by more than 5% during the past 12 weeks, as fruit and vegetables – many of which are imported – also saw an uptick in price. However, it’s important to point out that inflation is still far from universal, with prices actually falling across a number of categories including crisps, bacon and eggs.
“While consumers may be starting to feel a very slight pinch, increased inflation has led to overall market growth. Simultaneously, combined sales at the UK’s four largest supermarkets increased by 0.5% year on year. This is a timely reminder that despite the huge interest in the discounters during recent years the big four remain a force to be reckoned with: they still hold just over 70% of the market, with almost 99% of the population shopping in a Tesco, Sainsbury’s, Asda or Morrisons during the latest quarter.”
Individually, Morrisons grew ahead of the market with a sales increase of 2.6% signalling its fastest growth in five years. Holding market share steady year on year at 10.6%, the retailer’s positive bricks and mortar performance was buoyed further by the continued rapid expansion of its e-commerce business.
Tesco increased sales for the sixth period in a row – a run it hasn’t experienced since January 2014 – although this wasn’t enough to stop the grocer’s market share slipping by 0.5 percentage points to 27.9%. Asda was the only retailer to see sales fall during the past 12 weeks, but a decline of just 0.8% represents a significant improvement and is the grocer’s best performance since November 2014.
Fraser McKevitt continues: “To the catchy soundtrack of its new ‘food dancing’ advertising campaign, Sainsbury’s returned to growth for the first time since March last year, with sales up by 0.3%. At the same time, its market share slipped by 0.3 percentage points leaving the grocer with 16.5% of the market.
“Lidl became Britain’s fastest growing supermarket during the past 12 weeks – with sales up by 13.0% – while Aldi grew almost as quickly, increasing sales by 12.9% to reach a record market share of 6.3%. Also growing ahead of the market was Iceland, with sales up 8.8%. Meanwhile Co-op and Waitrose both increased sales by 1.7% and 2.9% respectively.”
There were signs of changing shopping habits too. Having peaked at just over 40% of sales in 2015, the proportion of groceries sold on promotion continues to decline, falling to 34.3% during the past 12 weeks – its lowest level since October 2009. The most dramatic shift has been a move away from multi-buy promotions, with shoppers spending half a billion less on these types of deals than last year.
Fraser McKevitt comments: “Despite the general move away from multi-buys, meal deals remain popular – particularly around Valentine’s Day. Premium meal deals, which offer dinner for two at a price point of £10 or above, were bought by nearly 2 million consumers in February as Valentine’s Day offered a welcome opportunity to splash out.
“In fact, British diners spent £9 million more on premium meal deals than during the same period last year, suggesting that celebrating special occasions at home is an increasingly appealing option. 1.2 million shoppers bought still wine as part of their premium meal deal, 700,000 plumped for sparkling wine and 840,000 bought chocolates.”
Kefir appears to be bucking the trend that has seen launch activity in drinking yogurts and fermented beverages remain relatively static in recent years. While kefir launch numbers are still limited globally, Innova Market Insights data indicate that they grew more than three-fold between 2011 and 2016. This is despite launches in the overall drinking yogurt/fermented beverages sub-category rising by a much more modest +60%.
“As interest in fermented dairy products spread in the west alongside the arrival of the so-called functional foods market in the 1990s,” reports Lu Ann Williams, Director of Innovation at Innova Market Insights. “Kefir started to move out of its home in the Caucasus via limited availability in specialist health food stores in western markets to a more value-added, mainstream positioning, particularly in the US,” she adds.
The US pioneered the kefir market in the west and brought value-added options in resealable plastic bottles to the mainstream market. This allowed for more direct competition with other dairy and non-dairy beverages. It accounted for over one-third of global kefir launches in 2016 and beverages featuring kefir accounted for 40% of US drinking yogurt/fermented beverages introductions overall, compared with just over 8% globally. Europe accounted for the bulk of the remainder, led by more traditional markets in Eastern Europe, although launches in Western Europe have grown strongly, but from a very small base.
Kefir is strongly promoted on its healthy properties, particularly with rising interest in fermented foods and beverages overall. All US and nearly 94% of global launches used some kind of health positioning in 2016. There was initial emphasis on probiotics, particularly focusing on digestive health benefits. Even though regulatory issues have made this type of claim more difficult in some parts of the world, digestive health claims were still used for nearly two-thirds of global launches in 2016.
Nearly half of kefir launches use low fat claims and the sector has also not been slow to exploit rising concerns over sugar intake in the diet. The number of global launches positioned on low sugar/no-added-sugar and sugar free positionings double in 2016 to feature in 20% of the total. Organic and lactose free variants are also increasingly common, among kefir launches.
IEA Report Shows That People Prepared To Pay For Convenience Of Food
Contrary to the claims of some health campaigners, it is cheaper to buy healthy and nutritious food than it is to buy processed ‘junk food’.
A new report from the Institute of Economic Affairs uses data from two leading supermarkets to compare the prices of 78 common food and drink products, finding that healthier options are mostly cheaper than less healthy alternatives.
When measured by edible weight, the cheapest ready-meals, pizzas, burgers and sugary breakfast cereals cost more than £2 per kilogram, whereas typical fruit and vegetables cost less than £2 per kilogram. And whilst £1 will buy you one cheeseburger, that same £1 could buy you a kilo of sweet potatoes, two kilos of carrots, two and a half kilos of pasta, ten apples or seven bananas. And the Government’s daily recommended five portions of fruit and vegetables can cost as little as 30p.
The report debunks studies which claim that healthy food is more expensive, finding they use the flawed methodology of comparing food products by their cost-per-calorie. This has the perverse effect of making low-calorie food appear expensive by definition. A better approach is to compare typical servings of food by weight or portion size.
Ultimately price is not the main driver of unhealthy food consumption; often consumers are prepared to pay more for taste and convenience. The popular belief that obesity and poor nutrition are directly driven by economic deprivation is untenable. If the price of food was a primary consideration, people (particularly those on low incomes) would eat more fruit and vegetables. The use of taxes and subsidies to incentivise better nutrition is unlikely to be successful. In practice, these measures would tax the poor and subsidise the rich.
Assumption that the high cost of healthy food causes obesity is flawed: * Obesity has increased rapidly at a time when incomes have risen and food prices have fallen. * Obesity rates are higher in rich countries than in poor countries. * People fail to buy more fruit and vegetables when they become richer. * There is a high rate of obesity among people on middle and high incomes. * The correlation between deprivation and obesity is only seen among women. * Obesity rates among men are highest among middle income earners.
Proposed tax and/or subsidies would be regressive:
There have been calls to bring in taxes or subsidies to encourage people to make healthier food choices, but such measures would be hugely problematic:
* Taxing food would be highly regressive given that food disproportionately consumed by people on low incomes would be taxed in order to subsidise food that is disproportionately consumed by high earners.
* It is doubtful that changes in pricing would have a significant impact on people’s choices given that healthy food is already cheap.
* Subsidising foods would create huge administrative costs given the difficulty classifying each foodstuff would present.
Commenting on the report, author Christopher Snowdon, Head of Lifestyle Economics at the Institute of Economic Affairs said:
“A diet of muesli, rice, white meat, fruit and vegetables is much cheaper than a diet of Coco Pops, ready-meals, red meat, sugary drinks and fast food. A wide range of healthy alternatives are available at the same price as the less healthy options.
“The idea that poor nutrition is caused by the high cost of healthy food is simply wrong. People are prepared to pay a premium for taste and convenience.
“A nutritious diet that meets government recommendations is more affordable than ever. Given the relatively high cost of ‘junk food’, it is unlikely that taxing unhealthy food or subsidising healthy food would change people’s eating habits. Instead, it would transfer wealth from the poor to the rich.”