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Discounters Grow To Grab 10% Share Of British Grocery Market
The latest grocery share figures from Kantar Worldpanel for the 12 weeks ending 8 November 2015, show the combined share of discount retailers Aldi and Lidl has reached 10% of the British grocery market for the first time.
Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, comments: “If you look back as recently as 2012 Aldi and Lidl only held a 5% share of the market, and it had previously taken them nine years to double their combined share from 2.5%. In the last 12 weeks the two retailers have attracted another additional million shoppers compared with last year while average spend per trip has increased by 4% to £18.85, which is 78p ahead of the total retailer average. The discounters show no sign of stopping and with plans to open hundreds of stores between them, they’ll noticeably widen their reach to the British population.”
Lidl’s market share reached a new record high of 4.4%, increasing by 0.7 percentage points on last year thanks to a sales growth of 19%. Aldi grew sales by 16.5%, keeping its market share at 5.6% for the fifth consecutive month.
Despite the ever more high-profile Christmas advertising campaigns launched by the supermarkets in recent weeks, the overall market remains slow. Sales were only up by 0.5%, held back by persistently falling prices which remained down by 1.7% on a like-for-like basis.
Fraser McKevitt continues: “Sainsbury’s has seen its fourth consecutive period of growth, flying in the face of tough market conditions. It’s 1.5% increase in sales was sufficiently ahead of the market for the retailer to increase its share by 0.2 percentage points – the first share gain registered by any of the ‘big four’ retailers since October 2014.
“Sainsbury’s performance means it has once again regained its position as Britain’s second largest supermarket, pushing ahead of Asda in the latest 12 weeks. The food-focused retailer traditionally increases its market share over Christmas, so we can expect to see it keep hold of second place for the time being.”
Sales fell at the rest of the major retailers – at Tesco they were down by 2.5% while Morrisons saw sales fall by 1.7%. With a raft of recent announcements including a range reduction and increasing click-and-collect opportunities in its stores, Asda will be looking to improve upon its decline of 3.5% in the coming weeks.
Growing revenues this quarter were Waitrose and the Co-operative, where sales were up by 2.7% and 1.5% respectively. The Co-operative’s market share gain of 0.1 percentage points to 6.3% is its first year-on-year share gain since 2011, when the benefits of the Somerfield acquisition were still being felt.
With ongoing interest in clean labeling and greater transparency, the free-from category is continuing to grow globally and, in addition to the high-profile developments in areas such as lactose-, dairy- and gluten-free foods and drinks, there has also been a marked upturn in interest in GMO-free or non-GMO products.
In terms of product activity, launches featuring GMO-free claims and labeling remain relatively limited on a global scale. Over 13% of launches recorded by Innova Market Insights in the 12 months to the end of June 2015 were marketed on an additive-free or preservative-free platform, while 7.8% were marketed as organic and 6.3% as natural. At the same time just 4% used GMO-free labeling, although this was a significant rise year-on-year, driven mainly by rising levels of interest in the US. Over the 12-month period, the US accounted for 43% of global launches using GMO-free claims, moving ahead of the EU on 39%, despite the much larger number of countries involved in the latter region.
According to Lu Ann Williams, Director of Innovation at Innova Market Insights, the use of genetic modification has become an issue in recent years in the US in particular, where there has traditionally been only limited consumer resistance to GM foods. “While GM foods have to be labeled in other parts of the world, including the EU,” she reports, “this has not been the case in the US to date. After rising levels of concern, the growing use of GMO-free labeling and the development of schemes such as Non-GMO Project Verification, some US states started to discuss introducing their own legislation and there is currently also a move for USDA to create its own voluntary non-GMO certification program.”
Bakery products and snacks lead in terms of numbers of global GMO-free introductions, accounting for 12% and 11%, respectively, reflecting the significance of GM ingredients in sectors using high levels of cereals for food. While these two product categories led in terms of introductions overall, cereals led in terms of share, with over 13% of launches of breakfast cereals and cereal bars featuring this type of labeling, compared with 7.4% for snacks and 4.6% for bakery products.
There has also been relatively strong interest in non-GMO labeling in the dairy industry, where a natural image has traditionally been important and there is already ongoing activity in organic and pasture milks. There is a strong link between organic and GMO-free certification, with many products using both types of positioning. In the US, these include leading organic dairy producers such as Stonyfield Farm and Organic Valley, as well as non-dairy drink lines such as blue Diamond’s Almond Breeze and white Wave’s Silk. The leading US Greek yogurt brand Chobani is also certified non-GMO.
Dairy products have also been one of the key areas for non-GMO or GMO-free labeling in Europe, where, despite compulsory EU regulations on labeling of genetically modified foods having been in force since the 1990s, there has still been ongoing pressure to verify and more easily identify non-GMO options. This has been led by countries such as Germany and Austria. Dairy launches using a GMO-free positioning accounted for nearly 28% of Austrian dairy introductions in the 12 months to the end of June 2015. This compared with 3.2% in the EU as a whole, just over 5% globally and just under 10% in the US.
Consumers Reap The Benefits Of Ongoing Grocery Price War
The latest grocery share figures from Kantar Worldpanel for the 12 weeks ending 11 October 2015, show overall supermarket sales growth up by only 0.8% compared to a year ago.
Despite a more buoyant overall economy, supermarket revenue growth has not reached above 1% since March 2015.
Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, explains: “With like-for-like grocery prices 1.7% lower than last year, the supermarket price war shows no signs of abating. Consumers have now enjoyed more than 12 months of continually falling prices and are currently pocketing these benefits rather than splashing out on substantially more grocery items, with overall volume growth of only 2%. This equates to £1.5 billion taken out of the market in the last year, saving each household £58 on average.”
Sainsbury’s was the only one of the larger supermarkets to see sales growth this period, and a strong performance in its online and Local stores helped it to increase revenues by 1.1%, though market share was static at 16.1%. Sales fell at Tesco by 1.7%, though it is too early to see the impact of its revamped ‘Brand Guarantee’ initiative. At Asda sales fell by 3.0%, bringing its market share down by 0.7 percentage points to 16.6%. Meanwhile, sales at Morrisons fell by 1.0%, taking share to 10.8%.
In contrast to the overall market, online grocery sales have increased by 9.8% on last year. Despite this rapid expansion, space for retailers to increase both share and revenue in this area remains, with less than a fifth of households currently shopping online.
Fraser McKevitt continues: “Internet sales offer a chance of long term growth – only 18% of households bought groceries online in the last 12 weeks meaning there’s plenty of space for further expansion. The convenience factor and minimum spend restrictions mean online baskets tend to be larger, averaging £67 in value, compared with £14 for the average bricks and mortar trip. Amazon Fresh’s expected full launch early next year could be a major disruptor, bringing down average basket sizes, accommodating on demand shopping, and accelerating the growth of the whole online market.”
After a slowdown earlier this year, the discounters have both seen their rate of growth return to above 17% during this period. Fraser McKevitt explains: “For the second successive month Lidl has reached a new share high, now claiming 4.3% of the market and growth accelerating to 17.9%. Growth was particularly strong in Scotland, the scene of its ‘smarter shopping’ card trial. It’s a similar story for Aldi, where revenues are up 17.6% on a year ago.”
There has been further success this period for Waitrose, up by 2.1%; the Co-operative, where sales grew by 1.0% and Iceland, growing for the sixth month in a row and increasing sales by 3.2%, benefitting from a wider range of premium products.
Grocery inflation now stands at -1.7%* for the 12 week period ending 11 October 2015. This means shoppers are now paying less for a representative basket of groceries than they did in 2014. This is the same fall as reported last month. Falling prices reflect the impact of Aldi and Lidl and the market’s competitive response, as well as deflation in some major categories including eggs, bread butter and crisps.