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Shoppers Turn To Healthy Eating As Free-From Soars In Grocery Market
The latest grocery market share figures from Kantar Worldpanel for the 12 weeks ending 26 March 2017, show supermarket sales increased in value by 1.4% compared to the same time last year.
Slower growth was primarily due to Easter falling outside the latest 12 weeks, while the celebration fell within the comparable period last year.
Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, explains: “Despite rising prices, we’ve seen shoppers’ minds turn to healthy eating after the excess of the festive period and before the temptation of Easter. Greater demand for gluten or dairy-free products, particularly from younger shoppers, has boosted the ‘free from’ category by 36% year on year. In fact, 54% of the population purchased a ‘free from’ product during the past three months – that’s 3.3 million more people than last year.
“Meanwhile inflation shows no signs of abating. The price of everyday goods is up by 2.3% compared to this time last year, and rising prices cost the average household an additional £21.31 during the past 12 weeks.
“We expect inflation to continue to accelerate, and as a result we’re likely to see consumers looking for cheaper alternatives. A reduction in promotional activity means the proportion of spending on promotions now stands at just 32.9% – 5.5 percentage points lower than last year. As a result, offers are becoming a less significant option for shoppers looking to save money. Already taking market share from their branded rivals – and up nearly 5% during the past 12 weeks – own label lines could be among the main beneficiaries of inflationary pressure.”
In terms of the performance of individual retailers, both Lidl and Aldi reached new record high market shares during the past 12 weeks, now accounting collectively for 11.7% of the grocery market. Sales growth of 15.0% made Lidl the fastest growing retailer, increasing its share of the market by 0.5 percentage points to 4.9%. Meanwhile, Aldi grew sales by 14.3%, taking its share to 6.8%. An ongoing programme of store openings by both retailers meant that the two together attracted an additional 1.1 million shoppers over the past three months.
Iceland posted its strongest sales growth since March 2013 – up 9.8% year on year – thanks in large part to the supermarket’s fresh and chilled lines. These products now account for more than a quarter of sales at the retailer, as Iceland moves beyond its traditional focus on just frozen foods.
Fraser McKevitt continues: “Slowing growth rates because of the late Easter meant that Morrisons was the only one of the big four to grow sales over the period: up 0.3% during the past 12 weeks. However, strong performances in produce and chilled convenience weren’t enough to stop Morrisons’ market share slipping by 0.1 percentage points to 10.4%.
“Sales at Tesco were down 0.4% overall, although growth in its own-label Farm Brands remains impressive one year after launch: 64% of Tesco shoppers made a purchase from the line during the past 12 weeks. Despite success in this area, Tesco’s market share fell by 0.5 percentage points to 27.6%. At Asda sales fell by 1.8%, while Sainsbury’s declined by 0.7%.”
Co-op enjoyed its 23rd consecutive period of growth, increasing sales by 0.8% year on year. Meanwhile Waitrose – up by 0.3% – welcomed an even longer run of success. With its market share now standing at 5.1%, the retailer has seen unbroken growth since March 2009, when it held just 4.0% of the grocery market. Both grocers were bolstered by success in premium own label: the Irresistible and Waitrose 1 ranges were the fastest-growing lines within each business during the past 12 weeks.
Clean Eating Pushed Avocados Centrestage For Consumers In 2016
The nation’s bid to be healthy in 2016 helped to push up sales of almond milk, avocados, and new flavours of water last year, according to new retail data released by IRI, the provider of big data and predictive analytics for FMCG manufacturers and retailers.
The company’s Product Growth Categories data for 2016 shows a clear trend towards alternative or healthy products, with almond milk, a non-dairy alternative, topping the list (by percentage growth) with sales of £62 million, up 32% over the previous year. With supermarket sales of £187 million, avocados came third in the list, showing 28% growth over the previous year, followed by fortified water (£55 million) up 25%, and coconut water (£63 million) up 20% over 2015.
2016 also saw strong sales of peanut butter – an industry now worth £80 million to UK retailers – up 20%, and juice smoothies up 17.5% to £154 million.
Martin Wood, Head of Strategic Insight – Retail at IRI, suggests: “2016 was the year of so-called ‘clean eating’ led by a group of lifestyle gurus, food bloggers and Instagrammers who are highly influential among consumers, particularly younger shoppers. It encourages people to eat non-processed foods like fruit and vegetables, wholegrains and protein, and drink lots of water.
“IRI’s figures suggest the trend may have influenced what people put in their shopping baskets, with some products showing exceptional growth in an FMCG market that has been relatively flat over the last 12 months. Usually we see a big uptick in sales of healthy products, like fruit and veg, at the start of each year triggered by New Year resolutions to be more healthy, but this was clearly more sustained growth over most of the year, apart from in the lead up to Christmas when shopping is strongly geared towards buying spirits, wine and other seasonal treats.”
As well as a move away by consumers from what are perceived as less healthy products, like sugary drinks, and growth in vegetarian alternatives, IRI points to new product innovation and improved distribution of products as a significant growth driver for retailers and food and drink manufacturers.
“Retailers are wising up to changing consumer habits and preferences and this is making a big difference in the availability of certain products on supermarket shelves, like dairy alternatives (coconut, almond, rice etc) and foods with plant-based proteins. But retailers are also faced with a dilemma – balancing demand by shoppers for choice and convenience with the need to rationalise product ranges and make the whole shopping experience easier.”
Despite the prominence of healthy and alternative items on the 2016 best seller list, sparkling wine and golden and dark rum also feature in the top 10 of products ranked by growth, while gin, which had a strong year last year in supermarkets, also features in the top 20.
New research from Technavio underscores the potential for bakers and cereals processors to vastly boost their gluten-free sales in a market hungry for innovation and value. The report’s findings are the latest to predict strong growth in the global gluten-free market, with an expected CAGR of 12% by 2021 . Using added-value ingredients like inulin in these applications further boosts their appeal and presents huge growth opportunities for brand owners, according to Sensus.
The Technavio study reinforces previous research that highlights the ‘worried well’ as a key driver for expansion: a group that wants clear health benefits, but no compromise in product choice or quality . Inulin is filling the reformulation gap, providing a healthy, high quality solution that sets gluten-free products apart on retailers’ shelves.
One of the primary drivers behind the popularity of gluten-free eating is the expanding awareness of its health benefits, particularly for digestive wellness. The rise of the ‘worried well’ – healthy people who make self-diagnoses – as well as increasing numbers of celiac sufferers, are fuelling the gluten-free market and make these products attractive to a wider range of people than ever before.
Inulin offers food manufacturers a proven solution for digestive wellness, to meet rapidly growing consumer demand. Enabling further product innovation in the gluten-free market, inulin also allows the reduction of fat and sugar levels and a clean label, making for a holistically healthy product profile.
Brigitte Peters, Technical Manager at Sensus, comments: “Despite their health credentials, gluten-free products can be difficult to formulate and are often dry. But our research has found that, as well as boosting nutritional profile, Frutafit® inulin, which is extracted from chicory roots, provides valuable functional benefits, like improving texture, enhancing appearance and increasing moisture levels in baked goods. Plus, as a natural ingredient, it provides added value for label-conscious consumers.
“Gluten-free products have traditionally appealed to people with specific allergies or sensitivities, but increasing numbers of consumers are cutting gluten intake simply because they perceive it as a healthier option. Gluten-free products are difficult to perfect but ingredients such as Frutafit® inulin offer both the scientifically-proven health benefits and functional properties required of tomorrow’s most successful gluten-free innovations.”