The United Kingdom has been experiencing exceptionally damp weather this early summer, which has had a negative impact on food and beverage sales. According to the latest sales data from Kantar, there has only been a 1% increase in food sales over the past four weeks, marking the slowest growth rate since June 2022. However, with a period of fine weather expected in the next few weeks, there is hope for a much-needed sales boost.
The gloomy weather has particularly affected impulse categories, with last year’s exceptionally hot June leading to increased spending on drinks and snacks. Soup sales have seen a notable increase of 24%, but overall sales have been lacklustre.
The upcoming Euros football tournament may bring a more positive outlook among shoppers, providing an opportunity for celebration and increased spending. It is worth noting that a survey conducted by NIQ of Britain’s Biggest Alcohol Brands has highlighted a growing trend of moderation in modern society, with retailers and brand owners offering lower-alcohol options to cater to changing consumer preferences. This trend towards moderation has also been inadvertently encouraged by new duty levels introduced by the government.
On a positive note, food price inflation has returned to normal levels, likely to further encourage spending. Kantar’s data reveals that the number of “comfortable” households has doubled, indicating a more positive sentiment among consumers.
The grocery market landscape is also experiencing significant changes, with discount retailers such as Aldi and Lidl making strides in the industry. Aldi has already surpassed Morrisons to become part of the new ‘big four’, and Lidl is expected to achieve a similar feat in the coming months. Meanwhile, M&S is on track to overtake Waitrose as it targets the weekly shopping needs of consumers.
The evolving market dynamics raise questions about the Competition & Markets Authority’s previous stance on the dominance of the big four retailers. Just five years ago, the CMA concluded that the big four were the primary players in the market, overlooking the potential of discount retailers due to their smaller size and limited range. With the current shift in consumer preferences and market trends, it is evident that the discounters are gaining momentum.
Furthermore, the highly competitive supermarket sector prompts consideration of potential mergers. As the CMA criticizes Asda’s decision to increase fuel prices without investigating the role of oil majors, the question arises: is the supermarket sector ripe for a merger?
In conclusion, the anticipated sunshine and changing consumer preferences are expected to bring a much-needed boost to the food and beverage industry in the UK. The evolving market dynamics and competitive landscape indicate a potential shift in the dominance of traditional retailers, paving the way for further changes in the industry.