Fresh food drives £3.7bn growth in groceries

By James Ridler contact

- Last updated on GMT

Fresh food and confectionery led last year's growth in the grocery market
Fresh food and confectionery led last year's growth in the grocery market
Fresh food saw the largest category growth in the grocery market last year, as consumers spent an extra £3.7bn on fast-moving consumer goods (FMCGs), according to new research by Nielsen.

Fresh food, confectionery and snacks sales accounted for 61% of the growth in the grocery market across western Europe for the 52 weeks to December 25 2016.

Fresh foods accounted for £1.3bn (38%) of the overall growth, followed by confectionery and snacks at £870M (23%). Alcoholic beverages sales grew by £738M (20%).

Sales of ambient foods saw the fourth largest growth last year – by £268M – followed by frozen food (£244M) and non-alcoholic beverages (£183M). See more details in the table below. 

Fresh meals, sparkling wine and beer were the sub-categories contributing most to the UK grocery sector’s growth in 2016. However, fresh meat, cereals and bread sales declined last year.

‘Change in consumer tastes’

Nielsen’s UK head of retailer and business insight Mike Watkins said: “Category growth generally follows a change in consumer tastes – such as sparkling wine – whilst a fall in a category’s sales value is often the result of deflation or a very competitive retail landscape, such as is happening in fresh meat and cereals.”

Baby milk was the category with the largest fall in sales across western Europe at -9.5%. Margarine sales were -4.4%, the second highest drop.

Senior vice president of Nielsen’s retail division Olivier Deschamps said fresh food and confectionery’s growth was driven by consumers buying more items, while alcohol sales were boosted by paying higher prices.

“It’s interesting to see this significant growth coming from fresh food: fresh is clearly a strong focus for retailers in order to attract shoppers and have a positive impact on their image,” ​he said.

‘Contributed the most to category growth’

“In terms of sub-categories, fresh meals, beer, fresh fruit and vegetables and mineral water contributed the most to the grocery sector’s overall growth.”

Manufacturers outside the 10 biggest players accounted for 70% of the growth in the western European grocery market, while own-label brands made up the remaining 30%. See more details below. The Top 10 saw a £372M decline in consumer spend. 

Meanwhile, think-tank IGD forecast the UK grocery market to grow 10% to a value of £197bn by 2021,​ with online the fastest growing format.

Manufacturers’ market share

Manufacturers outside the top 10 now have a 46.6% market share, followed by own label (36%) and the Top 10 (17.4%), according to Nielsen.

Nielsen claimed half of the growth in the overall grocery market was due to promotional items, which retailers had increasingly used last year to encourage shoppers to add more items to their shopping baskets.

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