Blog: The unresolved debate on trading up in the UK
Dean Best | 4 May 2007
UK consumers are starting to trade up when it comes to their food shopping. That’s pretty much a fact.
For decades, spending on food as a proportion of total consumer expenditure has fallen. Now, that trend has stopped and there are signs that it is reversing.
Tesco chief executive Terry Leahy has been very bullish about the greater willingness among some consumers to trade up. Leahy says consumers are demanding greater diversity in food and are taking more interest in cooking and the provenance of food. According to Leahy, it’s not just the affluent consumer spending more on food; it’s everyone.
What’s more, at the IGD Global Retail Conference 2007 held in London yesterday (3 May), just-food heard that the market for premium foods would grow by 46% to reach GBP19bn (US$38bn) in the UK by 2012. We were told that rising demand for more “ethical” products – organics, Fair Trade and so on – was driving the growth in premium foods. And suppliers had to react to that change now or face being left behind.
However, before the country’s big retailers get too excited about the prospect of higher margins, questions remain over how widespread the trend is – and its longevity. Are all UK consumers reacting this way? That seems doubtful. Such demand also seems reliant on the health of the economy; if there’s a downturn, “premium” foods would most likely be among the first goods consumers cut back on as they tighten their belts.
And it’s not clear that all retailers would benefit from this popularity of premium food. As Merrill Lynch analyst Andrew Fowler argued, as a brand, Asda seems out of step with the trend to premium. Fowler also asserted that, among the major retailers, Tesco is not seen as a particularly upmarket brand, especially when compared to Sainsbury’s or Waitrose.
Something for all of us to chew on.
We hear a lot in the food industry about two interconnected trends: and social media and “foodie” culture....
Nestle, set to welcome a new CEO on 1 January, has announced more changes to the make-up of its senior management team....
Blue Bell Creameries is trying to win back the trust of consumers after a fatal listeriosis outbreak last year was linked to its products - but in recent days the US ice cream maker has issued another...
The UK's competition regulator has given the all-clear to Hain Celestial's bid to buy UK food and beverage group Orchard House Foods, nine months after the US group announced the deal....
- General Mills on Q1, innovation, margins
- Interview: Mondelez's outlook for China
- Aryzta FY results, outlook for 2017 - 6 takeaways
- What next for Bernard Matthews? - comment
- Interview: Mondelez eyes sweet success in China
- ConAgra acquires Frontera Foods' "gourmet" brands
- Nestle revamps foodservice arm
- Aryzta FY profits fall
- Nestle close to finalising Garoto deal
- Nestle launches Nesquik Protein Plus for adults
- The Big 15: Strategies and Priorities of Top Packaged Food Players in Comparison
- Global Chocolate Confectionery Overview: Challenges, Opportunities and Risks
- Global Foodservice Market 2016-2020
- Constellation Brands, Inc. (STZ) - Financial and Strategic SWOT Analysis Review
- Global Food and Drinks Closures: Performance and Opportunities