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July 22, 2011

UK: “Consumer recession” hits food volumes in Europe

A "consumer recession" is hitting food sales volumes in parts of Europe, analysts at SymphonyIRI have claimed.

By Dean Best

A “consumer recession” is hitting food sales volumes in parts of Europe, analysts at SymphonyIRI have claimed.

A SymphonyIRI study of sales data by volume and value, as well as promotional activity, in seven European countries for the first quarter of 2011 showed consumers were buying less.

“Consumer confidence is at an all time low across Europe,” said Tim Eales, SymphonyIRI’s director of strategic insight. “With food prices rising faster than earnings, nervous consumers are now starting to reduce their weekly grocery shop.”

He added: “This is the first time we have seen a reduction in grocery sales volume and is in contrast to shopper behaviour during the recession where many countries increased their weekly grocery shop as they traded down their treats to cook at home instead of eat out for example.”

The publication of the SymphonyIRI study followed news in the UK that in June the country’s food retailers had seen the sharpest fall in sales volumes since records began in 1988.

SymphonyIRI’s research showed that FMCG volumes in the UK fell 1.8% during the first quarter of the year. Volumes in Italy also dropped by 1.8% while, in Germany, they were down 1.6%.

However, in the Netherlands, volumes were up, climbing 1%. Sales volumes also rose in France, increasing 1.2% and, further south in Spain, volumes grew 2.2%.

SymphonyIRI said FMCG manufacturers were using price promotions more to protect sales and profits. In the UK, the research firm, claimed over 50% of FMCG products are sold on deal.

Rod Street, executive vice president of consulting, international at SymphonyIRI, said: “There is no doubt that brands are attempting to counter the triple challenge of rising raw material costs, the increasing dominance of supermarket own-label brands and a more discerning shopper who is increasingly ready to vary their shop to get a better deal.”

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