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July 19, 2011

UK: Food inflation drives UK grocery growth – Kantar

Inflation is driving growth in the UK's grocery sector, according to the latest figures from Kantar Worldpanel.

Inflation is driving growth in the grocery sector, according to the latest figures from Kantar Worldpanel.

Kantar said today (19 July) that, for the 12 weeks ended 10 July, the grocery market grew 4.6%. However, over the period, food inflation rose from 4.6% to 4.8% this month, with Kantar saying that it is increasingly likely that it will reach 5%.

Kantar director Martin Wittingham told just-food that there has been some volume growth but said inflation has been the major driver behind the market’s growth over the period.

“While we previously predicted that grocery inflation would not exceed 5% in 2011, we believe this no longer to be the case,” said Wittingham.

“It has been growing much faster than anticipated and as such we expect it to reach 5% and perhaps go beyond in the next few months. However, unlike the high inflation that we saw in 2008, when it was over 10% in a third of the grocery categories, we are only seeing double-digit inflation in a small number of categories.”

Kantar said the theme of “two nations” continues with Aldi and Lidl again posting strong double-digit sales growth of 20.2% and 15.6% respectively. Both retailers now represent a combined 6.1% of the market. Waitrose reported growth of 9% and increased its share from 4.1% a year ago to 4.3%.

“The increasing polarisation of the grocery market looks set to stay as consumers turn to the discounters to cut their budgets while others continue to spend in Waitrose. This divergence seems to be reflective of some contrasting lifestyles in the UK at the moment,” said Wittingham.

He also highlighted the success of Morrisons, saying that it was the fastest growing of the UK’s four largest food retailers. Wittingham attributed that growth to attracting new shoppers, combined with the acquisition of some 18 Netto stores from Asda. Morrisons was the only of the four biggest retailers to grow ahead of the market over the period.

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