Abstract
This report examines the hypothesis that the future profitability of the food market lies in the two extremes of premiumisation and low pricing. It answers crucial industry questions e.g. What is the likely impact of interest rate increases and utility cost hikes on consumer confidence? How will healthy eating trends continue to impact on food quality and price? What impact do trends in new product development have on pricing? Will organic foods remain a premium niche or will they become mainstream?
Table of Contents
- Issues in the Market
- Market in Brief
- Economy
- Impact of the major grocers
- The influence of the health trend
- Consumers are buying more premium
- So, what next
- The Economy
- Figure 1: PDI and consumer expenditure, 2001-06
- Growing number of AB consumers
- Figure 2: Changes in socio-economic status, by gender, 2001-06
- Future economic prospects
- Figure 3: Trends in PDI and consumer expenditure, 2001-11
- Greater affluence...for some
- Figure 4: Trends in the adult population by socio-economic group, 2001-11
- Multiple Retailers
- Major grocers dominate the sector
- Figure 5: Sales by food retailers, 2001-06
- Structure of the grocery market
- Figure 6: Trends in market share by retailer type, 2001-06
- Growth of private label
- Figure 7: Retailer brand coverage
- Own label premium is the first step...
- Figure 8: Importance of own label ranges to shoppers, May 2006
- What does the future hold for the major grocers
- Figure 9: Food retailers' sales, 2001-11
- Farmers markets vs the grocers
- Future for own label
- Premium brands
- COD -- cheapest on display
- Figure 10: Tesco Value lines, 1993-2006
- Figure 11: UK retail sales of cheapest on display own-label food and drink, 2001-06
- Figure 12: Number of cheapest on display own-label lines by retailer, July 2006
- Breakdown of OL foods
- Figure 13: UK retail sales of the own-label food and drink ranges, 2001-06
- Performance by category
- Chilled foods
- Figure 14: Estimated own label penetration by selected chilled packaged foods by value, 2002-06
- Figure 15: Structure of selected chilled packaged foods markets, 2006
- Figure 16: Sales value growth in selected markets, 2005 v 2006
- Ambient foods
- Figure 17: Estimated own label penetration by selected ambient packaged grocery markets, by value, 2002-06
- Figure 18: Structure of selected ambient packaged foods markets, 2006
- Bread sales driven by premiumisation
- Biscuits
- Soups and cooking sauces
- Frozen foods
- Figure 19: Estimated own label penetration by selected frozen foods markets, by value, 2002-06
- Figure 20: Structure of selected frozen foods markets, 2006
- The exception to the trend
- Figure 21: Premium/economy sales of ice cream
- Renaissance in frozen foods?
- Others are jumping on the bandwagon
- New Product Development
- High profile for premium products
- Figure 22: Number of new products by positioning claims, 2001-06
- Rate of progress slowing
- Figure 23: Number of new products with premium and indulgent claims, 2001-06
- Economy products
- Figure 24: Number of economy new products, 2001-06
- Restricted focus for new premium products
- Figure 25: Number of new products with premium and indulgent claims by category, 2001-06
- Figure 26: New product claims by category, 2006
- Latest regulatory investigation
- Below cost selling
- Price flexing
- Future pricing developments
- Pricing strategies
- EDLP (everyday low pricing)
- Below cost selling
- Flexible pricing strategy
- Healthy Eating
- Figure 27: Agreement with lifestyle statements about diet and health, 2002-06
- More sophisticated approach to healthy eating
- Greater affluence
- Salt reduction
- Food labelling
- Changing attitudes towards food types
- Biscuits
- Figure 28: Percentage change in sales figures, 2005-06
- Functional Foods
- Figure 29: UK retail value sales of ' healthy' yogurt, by type, 2002-06
- Functional foods for breakfast
- Figure 30: Examples of other leading brands, functional ingredients and basic health claims, 2006
- Discrepancies in pricing
- Figure 31: Typical price differentials on functional foods v standard brands and own label
- Environmental/Ethical
- Organic growth
- Figure 32: UK retail sales of organic food, by type and value, 2002-06
- Figure 33: Agreement with the statement "It' s worth paying more for organic food", 2001-05
- The future
- Food miles
- Farmers markets on the up
- Grocers jump on the bandwagon
- Supply is difficult, but it can be done
- Fairtrade
- Figure 34: UK value sales of Fairtrade certified products*, 2002-06
- Figure 35: Agreement with the statement ' I buy Fairtrade products when available' , 2003-07
- Grocers are leading the way to a Fairtrade future
- But manufacturers are not far behind
- What does the future hold?
- The Rise of the ' Foodie'
- Increased media coverage
- Celebrity chefs
- Eating out
- Increased appreciation of foreign foods
- Consumer -- Purchasing Behaviour
- Figure 36: Products purchased in different food categories
- Figure 37: Propensity to buy premium foods compared to two years ago, June 2007
- Figure 38: Propensity to buy economy food items in past two years, June 2007
- Consumer -- purchasing frequency
- Figure 39: Frequency of purchase specific food types, June 2007
- Figure 40: Attitudes towards buying food, June 2007
- So, who thinks what?
- Consumer Typologies
- Consumer groups
- Posh Noshers (21% of Internet users)
- Who are they?
- Premium foods galore....
- So, what next?
- Econophobes (44% of Internet users)
- Who are they?
- So, what next
- Rangers (13% of Internet users)
- Who are they?
- Downmarkets (21% of Internet users)
- Who are they?
- Appendix
- Consumer research
- ACORN
- Advertising data
- Abbreviations
- Consumer attitudes
- Figure 41: Agreement with selected lifestyle statements, by demographic sub-group, 2007
- Health
- Figure 42: Health types
- Figure 43: Health types by demographic profile
- Propensity to buy premium/economy foods
- Figure 44: Propensity to buy premium/economy foods
- Figure 45: Propensity to buy premium/economy foods, by demographic sub-group, 2007
- Consumer groups
- Figure 46: Cluster groups, by demographic sub-group, 2007
- Figure 47: Cluster groups by grpcers
- Figure 48: Cluster groups by proportion of spend in premium/standard/economy
- Figure 49: Cluster groups by propensity to buy premium/economy/standard food more or less than two years ago
- Figure 50: Index of premium/economy/standard food usage
- Figure 51: Type of products purchased by demographic profile -- crisps and snacks
- Figure 52: Type of products purchased -- breakfast cereals
- Figure 53: Type of products purchased by demographic profile -- breakfast cereals
- Figure 54: Type of products purchased -- chocolate
- Figure 55: Type of products purchased by demographic profile- chocolate
- Figure 56: Type of products purchased -- meat
- Figure 57: Type of products purchased by demographic profile -- meat
- Figure 58: Type of products purchased -- ready meals
- Figure 59: Type of products purchased by demographic profile -- ready meals
- Figure 60: Type of products purchased -- desserts
- Figure 61: Type of products purchased by demographic profile -- desserts
- Figure 62: Type of products purchased by demographic profile -- vegetables
- Figure 63: Type of products purchased by demographic profile -- vegetables
- Figure 64: Type of products purchased -- yogurts
- Figure 65: Type of products purchased by demographic profile- yogurts
- Figure 66: Type of products purchased -- bread
- Figure 67: Type of products purchased by demographic profile -- bread
- Figure 68: Type of products purchased -- pizza
- Figure 69: Type of products purchased by demographic profile -- pizza
- Figure 70: Type of products purchased -- pasta
- Figure 71: Type of products purchased by demographic profile- pasta
- Figure 72: Propensity to buy premium foods compared to two years ago
- Figure 73: Propensity to buy premium foods compared to two years ago by demographic profile
- Figure 74: Propensity to buy economy food items compared to two years ago
- Figure 75: Propensity to buy economy food items compared to two years ago by demographic profile
- Figure 76: Frequency of purchase Fairtrade products
- Figure 77: Frequency of purchase Fairtrade products by demographic profile
- Figure 78: Frequency of purchase organic products
- Figure 79: Frequency of purchase organic products by demographic profile
- Figure 80: Frequency of purchase locally sourced products
- Figure 81: Frequency of purchase locally sourced products by demographic profile
- Figure 82: Frequency of purchase functional foods
- Figure 83: Frequency of purchase functional foods by demographic profile
- Figure 84: Frequency of purchase food from independent retailers (butchers, bakers, fishmongers)
- Figure 85: Frequency of purchase food from independent retailers by demographic profile
- Figure 86: Frequency of purchase food from supermarket meat, fish or bakery counters
- Figure 87: Frequency of purchase food from supermarket meat, fish or bakery counters by demographic profile
- Figure 88: Attitudes towards buying food
- Figure 89: Attitudes towards buying food by demographic profile
- Figure 90: Attitudes towards confidence in food safety in the UK
- Figure 91: Attitudes towards confidence in food safety in the UK by demographic profile
