UK food producers and retailers have reported downward shifts in the purchase of food staples. This could be caused by rising prices and the instability of the economy but it is definitely impacting the industry. Supermarkets and other retail outlets are reporting declining sales of breakfast cereals, fruit juices, bread, bread, cheeses and pastas. The downturn in demand has stressed growers and manufacturers and retailers, many of who are ill-prepared to survive negative cash flow.
According to the Grocer’s Top Products Survey 2012, overall volume food sales have fallen 3.2 percent in 2012. Individual sales are down 3.0 percent. Shoppers are paying more and receiving less for the pound, a condition that threatens the marketplace.
The Grocer’s Top Product Survey monitors 92 different food stuffs. Sales in 72 products (78 percent) declined in year-over-year comparisons through October 2012.
Bread Sales Hard Hit
Bread sales are down an astonishing 3.5 percent. Industry giant Warburtons reports a £13.6 million decline in sales. This was a 2.5 percent loss for the company. Meanwhile, cheese and pasta demand tailed off by 2.6 percent. Tea sales were off 1.8 percent in value and 3.3 percent in volume. Is this possible?
Industry experts attribute the decline as not related to consumption but rather to new purchasing habits. Consumers are buying in volume and capturing lower prices this way. Analysts have noticed a definite increase in the use of coupons.
Breakfast Food Sales Plummet
The breakfast market has been the hardest hit in this fragile economic recovery. Cereal sales have declined by 1.4 percent. Kellogg’s Special K sales in the UK are off 15.1 percent. Sales of the popular Tropicana smoothies are off by £24.8 million. Smoothies from Innocent are taking over the market and a stellar year of increased sales of £62.3 million could not prevent the industry from decline.
Breakfast biscuits showed strong sales volume as did the sale of porridge pot staples. Belvita sales rose 70 percent this year.
Instant Snacks Spike Upwards
Surprisingly, there has been an increase in out-of-home dining. Sales of instant snacks are up 12.7 percent in value and 8.4 percent in volume. Sainsbury has gained a 50 percent share of the instant snack marketplace. Tesco’s Piing microwaveable pasta pots continue to grow in popularity.
The “affordable indulgences” sector has been hard hit by increased pricing but surprisingly chocolates are still selling strongly. Quality Street is the standard bearer in these delicacies.
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