Big brands feel the pinch as shoppers buy fewer staples

Shoppers are cutting back on staple products, including bread, tea, fruit juice, cheese, pasta and breakfast cereals, as supermarkets and suppliers struggle to contend with soaring inflation and declining disposable income.

Overall volume sales of grocery goods have fallen 3.2% year-on-year, according to The Grocer’s Top Products Survey 2012, while total value sales have risen 3% [Nielsen 52 w/e 13 October 2012], suggesting shoppers are buying fewer grocery products than a year ago - and paying more for them.

Of the 92 categories covered in this year’s report, a shocking 72 (78%) have dropped in volume.

Bread sales are down 3.5%, with market leader Warburtons suffering a £13.6m decline in value sales (-2.5%). Volume sales of cheese and pasta were down 2.6%. Even the British cuppa appears to have gone off the boil, as tea sales fell 1.8% in value and 3.3% in volume.

The decline had been driven by a range of factors and didn’t necessarily mean Brits were eating less, industry experts said. “Consumers are shopping differently and buying different pack sizes,” said Mike Watkins, Nielsen UK head of retailer and business insight. Changing promotional mechanics also contributed - particularly an increase in the use of coupons.

The breakfast market has been hit particularly hard this year, with the cereals category down 1.4% by volume and Special K falling 15.1% in value sales year-on-year. In the juices and smoothies category, sales of market leader Tropicana have fallen £24.8m, and even a stellar performance from Innocent - which grew by £62.3m - didn’t prevent category volume sales falling 3.9%.

Traditional breakfast foods have suffered from the trend for eating meals at work or on the move, which has driven strong growth in porridge pots. Breakfast biscuits also benefited, with Belvita up 70% by value and volume year-on-year.

Out-of-home eating has also boosted the instant pot snacks category, which has grown more than any other area of grocery in the past year - up 12.7% in value and 8.4% in volume. The mults have invested heavily in the category. Sainsbury’s expanded its fixture by 50% and Tesco launched Piing microwaveable pasta pots.

Consumers were still splashing out on “affordable indulgences”, added Watkins. Chocolate confectionery was one of the few categories in value and volume growth, with sharing bag formats doing well, while traditional tins such as Quality Street declined.