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Take home grocery sales have slumped by 6.3% in the 12 weeks to 20 March as inflation hit its highest level for a decade, according to the latest market share data from Kantar.

Sales are still up versus two years ago, though only by 0.7% as the comparison now includes the record buying seen before the first lockdown in March 2020.

Fraser McKevitt, head of retail and consumer insight at Kantar, says: “It’s no surprise that sales are down over the latest period as consumers are now more confident eating out of the home again.

“What we’re really starting to see is the switch from the pandemic being the dominant factor driving our shopping behaviour towards the growing impact of inflation, as the cost of living becomes the bigger issue on consumers’ minds.”

The monthly data marks the first annual decline in grocery shopping trips for 12 months. Households made 15.4 visits to the supermarket on average last month, compared with 15.6 trips in March 2021 as consumers socialise more and have less time for shopping.

Grocery price inflation hit its highest level since April 2012 this period at 5.2% over the latest four weeks.

Prices are rising fastest in markets such as savoury snacks, dog food and cat food, while falling in fresh bacon.

McKevitt said that consumers are increasingly turning to own label products, which are usually cheaper than branded alternatives. Own label sales are down in line with the wider market but the proportion of spending on them versus brands has grown to 50.6%, up from 49.9% this time last year.

On an individual retailer basis, all of the big four were down significantly year-on-year, with only Tesco now in two-year growth.

Tesco’s sales were down 5.2% over the 12 week period (up 2.8% on a two year basis), while Sainsbury’s was down 7.5%, Asda 9.9% and Morrisons 11.5% (now down 3.8% on a two-year basis).

Growth also moderated at Aldi and Lidl, both up 3.6%.

Ocado remains up 24.9% on a two-year basis, but was down 6.7% year-on-year.

Also falling over the 12-week period were Co-op (- 8.5%), Waitrose (-8.5%) and Iceland (-9.6%).

While COVID-19 is loosening its grip on day-to-day grocery habits, some pandemic trends are proving stickier than others. Fraser McKevitt added: “The real story of COVID-19 has been the acceleration of online shopping, and retailers have built their digital capacity to match a seismic change in demand. 12.6% of sales were made online in March 2022 compared with just 8% three years ago.”

Morning update

Irn-Bru producer AG Barr has bounced back to top pre-Covid levels as the reopening of the leisure sector boosted sales volumes.

For the 53 weeks to 30 January, AG Barr’s revenues were up 18.3% year-on-year to £268.6m, which was up 5% on the pre-Covid prior year.

This revenue increase was driven by a combination of volume growth, favourable mix, tight cost control and selective pricing benefits.

AG Barr said volume advanced across the portfolio with all its core carbonated soft drinks and Funkin cocktails in strong growth.

Volume and mix were both supported, particularly in the first half, by the relaxation of Covid-19 restrictions and the reopening of the hospitality sector, and further underpinned by innovation and £6m of revenue from an extra week of trading

Barr Soft Drinks, which represents over 85% of group sales and gross profits, returned to revenue growth with strong volume gains across the core portfolio as out-of-home consumption returned.

The launch of Rubicon RAW Energy in February 2021 partially mitigated the loss of the Rockstar franchise, as well as the underlying positive momentum of core brands.

Irn-Bru grew volume, revenue and gross margin, benefitting from distribution gains in England as well as the reintroduction of IRN-BRU 1901 in Scotland. Particularly strong growth of single serve cans and smaller PET packs, along with optimisation of promotional mix and price, supported improved margins.

Funkin revenue more than doubled the prior year up £19.9m to £36.9m as it benefitted from the reopening of the hospitality sector and the continued success of the take home business.

The group said it was not immune from the well-publicised impact of the pandemic on supply chains and freight networks in terms of both labour availability and input costs and it faces continued cost pressure and high commodity prices.

Operating costs increased 25% primarily driven by the impact of increased volumes, higher logistics costs, increased variable rewards and enhanced marketing investment.

Despite the cost pressures faced and the investments made, operating margins improved 83 basis points to 15.6% to deliver profit before tax of £41.5m - a 26.5% improvement year-on-year.

CEO Roger White commented: “Our business and brands have once again proven their resilience in uncertain and often challenging circumstances.

“We have accelerated our revenue growth and consequently delivered a strong financial performance. In the year we have recommenced our dividend, alongside paying a one-off special dividend, and our balance sheet has continued to strengthen.

“We enter the new financial year with good momentum and exciting brand and sales plans. Trading in the early weeks of the new financial year has been well ahead of the prior year and in line with our expectations.

“Like most companies we are facing significant inflationary pressures but we are well placed as a Group to deal with these and will continue to seek to manage our exposure proactively through mitigating actions across revenue management, pricing, procurement and cost control.

“The growth potential of our business is underpinned by our growing brands, our highly capable people and our resilient infrastructure. We plan to invest further in all of these important areas and I remain confident in our ability to deliver continued growth in both revenue and profit in the coming year.”

AG Barr shares are up 3.1% to 548.6p so far this morning.

On the markets this morning, the FTSE 100 is up 0.7% to 7,527.2pts.

Risers include Just Eat Takeaway.com, up 6% to 2,789.5p, Deliveroo, up 5.9% to 120.9p and Ocado, up 3.9% to 1,132p.

Fallers include McBride, down 2.6% to 42.4p, British American Tobacco, down 1.6% to 3,248p and Imperial Brands, down 0.7% to 1,649p.

Yesterday in the City

The FTSE 100 opened the week edging down 0.1% to 7,473.1pts.

Fallers included McColl’s, back down 3.9% to 2.1p, McBride, down 2.6% to 42.4p, Finsbury Food Group, down 1.4% to 70.5p, Premier Foods, down 1% to 117p and PZ Cussons, down 0.9% to 194p.

Risers included THG, up 3.6% to 86.7p, Greggs, up 3.4% to 2,499p, Just Eat Takeaway.com, up 3% to 2,632p, Glanbia, up 2.4% to €10.65, AG Barr’ up 1.9% to 532p, SSP Group, up 1.8% to 238.2p and Tesco, up 1.6% to 280.3p.

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