Top story

UK grocery sales growth slowed last month as food price inflation continues to ease and shoppers cut back after Easter.

According to new data from NIQ, total till sales at UK supermarkets slowed to 3.4% in the last four weeks ending 20 April 2024, compared to growth of 5.4% reported last month.

NIQ said this is due to inflation slowing in April, and affected by an earlier 2024 Easter and a drop in general merchandise sales (–8%) also likely impacting growth.

Additionally, increased levels of discounts and promotions held back price growth, with spending on promotions up to 25.3% from 24% last month. This was driven by an increase in promotional activity from brands, which saw value sales of branded items up (+36%) compared to 32% this time last year.

Although food inflation is slowing, food prices remain higher than this time last year and shoppers are likely choosing to dine more at home, NIQ said.

Over the last four weeks, meat, fish & poultry (+6.7%) and produce (+6.4%) had the biggest uplifts with dairy also seeing strong growth (+4.8%).

On an individual retailer basis, Ocado was the fastest-growing supermarket, with the online specialist up 12% over the past 12 weeks.

Sainsbury’s (+6.6%) and Tesco (+5.8%) continue to gain market share with visits to stores increasing compared to this time last year.

Morrisons (+4.4%) is now holding market share, with spend per visit growing ahead of last year.

Aldi (+1.3%), with the highest industry comparatives, has experienced slow growth in the last 12 weeks compared to Lidl (+9.5%).

Mike Watkins, NIQ’s UK head of retailer and business insight, commented: “The early Easter brought forward some spend to March so weekly growths in April were impacted. This in turn exaggerated some of the slowdown in growth which we were already seeing. However, the growth week ending 20 April at the major supermarkets was +2.6% and may be indicative of the level of growth now that inflation is in low single digits. We can also expect the gap in growth between private label and brands to close further as shopper spend starts to normalise after 18 months of inflation.

“Even with lower food inflation and, for some households, improving personal finances, shoppers still need to be persuaded to spend. Therefore we can expect promotional activity to continue to increase. With 49% of households now feeling they are more insulated from the pressure on their personal finances, there is a potential this cohort will be the first to start to spend more freely in 2024.

“Shoppers continue to shop around for the best offers. But there is a question mark about spending on fashion, technology and homegoods, with holidays and leisure activities more likely to see an uptick when disposable income increases. This means for food retailers, much depends on the weather improving in the next few weeks to help maintain sales growth, as the comparatives are now starting to get a bit tougher.”

Morning update

Listed wholesaler Kitwave said it continues trade in line with current market expectations, being boosted by organic growth and the benefit from acquisitions made over the past 18 months.

However, operating profit performance in the six-month period ended 30 April 2024 is expected to be slightly behind the prior year.

This reflects lower levels of demand in the hospitality customer base of the higher margin foodservice division, due to a historically high and sustained period of wet weather over recent months.

The group has also increased investment in its infrastructure ahead of the revenue-generating opportunities associated from these investments.

Some of the benefits of these investments, in addition to the second half inclusion of trade from the recent acquisition of Total Foodservice, will further increase this year’s weighting of trading toward the second half of the year.

CEO Ben Maxted commented: “I am pleased to report the group has continued to make progress towards its operational and financial targets, and we remain confident of achieving a positive outcome for the full-year results.

“The group has an excellent platform for growth in the form of organic developments and incorporating the full benefits from its strategic acquisitions. The most recent acquisitions demonstrate that we continue to capitalise on the opportunities available to us in a fragmented delivered wholesale market.

“Kitwave is well positioned to continue delivering value to its customers and shareholders and we look forward to updating the market on further progress in due course.”

Kerry Group saw a near 10% drop in first quarter revenues as disposals and price deflation hit the top line sales at the Irish ingredients company.

Group revenue was down 9.9% in the period, despite volume growth of 1.9%.

However, price deflation of 5.3%, the effect from disposals net of acquisitions of 5.1% and unfavourable translation currency of 1.4%, all hit the top line.

Kerry added that consumer demand remained relatively subdued during the period, given the recent inflation across many geographies.

Despite the drop in sales, group EBITDA margin increased by 140bps driven by cost efficiencies, portfolio developments and the effect of pricing.

Its taste & nutrition business delivered good overall volume growth of 3.1% in the period, given relatively muted consumer demand in a number of markets.

Dairy Ireland saw volumes decline by 3%, impacted by softer overall supply across the first quarter given local market conditions. Dairy consumer products performed well in the period, with growth led by snacking, Kerry’s branded cheese range and private-label spreads.

CEO Edmond Scanlon commented: “We are pleased to report a good start to the year given market dynamics. Taste & nutrition achieved good volume growth driven by a strong performance within our foodservice channel, and we delivered strong margin expansion in the period reflecting the continued development and evolution of our business.

“Consumer market dynamics remain similar to those outlined at our full year results. As part of our capital allocation framework as previously indicated, we are announcing a new share buyback programme, and the expected net earnings per share accretion has been reflected in our updated guidance range.”

Finally this morning, troubled Revolution Bars Group has confirmed it has held an exploratory meeting with bar owner Nightcap regarding a range of possible transactions.

It said these talks include a possible offer for the entire issued share capital of Revolution Bars Group.

On the markets this morning, the FTSE 100 is back up 0.4% at 8,156.9pts.

Early risers include Kerry Group, up 1.3% to €81.15, THG, up 1.2% to 63.1p and Coco-Cola HBC, up 1% to 2,626.6p.

Fallers include Just Eat Takeaway.com, down 4% to 1,168p, Naked Wines, down 2.5% to 52.7p and Glanbia, down 2% to €17.73.

Yesterday in the City

The FTSE 100 slipped back 0.3% yesterday to 8,121.2pts.

Consumer health player Haleon dropped 2.5% to 331p after posted a sales slowdown in its first quarter.

Risers yesterday included Naked Wines, up 3.7% to 54p, Just Eat Takeaway.com, up 3.1% to 1,216p, Glanbia, up 2.8% to €18.09, Nichols, up 1.7% to 980p and Kerry Group, up 1.7% to €80.10.

The day’s fallers included McBride, down 5.4% to 105p, Ocado, down a further 2.8% to 343.1p, Deliveroo, down 2.4% to 130.6p, Fever-Tree, down 2% to 1,110p and THG, down 1.9% to 62.3p.

Topics