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Warm weather in June helped the UK grocers to their largest monthly year-on-year rise in sales since July 2013, according to market share data from Nielsen.

The amount shoppers spent on groceries during the four weeks ending 17 June 2017 was 4% higher versus the same period a year ago. The final week in that period saw sales jump 5.7%.

The last time growth was higher was back in July 2013, when sales rose 7% following a three-week heatwave.

Similarly, the latest grocery market share figures from Kantar Worldpanel, published today for the 12 weeks ending 18 June 2017, also show a marked turnaround for the sector.

Supermarket sales growth accelerated to 5.0% – the strongest increase since March 2012 and a stark contrast to the 0.2% decline seen this time last year.

Nielsen found that the period also marked the first time since July 2013 that all of the biggest grocery retailers saw year-on-year sales rise.

During the 12 weeks ending 17 June 2017, Tesco (TSCO) had the biggest rise among the big four, with sales jumping 4.2%. Morrisons’ (MRW) sales were up 3.4% in the period, Sainsbury’s (SBRY) 3.1% and Asda 1.7%.

Iceland had the biggest rise of anyone outside the discounters, with sales up 9%.

Kantar found Morrisons achieved the strongest sales performance of the big four, increasing sales by 3.7% to post its seventh consecutive period of growth. Tesco’s sales were up 3.5%, Sainsbury’s sales were up 3.1% and Asda was up 2.2%.

Kantar also found that Lidl pipped Aldi to the title of the UK’s fastest growing supermarket for the first time since March, with sales growth of 18.8% just ahead of the latter’s 18.7%.

Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, commented: “The market’s robust performance this period is partly down to particularly weak sales growth last year and a continuing increase in like-for-like grocery inflation, which is now running at 3.2%. At this rate, that’s an extra £133 on the average household’s annual shopping bill, or the equivalent of seven additional shopping trips a year.

Mike Watkins, Nielsen’s UK head of retailer and business insight commented: “The early summer weather gave supermarkets a much needed shot in the arm. Rising temperatures benefited soft drinks (up 9.1%), alcohol (+6.8%) and frozen food (+7%), in particular, with sales of hand-held ice creams alone soaring 24%.”

“All in all it’s refreshing to have some good news around retailing. Looking ahead, a continuation in both the warm and dry weather and creeping inflation means growth should be maintained at around +3% for at least the next few weeks,” concluded Watkins.

Kantar added that grocery inflation now stands at 3.2% for the 12 week period ending 18 June 2017. Rising prices in markets such as butter, fish and instant coffee were only partially offset by falling prices in categories including ambient cooking sauces and cooked poultry.

Highest sales growth in five years for British supermarkets from Kantar Worldpanel on Vimeo.

Morning update

The Competition and Markets Authority is to consider whether proposals offered by Heineken to sell 33 pubs will address competition concerns and remove the need for an in-depth investigation.

Earlier this month, the CMA said that Heineken’s proposed purchase of part of the Punch Taverns estate could reduce competition in 33 local areas across Great Britain.

Heineken has now offered to sell pubs in each of the affected areas to preserve competition and ensure customers in these locations do not lose out.

The CMA said today “there are reasonable grounds for believing that these proposals, or a modified version of them, might be acceptable to remedy the competition concerns it has identified”. The body will decide whether Heineken’s proposals are sufficient to avoid the merger being referred for a further, more in-depth investigation.

Private label consumer goods manufacturer McBride (MCB) has refinanced its existing banking facilities to buy back previously issued bonds and support its “Repair, Prepare, Grow” strategy.

These actions will lower the cost of the Group’s debt financing from the financial year starting on 1 July 2017 by approximately £2m per year.

It has replaced its existing €140m multi-currency revolving credit facility with a five year €175m facility with a maturity of June 2022, resulting in a 5 bps reduction in both margin and non-utilisation fees.

The bank facilities are provided by a syndicate of HSBC, KBC, Bayern LB, BNP Paribas and Barclays.

It will use the new facilities to buy back its existing $50m 5.51%1 2020 US Private Placement Notes and $40m 5.38%1 2022 USPP.

The repayment will incur an exceptional finance charge of £13m as a result of ‘make whole’ payments to USPP note-holdings and additional USPP closure costs.

The group’s overall ongoing average cost of debt, after the repayment of the USPP, will reduce by approximately 310bps 4 to 150bps.

Chris Smith, CFO of McBride, commented: “As we prepare for the Grow phase of our strategy, we have secured an improvement in the cost, flexibility and duration of our banking facilities. The completion of this exercise represents another important milestone in the delivery of Repair, Prepare and Grow and reflects the strong ongoing support from our chosen banks.”

On the markets this morning, the FTSE 100 has eased back 0.2% to 7,431.3pts.

The supermarkets are amongst the better performing large stocks on the market, with Tesco up 1.4% to 169.1p, Morrisons up 0.3% to 241.6p and Sainsbury’s edging down 0.1% to 254.8p.

Other risers include Science in Sport (SIS), up 6.9% to 85p, Compass Group (CPG), up 2.9% to 1,659p and Premier Foods (PFD), recovering 2.6% to 39p.

Fallers include Glanbia (GLB), down 7.5% to €17.20, Real Good Food (RGD), down 7.1% to 33.9p, Total Produce (TOT), down 6% to 174.8p and Finsbury Food Group (FIF), down 5% to 113p. Also down are Marks & Spencer (MKS), falling 1.9% to 336.7p and Tate & Lyle (TATE), down 1.5% to 703p.

Yesterday in the City

The FTSE 100 ended the day up 0.3% yesterday at 7,446.8pts, although the index tailed off towards the end of the day as oil prices eased back again.

Costa Coffee owner Whitbread (WTB) has boosted by a positive note from Morgan Stanley after an analyst site visit to its Premier Inn hotels. The FTSE 100 firm was up 2.2% to 4,4045p yesterday.

It was generally a solid day of trading for most of the UK’s large grocery/fmcg firms. Reckitt Benckiser (RB) was up 1.3% to 7,960p, Unilever (ULVR) was up 1.1% to 4332.5p and Associated British Foods (ABF) was up 1% to 2,962p.

Other risers included Hotel Chocolat (HOTC), up 3.6% to 375p, Nichols Beverages (NICL), up 3.2% to 1,920p, C&C Group (CCR) up 2.6% to €3.25 and AG Barr (BAG) up 2.5% to 647p. Cranswick (CWK) was also up 1.2% to 2,900p, while Dairy Crest (DCG) rose 1% to 621.5p.

Premier Foods (PFD) was amongst the day’s few significant fallers, dropping a further 4.4% back to 38p.

Elsewhere, fallers included Hilton Food Group (HFG), down 1.8% to 717p, Devro (DVO), down 1.2% to 210p and Just Eat (JE), down 1.2% to 677p.

Internationally, Nestle (NESN) ended the day up 4.4% at CHF85.65 after activist investor US hedge fund Third Point revealed it had taken a $3.5bn stake in the world’s biggest food manufacturer and had urged “bolder” action.

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