Monday, 6 April 2020
March was a month unlike any seen before in food retail. Drastic changes to how we live our lives have driven changes in shopping behaviour that left grocery retailers scrambling to adapt. As the dust settles, we take a look at what happened in a month we’re unlikely to forget.
- The 4 weeks to 22 March 2020 saw record-breaking grocery sales.
- Spend on red meat outperformed the total grocery market, particularly processed pork and beef mince. Lamb's uplift was more subdued.
- Dairy saw particularly strong growth in cheese and spreads.
- Fresh potato volumes were up 27% and frozen potato volumes up 30%.
An extra £1.4 billion was spent on food and drink in the four weeks to 22 March 2020, compared to the same period last year. That’s equivalent to an extra £21.08 spent per person, an uplift of almost 22% (Kantar).
Though reports of panic-buying were widespread, in reality most pressure on supermarkets came from lots of us shopping slightly more frequently and buying a little bit extra each time. Over the four weeks to 22 March, households spent an average of £62.92 extra on shopping, equivalent to five days’ worth of groceries. Families with children aged over 16 spent £88.13 more than they did in March 2019, likely as a result of dependents returning from college or university.
A critical period for sales was between Monday 16 and Thursday 19 March. Over these four days, there were an extra 42 million shopping trips made, with 88% of households visiting a grocer. The week began with social distancing being advised by government and ended with the closure of all pubs, restaurants and cafes. Kantar estimate that 503 million meals which would normally have been eaten out-of-home will now take place at home every week, mostly lunch and snacks.
Meat sales ahead of the market, with beef leading the way
Meat, fish and poultry grew ahead of the market, with spend up nearly 24% (Kantar, 4 w/e 22 March 2020). Frequency of purchase was a key driver, in line with the total market trend, but shoppers also added more to their baskets – 11 kilos per household, up from 9 last year. This resulted in volumes in March exceeding Christmas 2019 by 36m kg.
The main uplift came during the final week of the data period (16-22 March) when social distancing was ramped up and schools closed.
A three-week lockdown came into force on 23 March, the day after this data period ended. This immediately resulted in reduced footfall to stores but the extent to which this has impacted MFP sales will be seen in next month’s data.
Fresh vs frozen
During the four weeks to 22 March, fresh meat remained the bulk of shoppers’ MFP purchases, accounting for 77% of volume. Sales of fresh meat rose 20% in volume terms, but frozen and ambient (canned) meat products exceeded this – growing by 31% and 73% respectively. This indicates that shoppers have stockpiled items with a longer shelf life (while likely also freezing fresh products).
For the beef category, shoppers bought more mince, with volumes up 45% over the four week period. However, all primary beef cuts experienced signficant increases in volume, with roasting up 51% and steaks up 20%. Burgers were also up 38% - they are the top dish eaten out of home, so people are likely to be cooking them more in-home as they can’t visit pubs and restaurants.
However, the month is a tale of two halves, with higher share of volume belonging to mince in the last two weeks, while steak share pares back. This movement to mince will result in issues with balancing the carcase, particularly with the temporary loss of the out of home market. Monitoring this over the next data period will be key, to establish how long these behaviours last, but with rising concerns about personal and national economic circumstances, it’s unlikely that the higher priced cuts will immediately rebound to their usual share of sales.
Bacon and sausage volumes were up 22% and 33% respectively during the 4-weeks ending 22 March. The AHDB/YouGov Consumer Tracker shows that people think sausages are easy to cook and suitable for mid-week meals, making them a good fridge/freezer staple during times like these. Sliced cooked meat volumes grew 10%. With school closures/lockdown coming after this data period, the impact of the loss of the carried-out lunch is yet to be fully felt – with ham being a key lunchbox staple.
Primary pork volumes were also up 10%, to a lesser extent than processed pigmeat and the other primary proteins. Leg and shoulder joints actually experienced a loss of volume, however loin roasting and chops grew 52% and 36% respectively.
Lamb volumes were up 12% during the month, but this was the smallest uplift in sales out of the key proteins. Pricing could be a challenge here, as indicated by the fact that leg steaks, the most expensive cut on average, declined by 18% in volume. However, mince volumes – the most affordable cut – rose 28% and roasting joints were also in strong growth, especially shoulder, which was up 19% in volume. The all-important Easter holiday falls within the next data period and while people are unlikely to gather in the same way as usual, they are clearly picking up roasting joints and so smaller, price-led presence is still needed in store, with most people still visiting a supermarket for their MFP purchases.
An additional £131m was spent on dairy products in March 2020 compared to March 2019. This is an increase of 17%, with increases seen across all major dairy categories.
Milk, which typically accounts for 32% of spend on dairy, saw a growth of 11% in spend and 9.2% in volume.
Cheese and spreads saw the greatest increase in sales, with cheese volumes up 25% and spreads up 30%. Yogurt saw the smallest increase, growing by 9% in volume.
Fresh potato sales in the latest 4 week period have exceeded even the usual peak seen at Christmas. In total, 130,321 tonnes were sold in the four weeks to 22 March, an increase of 26.6% compared to the same period last year, adding £17.9 million in spend. Although volumes increased for baking and new potatoes, the majority of growth came from maincrop potatoes where volumes were up by a third on last year.
There was also evidence of significant uplift in processed potato categories. Sales of chilled potato products grew by almost a fifth compared to March last year, while volumes of frozen potato products sold increased by over 30%. With freezer space now at a premium, this peak is unlikely to be sustained.
Did retail offset losses to foodservice?
Last week, we estimated the volume uplift required in Q2 to compensate for losses in the out-of-home market. Based on the March data, just ahead of Q2, beef and pigmeat would both exceed this, while lamb volumes fall short, at 12% growth vs the required 18%. It was the only protein to under-perform versus the total grocery market.
Milk sales grew by 9%, slightly below the 10% uplift in volume we estimate is required to offset the losses of liquid milk sold through foodservice. Sales of potatoes, including processed, grew by 28% in volume, exceeding the 15% we estimate is needed to offset foodservice loss
It’s also important to remember that the market is expected to slow from these key ‘panic buying’ weeks. Therefore, these levels of volume sales are unlikely to be sustained, putting lamb in particular at risk.Those products perceived as highly versatile (such as beef mince, chicken breast and pork sausages) are likely to continue seeing enhanced volumes.