Grocery has its biggest Christmas yet, benefitting AHDB categories

Friday, 22 February 2019

According to Kantar Worldpanel, Christmas 2018 was the biggest Christmas yet in terms of grocery spend, despite weaker inflation slowing market growth versus 2017.

Christmas is extremely important for AHDB categories, with the 4 weeks running up to Christmas accounting for 23% of annual gammon sales, 19% for beef, 14% for lamb and 11% for pork (Kantar Worldpanel, share of 52 w/e sales in 4 w/e 30th Dec 2018). Fresh meat, fish and poultry (MFP) did particularly well with value sales up 1.3% to £434m and volume sales up 0.7%, topping 2017s record Christmas performance (Kantar Worldpanel, 4 w/e 30th Dec 2018). 20% of these sales were made on the Saturday and Sunday before Christmas, with last minute shopping being key for fresh categories. This article highlights some of the key themes this Christmas, aiding planning for 2019.

The Retail Market

89% of shoppers said they were willing to spend more on certain food and groceries at Christmas to get better quality, in particular for poultry, cheese and desserts (IGD ShopperVista, November 2018). This resulted in premium own label and branded products seeing the highest growth in the market, but shoppers are still looking for value in the basics, for example, with vegetables. Capitalising on this, discounters stole grocery share from premium supermarkets by offering a winning balance of premium and value for money products. Meanwhile, weaker performing supermarkets offered the most expensive Christmas dinner options, highlighting the importance of getting the balance right.

In the final 4 weeks of 2018, the ‘big shop’ remained key to success and got even bigger this year with average spend up £3.52 on the year (Kantar Worldpanel RST Total Grocery 4w/e 30th Dec 2018). Furthermore there was a move towards online shopping, enabling budget-conscious shoppers to keep track on their total spend.

The Christmas foods

Proteins

According to Kantar Worldpanel, whilst volume and value sales of fresh MFP this Christmas surpassed all previous performances, declines were seen for frozen MFP as consumers increasingly chose fresh. Turkey saw the biggest losses but penetration remained unchanged, as shoppers moved to smaller birds and crowns potentially due to smaller households, waste conscious shoppers and more proteins featuring on the table. Nevertheless, Christmas traditions meant that turkey still dominated the market, capturing just over half of all fresh roasting meat and poultry spend 5 days preceding Christmas day.

In contrast to last year, the reduction in turkey may have provided opportunity for growth of other meats, especially beef and lamb roasting joints. Christmas week is clearly important for sales of all meats. Beef is particularly reliant on the 4 weeks around Christmas, however its reliance on Christmas week in particular, fell this year.

Despite the rise of flexitarians and vegans throughout the year, the meat free category remains relatively small and didn’t recruit any more shoppers this Christmas. The number of shoppers purchasing meat free options was down 1.6%, with Christmas proving to be an important time for meats. Vegetarian party food, however, bucked the meat free trend with increased penetration, highlighting potential opportunities for meat innovations to challenge this market next Christmas (Kantar Worldpanel, 4 w/e 30th Dec 2018).

Potatoes

Potatoes found their way on to more Christmas tables this year, with a 1.4% rise in shoppers compared to Christmas 2017. Promotion of large 4-5kg bags of potatoes also drove value and volume growth. In contrast, a slowing of sweet potato volume sales of -0.8% was seen over Christmas (Kantar Worldpanel, 4 w/e 30th Dec 2018).

Dairy

Value of total cream sales grew this Christmas, up 1.8%. This was driven primarily by average price increases as less shoppers bought cream over the festive period (Kantar Worldpanel, 4 w/e 30 Dec 2018). Ready-made chilled and frozen desserts had a less than merry Christmas, with volume and value sales below 2017 levels. Desserts normally served with cream (fruit, ambient cakes and desserts) saw growth this Christmas. In particular, buyers of traditional Christmas puddings were up 7%. Complementing this, shoppers also indulged in ice cream which may have cannibalised some occasions from cream, resulting in premium ice cream sales up 16.3%.

Cheese had a relatively flat Christmas in terms of volume but value increased +1.4% (Kantar Worldpanel, 4 w/e 30th Dec 2018). Camembert for sharing and halloumi did particularly well whilst cheese board classics struggled.

Learnings for 2019

  • Christmas week is key for purchase of fresh meat, fish and poultry so make sure all have prominent placing. Beef, lamb and pork roasting joints should also capitalise on the whole month of December for ‘friendmas’ and other family gatherings.
  • The shift to smaller turkeys and growth for other proteins poses potential opportunity to increase meat on the Christmas table further in 2019 by utilising different joint sizes.
  • Party food is a huge segment at Christmas posing an opportunity for meat based options to innovate in order to stand out.
  • Fresh cream and ice cream remain key accompaniments to desserts at Christmas.
  • Standard is still the biggest tier, but once again value and premium tiers have over-performed showing retailers should focus on the winning balance of the two.