UK food and drinks market weathering economic storm

The UK has one of the largest retail food markets in both Europe and the world, with value sales having risen by around 3% per annum since 2004, according to a new report from Leatherhead Food Research.

And with a value share of around 31%, the alcoholic beverages sector is the market’s largest, ahead of soft drinks (11%).
Until the economic downturn, growth in market value was sustained as a result of growing consumer demand for premium and speciality foods, although more people are now seeking value for money when shopping for groceries, says Leatherhead. This latest trend has benefited the own-label sector to a large extent, while the major retail groups have increasingly been focusing upon value for money in their promotional and marketing efforts.
The market’s largest single growth sector between the years of 2004 and 2008 was rice, which increased in value by almost 14% per annum during this time. Other impressive performers include yogurt and chocolate spreads, both of which have risen by around 10% per annum, as well as chilled soups and cooking oils. However, rising prices have been apparent in many sectors, examples of which have included bakery, dairy and cooking oils, due to the escalating cost of key ingredients.
The report, commissioned by the Food and Drink Federation, reveals that the worst performing sector between 2004 and 2008 was flavoured alcoholic beverages (FABs), which dropped by over 14% per annum during this time. The sector had already been losing drinkers prior to 2006, when excise duties were raised among concerns that FABs were a contributory factor in binge- drinking among younger sections of the population.