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Grocery Trends: Posh nosh up to 13bn
IGD: Posh nosh on the up
UK shoppers spend £13bn a year on premium food and grocery*, according to the latest research from international food and grocery expert IGD. Premium products include organic, Fairtrade, premium brands, retailers' premium own label, local and regional foods, and specialist fine foods. IGD predicts the value of the premium market will rise to £19.2bn** by 2011.
"Some retailers, like Marks & Spencer and Waitrose, focus almost exclusively on a premium offer," says Patrick Mitchell-Fox, Senior Business Analyst, IGD. "Others are looking to exploit the potential this market offers, and are adding more premium lines to their ranges."
The premium sector currently makes up around 10% of the food and grocery market, and this will rise to 13.5% by 2011. The strongest growth, according to IGD, will be in organic, Fairtrade, retailers' private label ranges, and premium brands, like Gü and Innocent.
"All the indicators suggest that consumer demand for premium foods will increase steadily," continues Mr Mitchell-Fox. "Growth is coming from a number of areas. Waitrose, in particular, has been expanding its portfolio over the last few years through the acquisition of 50 stores, and there is still potential for it to grow further outside the South East.
"Food sales now account for half Marks & Spencer's turnover, and the retailer continues to expand its food space ahead of other categories. Up to 50 new Simply Food stores are being added this year.
"Other retailers will continue to develop their premium private label ranges. The largest of these is Tesco, whose Finest brand is currently worth £1bn a year. Sainsbury's Taste the Difference range now extends to 1,000 lines, and the retailer has plans to grow the selection further. Asda is currently relaunching its Extra Special range, while Morrisons is expanding its The Best range. The discounters are also getting involved, with Aldi most notably introducing its own premium brand.
"Retailers that are not involved in the premium market are now the exception, rather than the norm," concludes Mr Mitchell-Fox. "Organic, premium private label, and Fairtrade products will continue to drive growth."
25 October 2006