Fresh food and confectionery driving Western Europe grocery growth, Nielsen reveals

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Between them, fresh food and confectionery/snacks accounted for 61% of the growth in the grocery market across Western Europe last year, according to Nielsen retail performance data released today.

Consumers spent €4.3 billion more on fast-moving consumer goods (FMCGs) at grocery retailers across the nine major Western European markets in 2016 than in 2015 – a growth of 0.9%. Fresh foods accounted for €1.6bn (38%) of the overall growth, followed by confectionery/snacks (€1.0bn, 23%) and alcoholic beverages (€849 million, 20%). Consequently, these three categories alone accounted for 80% of increased grocery spend in 2016.

Largest FMCG category growths in millions
“Fresh food and confectionery’s growth were primarily driven by consumers buying more items, whilst alcohol’s was mainly driven by paying higher prices,” said Olivier Deschamps, senior vice president retailer services Europe. “It’s interesting to see this significant growth coming from fresh food: fresh is clearly a strong focus for retailers in order to attract shoppers and have a positive impact on their image. In terms of sub-categories, fresh meals, beer, fresh fruit & vegetables and mineral water contributed the most to the grocery sector’s overall growth.”

In the UK, fresh meals, sparkling wine and beer were the sub-categories contributing most to the grocery sector’s growth in 2016. Mike Watkins, Nielsen’s UK head of retailer and business insight notes that, “category growth generally follows a change in consumer tastes, such as sparkling wine, whilst a fall in a category’s sales value is often the result of deflation or a very competitive retail landscape, such as is happening in fresh meat and cereals.”

Who’s driving the growth?
Manufacturers outside the 10 biggest players accounted for 70% of the growth in the Western European grocery market, whilst retailers’ own label brands accounted for the other 30%. The Top 10 saw a €430 million decline in consumer spend.

Manufacturers outside the top 10 now have a 46.6% market share, followed by own label (36%) and the Top 10 (17.4%).

Half of the growth (€2.2bn) in the overall grocery market was due to promotional items which“retailers increasingly used in 2016 to great success to encourage shoppers to add more items to their shopping baskets which was a major factor in the sector’s growth.”