Matthew Verity Business Unit Director, Kantar

Transcription

1 Matthew Verity Business Unit Director, Kantar

2 The UK Grocery Market A Return To Growth? Matthew Verity - Kantar Worldpanel UK 22 March 2017

3 AGENDA UK Grocery Market & Retailer Performance Five Key Changes in the UK Market for 2017 Brexit: Potential Implications for UK Grocery

4 The largest shopper panel in Great Britain Geographically and demographically representative of the population of GB 30,000 Households in GB

5 HEADLINES Return to Tesco Inflation Promotions Discounters Growth Revival

6 ALMOST ALL KEY RETAILERS ARE IN GROWTH AND WHILST DISCOUNTERS GROW STRONGLY OVER 70% OF SPEND STILL GOES THROUGH THE BIG 4 Tesco Sainsbury's Asda Morrisons Co-op Aldi Waitrose Lidl Iceland Farm Foods Share of Till Roll Grocers % 6.0% 5.9% 5.8% 6.3% 5.2% 5.3% 4.2% 4.6% 2.1% 2.2% 0.6% 0.5% 16.8% 16.5% 16.2% 15.7% 10.6% 10.6% 28.4% 27.9% Tesco Sainsbury's Asda Morrisons Co-op Aldi Waitrose Lidl Iceland -0.8% YoY % Growth 0.6% 0.3% 2.6% 1.7% 2.9% 8.8%.9% 13.0% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% weeks to 28/02/16-2.0% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0%.0%14.0% Source: Kantar Worldpanel Total Till Roll we

7 13 Sep Oct Nov Dec Jan Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Jan Feb-17 % Growth MORRISONS RECOVERY CONTINUES AS THE ONLY MEMBER OF THE BIG 4 TO GROW AHEAD OF THE MARKET IN THE PAST QUARTER +3% +2% +1% 0% -1% -2% -3% -4% -5% -6% -7% Source: Kantar Worldpanel Total Till Roll we Total Grocers Tesco Sainsbury's Asda Morrisons

8 % Change AFTER OVER TWO YEARS PRICES ARE RISING AGAIN WITH INFLATION DOUBLING SINCE LAST PERIOD AND GROCER GROWTH UP TO +2.3% 10% 8% 6% 4% 2% 0% -2% Grocery growth Grocery inflation -4% Source: Kantar Worldpanel Total Grocery we

9 STAPLES SUCH AS BUTTER, TEA AND FISH ALL SAW PRICES RISE BY MORE THAN 5% THIS QUARTER WHILST FRUIT ALSO SAW INFLATION OF OVER 4% Butter Wet/Smoked Fish Tea Fresh Lamb Fruit Chilled Pizza+Bases Skincare Pre prepared Fresh Instant Coffee 6.1% 5.7% 4.2% 3.5% 3.4% 2.8% 2.7% 8.8% 15.8% Source: Kantar Worldpanel Total Grocery Inflation we

10 HOWEVER INFLATION STILL FAR FROM UNIVERSAL WITH PRICES ACTUALLY FALLING IN A NUMBER OF CATEGORIES INCLUDING CRISPS, BACON AND EGGS -2.5% -2.0% -1.8% -1.5% -1.3% -1.2% -0.6% -0.4% -0.4% Crisps Fresh Bacon Rashers Eggs Fresh Poultry Savoury Snacks Ambient Rice+Svry Noodles Machine Wash Yoghurt Sugar Confectionery Source: Kantar Worldpanel Total Grocery Inflation we

11 % Spend Growth TESCO CONTINUES TO SEE A RECOVERY WITH FURTHER POSITIVE GROWTH AND AVERAGE PRICES PAID UP FOR THE FIRST TIME SINCE Source: Kantar Worldpanel Tesco - Total Grocery Growth % we

12 KEY TO THE IMPROVED PERFORMANCE OF TESCO HAS BEEN THEIR BIG STORES AND THE CONTINUED GROWTH OF THEIR VALUE TIER FARM BRANDS Total Tesco Expres s +0.2% +1.0% Growth from large stores and main shop Metro Supermark et -3.6% +1.2% Switching gains from Tesco and JS Extra Intern et +0.8% -3.3% Source: Kantar Worldpanel Tesco - Total Grocery Growth % 52 we Source: Kantar Worldpanel Till Roll we 11 Sep 2016 % spend growth Farm Brands continues to drive performance

13 % Sales On Promotion HAVING PEAKED IN 2015 THE PROPORTION OF SALES SOLD ON DEAL CONTINUES TO DECLINE FALLING TO ITS LOWEST LEVEL SINCE Source: Kantar Worldpanel % Sales On Promotion Total Grocery we

14 % Sales On Promotion THIS HAS SEEN A MOVE AWAY FROM MULTIBUY PROMOTIONAL ACTIVITY WITH SAINSBURY S, TESCO AND ASDA ALL PULLING BACK ON THE MECHANIC 14.3% 16.7% 14.2% 13.9% 13.6%.8% 10.3% 8.1% 15.9% 16.3% 23.0% 23.9% 23.4% 26.3% 27.6% 25.5% Source: Kantar Worldpanel % Sales On Promotion Total Grocery we

15 % %

16 % Growth LONG TERM GROWTH FOR THE DISCOUNTERS HAS SLOWED BUT REMAINS SPECTACULAR AND HAS IMPROVED IN RECENT PERIODS Dec 03 Feb Mar May Jul Sep 13 Source: Kantar Worldpanel Total Till Roll we 10 Nov Jan Mar Apr Jun Aug 14 Oct Dec Feb Mar May Jul Sep Nov Jan Feb Apr Jun Aug Oct Dec Jan 17

17 Waitrose M & S Sainsbury's Tesco Total Lidl Aldi Co- Morrisons Asda THE DISCOUNTERS ARE NOW VERY MUCH PART OF THE MAINSTREAM ATTRACTING BIGGER BASKETS AND GROWING PREMIUM OWN LABEL Class E Class D Class C2 Class C1 Class AB Premium Own Label +23% Trip Size Shoppers 58% Source: Kantar Worldpanel Total Grocery we 17

18 HEADLINES Return to Tesco Inflation Promotions Discounters Growth Revival

19 AGENDA UK Grocery Market & Retailer Performance Five Key Changes in the UK Market for 2017 Brexit: Potential Implications for UK Grocery

20 % Change THE CURRENT RATE OF INFLATION IS HELPING GROWTH IN GB GROCERY. THIS IS STILL FAIRLY MODEST THOUGH LIKELY TO RISE THROUGH % 8% 6% 4% 2% 0% -2% Grocery growth Grocery inflation -4% Source: Kantar Worldpanel Total Grocery we

21 IMPORTANT TO REMEMBER THAT WE ACTUALLY SEE VERY SLOW CHANGE IN SHOPPER BEHAVIOUR IN GROCERY FREQUENCY (Annual FMCG) 256 REPERTOIRE ( we Till Roll Grocers) SLOW CHANGE BASKET SIZE (Annual FMCG) % 2011 MISSION 62.5% 2016 (Annual % Spend from Top Up Trips)

22 Contribution to Change % Pts #1 SHOPPERS MAINLY RESPOND TO INFLATION BY TRADING DOWN OR USING PROMOTIONS WHICH IMPACTS GROWTH ACCORDINGLY 5% 4% 3% 2% 1% 0% -1% -2% -3% -4% -5% Volume per Shopper Store Choice Promotion Choice Product Choice Inflation 10% 8% 6% 4% 2% 0% -2% -4% -6% -8% -10% Source: Kantar Worldpanel Total Grocery Contribution to Change we

23 Growth % #2 SHOPPERS MADE A CONSCIOUS CHOICE TO INCREASE SPEND ON VALUE OWN LABEL PRODUCTS AIDED BY RETAILERS FOCUSING HERE 50% % 30% Value OL 20% Brands 10% 0% Standard OL -10% Premium OL -20% 25 Mar Apr May Jun Jul 07 Source: Kantar Worldpanel Total Grocery we Aug Sep Oct Nov Dec Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Nov Dec 08

24 #3 CONSUMER CONFIDENCE TOOK A HUGE HIT. DISCRETIONARY CATEGORIES TEND TO BE AFFECTED BY CONFIDENCE Mineral Water Frozen Fish Source: ESI Economy 2015 Kantar Worldpanel, category volume consumption & GfK consumer confidence correlation, Apr 2007 Apr 2015

25 % of GB Household Expenditure #4 SPEND ON GROCERY IS FAIRLY CONSISTENT, WITH UPWARD PRESSURE FROM UTILITIES TENDING TO IMPACT SPEND ON LEISURE AND EATING OUT 100% 80% 60% 40% 20% 0% Misc Goods & Services Restaurants & Hotels Education Recreation & Culture Communication Transport Health Furnishing, Equip & Maint Source: ONS Share of Household Expenditure

26 #5 DURING THE RECESSION WE SAW HEALTH BECOME LESS IMPORTANT AS A REASON FOR CONSUMPTION WHILST IN HOME SNACKING SAW AN INCREASE Health YOY Health 2016 vs % 14,800 14,600 14,400 Snacking YOY IH Snacks 2016 vs % , , Feb 2008 Aug 2008 Feb 2009 Aug 2009 Feb 2010 Rolling YoY % Change in Health as a need state Aug 2010 Feb 2011 Aug ,800 13,600 Feb 2006 Aug 2006 Feb 2007 Aug 2007 Feb 2008 Aug 2008 Feb 2009 Aug 2009 Rolling Annual In Home Snacking Trends (Food & Drink), Millions Occasions Feb 2010

27 WHAT CAN WE TAKE FROM LOOKING BACK TO THE UK RECESSION OF 2008? VOLUME STABLE TRADING DOWN DISCRETIONARY CATEGORIES IMPACTED EAT OUT LESS LESS HEALTH MORE TREATS

28 BUT FOR NOW THE ONLY KNOWN IS UNCERTAINTY AND INFLATION

29 Total Out of Home Quick Service Restaurant Coffee Shop Leisure Pubs & Bars High Street Mults (inc cafe/forecourt) Bakery & Sandwich Vending Full Service Restaurant Workplace & Education Symbols & Independents Petrol Forecourts & Travel Hotels % Growth OUT OF HOME SECTOR IS MORE LIKELY TO BE IMPACTED BUT A LONG TERM GROWTH TREND AND COULD HELP SMALLER TRIPS IN THE MULTIPLES Source: Kantar Worldpanel Total Out of Home we Feb 2016

30 OWN LABEL GROWTH SHOWS NO SIGNS OF SLOWING AND IS A KEY DIFFERENTIATOR FOR THE RETAILERS MMJ SNDFA J AON JMMJ SNDFAMJ SN JMMJ AODF AMJ SN JMA J AODFMMJ SN JMA J AOD JMMJ SN J F Source: Kantar Worldpanel Total Grocery we Own Label vs. Branded Growth % - we Brands Own label 1. Own Label in good health - UK a global leader - Growth is robust 2. Own Label matters - Key driver of difference - Drives store choice - Plays a pricing role as inflation bites 3. Growth - Fresh & Chilled not saturated yet - Branding of Own Label - Value and Premium winning

31 % Sales at Round Pound INFLATION COUPLED WITH RECENT GROWTH OF ROUND POUND PRICING COULD PUT PRESSURE ON PACK SIZES AND REFORMULATION 35% 30% 25% 20% 15% 10% 32% 32% 38% 36% 54% Source: Kantar Worldpanel Total Grocery - % Sales at Round Pound 52 we

32 POTENTIAL IMPACT WILL VARY BY CATEGORY AND RETAILERS WILL BE KEEN TO SEE VALUE, QUALITY AND DIFFERENTIATION Alcohol Ambient Fresh & Chilled Frozen Healthcare Household Toiletries Store Choice Store Choice Volume HH Product Choice Product Choice Promotion Choice 0.84 Store Choice -0.3 If shoppers are looking to save through store or product choice, markets where the Discounters are more established and PL is disproportionally cheap or prevalent are most at risk. Important to understand dynamics within categories

33 Spend Share % THE DISCOUNTERS REMAIN WELL PLACED TO INCREASE MARKET SHARE DISCOUNTERS COULD HOLD OVER 14% OF THE MARKET BY 2020 Aldi 8.0% Lidl 6.3% COVERAGE FREQUENCY & BASKET SIZE MISSIONS CATEGORIES TIERS Source: Kantar Worldpanel Total Till Roll we

34 Frozen Meat Frozen Poultry+Game Frozen Prepared Foods Pet Care Take Home Confectionery Ambient Bakery Products Take Home Soft Drinks Take Home Savouries Biscuits Canned Goods Frozen Fish Frozen Confectionery Ambient Slimming Hot Beverages Household & Cleaning Fresh Meat Pickle+Tbl Dairy Products Grocery Chilled Bakery Products Sweet Home Cooking Savoury Other Toiletries Savoury Home Cooking Packet Breakfast Chilled Convenience Alcohol Haircare Fresh Poultry+Game Healthcare Fruit+Veg+Salads Oral-Care Bathroom Toiletries Chilled Drinks Fresh Fish INFLATION WILL MORE ADVERSELY AFFECT LOWER SOCIAL CLASS HHS, WHO OVER-INDEX ON CERTAIN MARKETS THOUGH INFLATION WILL VARY Ranked C2DE share of market % Overtrade with C2DE Undertrade with C2DE Source: Kantar Worldpanel Oct Kantar Worldpanel

35 Frozen Poultry+Game Fruit+Veg+Salads Fresh Meat Frozen Fish Fresh Poultry+Game Frozen Confectionery Packet Breakfast Sweet Home Cooking Canned Goods Fresh Fish Dairy Products Ambient Bakery Products Biscuits Take Home Savouries Grocery Pickle+Tbl Savoury Home Cooking Alcohol Savoury Frozen Prepared Foods Chilled Convenience Take Home Confectionery Take Home Soft Drinks Household & Cleaning Frozen Meat Chilled Drinks Hot Beverages Chilled Bakery Products Other Toiletries Pet Care Bathroom Toiletries Oral-Care Healthcare Haircare Amb Slimming Prds IF SHOPPERS CHOOSE TO MANAGE SPEND THROUGH STORE CHOICE, MARKETS WHERE DISCOUNTERS OVER-TRADE WILL BE AFFECTED FIRST Ranked Hard Discounter share of market % Overtrade Undertrade Source: Kantar Worldpanel Oct Kantar Worldpanel

36 IMPACT COULD ALSO DEPEND ON YOUR CATEGORY. IMPORTANT FOR MANUFACTURERS TO CONSIDER How do shoppers cope with inflation in your market? Are there clear price tiers and/or OL presence allowing shoppers to trade down Is there a clear market leader or a more level playing field? Do the Hard Discounters overtrade allowing shoppers option to manage their spend through store choice Are you more reliant on less affluent shoppers who have more of a need to save? Do you have a clear USP and strong equity that will protect you from the competition

37 LONG TERM TRENDS ARE JUST THAT AND REMAIN KEY Older & More Diverse Smaller Households Valuing Time Convenience Health