Among the daily headlines of bank bailouts, share price freefalls and housing market meltdowns, it's easy to forget there are good news stories out there. So we've devoted the next 14 pages to positive thinking, silver linings, tips on how to survive the credit crunch plus an exclusive interview with chief optimist and Sainsbury's boss Justin King. But first: 18 reasons to keep smiling
You're not an estate agent
Shelve the trip to Disneyland, put those extension plans on the back-burner, re-wrap the kids’ birthday presents at Christmas... no matter how bad things get, take a moment to rejoice in the fact that we all need to eat. Sure, consumers may scale back on quality or even quantity. They may even lose a little bit of weight. But unlike estate agents, bankers and car salesmen, the service we deliver is the source of life itself. And, short of a nuclear holocaust or a world war, we’ll have plenty to go round.
Eating in is the new eating out
Cash-strapped UK diners are increasingly opting for a night in with their woks and colanders.
"Restaurant meals are off the menu for many; instead consumers are heading to the supermarkets," says Remmelt Jongkind, general manager of pasta and sauce company Napolina, with 670,000 new consumers opting for the more upmarket fresh pasta option in the year to August [TNS].
Takeaways are also becoming a no-no, with more than half of all adults spending less money 'ordering in' since the beginning of the year and one in six have scrapped them altogether, according to research compiled by YouGov for Sainsbury's.
And for those who still can't be bothered to cook, the numerous '£10 meal for two'-style offers are going down a storm, making it a good time for suppliers of ethnic and bistro-oriented British dishes alike.
The fashion for frozen
After years of neglect and declining sales, the investment of companies such as Birds Eye and Young's Seafood is paying off, with frozen fish volumes up 2.3% and sales up 5.9% [Nielsen MAT 4 October]. Having ploughed money into advertising to educate consumers about the health credentials of buying frozen, the value message is now attracting penny-saving shoppers too. The performance of Malcolm Walker's Iceland (up 10.9% in the three months to 2 November, according to TNS) and the ultra-secretive Farm Foods (up 22.4%) confirms the resurgence of the category.
Ambient is in
Canned goods were first used by soldiers during the Battle of Waterloo. Now, nearly 200 years later, they are providing much-needed rations as under-fire Britons once again focus on ambient.
"Canned soup, pasta and beans are recession-positive categories, " says Paul Lees, vice president of sales for Heinz UK & Ireland. Heinz has also invested to good effect, with Snap Pots going down a storm. "On the back of a strong performance last year we continue to grow ahead of a market that's up 9.5% this year over last. Complacent? No. Cheerful? Yes."
Mark Bosworth, marketing controller for The English Provender Company, adds: "Ambient products are easy to store, have longer shelf lives and provide plenty of price points, from value to premium. Provided your products deliver their promises, there is every reason to be cheerful."
Comfort eating
Have the hysterical warnings of the health police subsided or are we just tuning them out? Regardless of which is the case, indulgence is back in a big way.
Leonard Lauder, chairman of Estée Lauder, dubbed it the "lipstick index" when, after 9/11, sales of little luxuries soared. But it applies just as much to food and drink. Cakes have seen a volume increase of 3.5% in the past year [Nielsen]. This month, wholesaler Nisa-Today's reported that third-quarter sales volumes were up by 29% for chocolate and 21% for alcohol - the perfect tonic for a lazy (and cheap) night in front of the TV. And the resilience of tobacco was confirmed last month when Philip Morris and British American Tobacco both reported sales up 20%.
Crunch-proof categories
But it’s not just comfort food that’s doing well. Approximately 85% of food and drink categories are expected to show an increase in value in next month’s Top Products Survey. Among the star performers are sports drinks, cider, nappies, mouthwashes and shower gels. And volumes are also expected to hold up well.
Innovation is continuing
No-one could accuse Procter & Gamble of battening down the hatches. With the supermarkets obsessing over price cuts, it launched Ariel Excel Gel – a revolutionary laundry detergent that works even on a cold water cycle – and urged industry leaders not to forget the importance to consumers of ideas. “We need to continue to delight consumers with innovative products,” says director of customer business development Ian Radcliffe. “What happens following a recession if we are known only for low prices and stop investing in ideas?”
Other manufacturers increasingly committed to innovation include giants such as Heinz, InBev, Reckitt Benckiser, Gallaher, Cadbury and Coca-Cola, who in turn have been inspired by the growth of Gü, Tyrrells, Dorset Cereals and others. Indeed, while poster-child Innocent has seen a slump in smoothie sales, it’s significant, surely, that it’s investing first in European expansion – seeking an equity-based investment – and second in new product development in the form of its new Veg Pots.
New brands are emerging
It’s equally cheering to report that, despite the economic downturn, exciting new players are emerging. Inside Out Beauty launched Sip last year into the highly competitive bottled water category. Having gained listings in Eat, Coffee Republic, Waitrose, Ocado and Whole Foods Market among others, it this month went on sale in Tesco, Sainsbury's and Boots. Sales and operations director Kate Cazenove reports that this month sales were the highest ever, despite no promotions budget, and credits supermarket and wholesaler buyers for their imagination.
“The buyers I’ve dealt with have been fantastic. They’ve held our hands, they didn’t take the piss with negotiations. I think they like Sip because it’s so unashamedly girlie, they love the design and they love the idea that girlies are doing it for themselves.”
Competition is healthy
Perhaps the retail story of the year has been the rise of the discounters and the consumer ‘flight to value’, with Aldi posting sales growth of 24% [TNS, 12w/e 2 November]. Some are clearly irritated by the free PR and ‘unchallenged assumptions’ about their true value. Their success has rattled even Tesco, which launched a discount range of tertiary brands in September. But the rise of the discounters is a ringing endorsement of competition, and has turned what was becoming a predictable debate about the big four’s power into a guerilla war in which smaller players have real weight.
There is growth still
Also, lest we forget, while sales for other retailers have slowed, they are still up for most grocers. In fact, the market is up 6.4% overall [TNS 52w/e 2 November], with only Somerfield among the top 10 players recording a decline. Even independents such as Booths are recording sales growth and, along with The Co-operative Group, recorded a spectacular return to profit. The picture on the supply side is more mixed, with a number of dairy manufacturers reporting problems, for example. On the other hand, the results of Reckitt Benckiser, Nestlé and Danone in the past month have confirmed that companies with strong brands are well equipped to ride out the recession.
Commodity prices are falling
It's hard to maintain confidence when food prices have been rocketing but commodity prices are now falling significantly. With the exception of basmati, all the major grains have fallen in price by at least 25% year-on-year while SMP (down 39.7%) and potatoes (down 35%) have fallen even further.
So are petrol prices
Of course, oil is also a commodity, but its recent dramatic fall in price warrants cheer in its own right as it will have a greater impact on cash-strapped consumers and the supply chain. After reaching a peak of almost $150 a barrel in July, it's languishing this week at $50. Some predict it will go as low as $40 by the year end.
Releasing cash
The decision by the Bank of England to slash interest rates to 3% will reduce mortgage payments for those on a variable rate, and makes borrowing a good deal cheaper for small business owners in need of capital. The next challenge is to persuade the banks to part with their cash. This is a relatively scarce commodity at the moment, except in the vaults of the private equity funds, who are sitting on unspent billions. It needs to find a home.
Soaring exports
Food from Britain's latest figures show annual food and drink exports are likely to exceed £13bn by the year end. There is an upside to the weakening pound, especially when combined with significant interest from emerging markets.
Even meat producers, who have suffered hugely in recent years with EU animal disease restrictions, seem to have found their way out of the tunnel. Beef exports were up 8% by volume in the first half of this year, while lamb exports are also up thanks to interest from new markets such as Africa.
The value of values
They say old habits die hard, but new ones are also proving steadfast. While organic sales are reportedly flat, sales of Fairtrade are holding up well. So too local. Riding on the coat-tails of consumer opinion, every major UK supermarket has pledged to back British to some extent or another.
"The strength of local is that it's the best quality, it's seasonal and it's cheaper for the consumer," says Helen Evans of the Covent Garden Market Authority.
Tesco reckons it will generate £1bn from sales of local products by 2011, while Asda has pledged to double the number of products sourced from local producers to 15,000 by the same date.
Convenience comeback
It may come as a surprise, with sales in independents down 1%, but some experts are tipping c-stores to benefit from the credit crunch. The theory is that shoppers will save money by avoiding both the wastage and the cost of a weekly shop in an out-of-town supermarket.
IGD found 21% of shoppers had walked to the shops more often in the past six months, and the My Shop Is Your Shop campaign found 20 million people a day were walking to their local store.
"As successful as the multiples are, they rely on car usage. The trend toward walking is a unique, positive selling point for independents," says MSYS chairman Alan Toft.
Online is an opportunity
Recession or no recession, online shopping remains an avenue retailers can continue to exploit. IGD predicts the market value of online grocery shopping will grow by 20% this year, and almost double from £3.2bn to £6.2bn come 2013. It claims a greater reluctance on the part of consumers to use their cars is making home delivery more attractive.
There will be bargains
It’s highly likely some companies will go bust, but it also means the overinflated prices of the past will be replaced by genuine bargains. The ones that emerge will be able to steal a march when the economic downturn ends, as inevitably it will.
You're not an estate agent
Shelve the trip to Disneyland, put those extension plans on the back-burner, re-wrap the kids’ birthday presents at Christmas... no matter how bad things get, take a moment to rejoice in the fact that we all need to eat. Sure, consumers may scale back on quality or even quantity. They may even lose a little bit of weight. But unlike estate agents, bankers and car salesmen, the service we deliver is the source of life itself. And, short of a nuclear holocaust or a world war, we’ll have plenty to go round.
Eating in is the new eating out
Cash-strapped UK diners are increasingly opting for a night in with their woks and colanders.
"Restaurant meals are off the menu for many; instead consumers are heading to the supermarkets," says Remmelt Jongkind, general manager of pasta and sauce company Napolina, with 670,000 new consumers opting for the more upmarket fresh pasta option in the year to August [TNS].
Takeaways are also becoming a no-no, with more than half of all adults spending less money 'ordering in' since the beginning of the year and one in six have scrapped them altogether, according to research compiled by YouGov for Sainsbury's.
And for those who still can't be bothered to cook, the numerous '£10 meal for two'-style offers are going down a storm, making it a good time for suppliers of ethnic and bistro-oriented British dishes alike.
The fashion for frozen
After years of neglect and declining sales, the investment of companies such as Birds Eye and Young's Seafood is paying off, with frozen fish volumes up 2.3% and sales up 5.9% [Nielsen MAT 4 October]. Having ploughed money into advertising to educate consumers about the health credentials of buying frozen, the value message is now attracting penny-saving shoppers too. The performance of Malcolm Walker's Iceland (up 10.9% in the three months to 2 November, according to TNS) and the ultra-secretive Farm Foods (up 22.4%) confirms the resurgence of the category.
Ambient is in
Canned goods were first used by soldiers during the Battle of Waterloo. Now, nearly 200 years later, they are providing much-needed rations as under-fire Britons once again focus on ambient.
"Canned soup, pasta and beans are recession-positive categories, " says Paul Lees, vice president of sales for Heinz UK & Ireland. Heinz has also invested to good effect, with Snap Pots going down a storm. "On the back of a strong performance last year we continue to grow ahead of a market that's up 9.5% this year over last. Complacent? No. Cheerful? Yes."
Mark Bosworth, marketing controller for The English Provender Company, adds: "Ambient products are easy to store, have longer shelf lives and provide plenty of price points, from value to premium. Provided your products deliver their promises, there is every reason to be cheerful."
Comfort eating
Have the hysterical warnings of the health police subsided or are we just tuning them out? Regardless of which is the case, indulgence is back in a big way.
Leonard Lauder, chairman of Estée Lauder, dubbed it the "lipstick index" when, after 9/11, sales of little luxuries soared. But it applies just as much to food and drink. Cakes have seen a volume increase of 3.5% in the past year [Nielsen]. This month, wholesaler Nisa-Today's reported that third-quarter sales volumes were up by 29% for chocolate and 21% for alcohol - the perfect tonic for a lazy (and cheap) night in front of the TV. And the resilience of tobacco was confirmed last month when Philip Morris and British American Tobacco both reported sales up 20%.
Crunch-proof categories
But it’s not just comfort food that’s doing well. Approximately 85% of food and drink categories are expected to show an increase in value in next month’s Top Products Survey. Among the star performers are sports drinks, cider, nappies, mouthwashes and shower gels. And volumes are also expected to hold up well.
Innovation is continuing
No-one could accuse Procter & Gamble of battening down the hatches. With the supermarkets obsessing over price cuts, it launched Ariel Excel Gel – a revolutionary laundry detergent that works even on a cold water cycle – and urged industry leaders not to forget the importance to consumers of ideas. “We need to continue to delight consumers with innovative products,” says director of customer business development Ian Radcliffe. “What happens following a recession if we are known only for low prices and stop investing in ideas?”
Other manufacturers increasingly committed to innovation include giants such as Heinz, InBev, Reckitt Benckiser, Gallaher, Cadbury and Coca-Cola, who in turn have been inspired by the growth of Gü, Tyrrells, Dorset Cereals and others. Indeed, while poster-child Innocent has seen a slump in smoothie sales, it’s significant, surely, that it’s investing first in European expansion – seeking an equity-based investment – and second in new product development in the form of its new Veg Pots.
New brands are emerging
It’s equally cheering to report that, despite the economic downturn, exciting new players are emerging. Inside Out Beauty launched Sip last year into the highly competitive bottled water category. Having gained listings in Eat, Coffee Republic, Waitrose, Ocado and Whole Foods Market among others, it this month went on sale in Tesco, Sainsbury's and Boots. Sales and operations director Kate Cazenove reports that this month sales were the highest ever, despite no promotions budget, and credits supermarket and wholesaler buyers for their imagination.
“The buyers I’ve dealt with have been fantastic. They’ve held our hands, they didn’t take the piss with negotiations. I think they like Sip because it’s so unashamedly girlie, they love the design and they love the idea that girlies are doing it for themselves.”
Competition is healthy
Perhaps the retail story of the year has been the rise of the discounters and the consumer ‘flight to value’, with Aldi posting sales growth of 24% [TNS, 12w/e 2 November]. Some are clearly irritated by the free PR and ‘unchallenged assumptions’ about their true value. Their success has rattled even Tesco, which launched a discount range of tertiary brands in September. But the rise of the discounters is a ringing endorsement of competition, and has turned what was becoming a predictable debate about the big four’s power into a guerilla war in which smaller players have real weight.
There is growth still
Also, lest we forget, while sales for other retailers have slowed, they are still up for most grocers. In fact, the market is up 6.4% overall [TNS 52w/e 2 November], with only Somerfield among the top 10 players recording a decline. Even independents such as Booths are recording sales growth and, along with The Co-operative Group, recorded a spectacular return to profit. The picture on the supply side is more mixed, with a number of dairy manufacturers reporting problems, for example. On the other hand, the results of Reckitt Benckiser, Nestlé and Danone in the past month have confirmed that companies with strong brands are well equipped to ride out the recession.
Commodity prices are falling
It's hard to maintain confidence when food prices have been rocketing but commodity prices are now falling significantly. With the exception of basmati, all the major grains have fallen in price by at least 25% year-on-year while SMP (down 39.7%) and potatoes (down 35%) have fallen even further.
So are petrol prices
Of course, oil is also a commodity, but its recent dramatic fall in price warrants cheer in its own right as it will have a greater impact on cash-strapped consumers and the supply chain. After reaching a peak of almost $150 a barrel in July, it's languishing this week at $50. Some predict it will go as low as $40 by the year end.
Releasing cash
The decision by the Bank of England to slash interest rates to 3% will reduce mortgage payments for those on a variable rate, and makes borrowing a good deal cheaper for small business owners in need of capital. The next challenge is to persuade the banks to part with their cash. This is a relatively scarce commodity at the moment, except in the vaults of the private equity funds, who are sitting on unspent billions. It needs to find a home.
Soaring exports
Food from Britain's latest figures show annual food and drink exports are likely to exceed £13bn by the year end. There is an upside to the weakening pound, especially when combined with significant interest from emerging markets.
Even meat producers, who have suffered hugely in recent years with EU animal disease restrictions, seem to have found their way out of the tunnel. Beef exports were up 8% by volume in the first half of this year, while lamb exports are also up thanks to interest from new markets such as Africa.
The value of values
They say old habits die hard, but new ones are also proving steadfast. While organic sales are reportedly flat, sales of Fairtrade are holding up well. So too local. Riding on the coat-tails of consumer opinion, every major UK supermarket has pledged to back British to some extent or another.
"The strength of local is that it's the best quality, it's seasonal and it's cheaper for the consumer," says Helen Evans of the Covent Garden Market Authority.
Tesco reckons it will generate £1bn from sales of local products by 2011, while Asda has pledged to double the number of products sourced from local producers to 15,000 by the same date.
Convenience comeback
It may come as a surprise, with sales in independents down 1%, but some experts are tipping c-stores to benefit from the credit crunch. The theory is that shoppers will save money by avoiding both the wastage and the cost of a weekly shop in an out-of-town supermarket.
IGD found 21% of shoppers had walked to the shops more often in the past six months, and the My Shop Is Your Shop campaign found 20 million people a day were walking to their local store.
"As successful as the multiples are, they rely on car usage. The trend toward walking is a unique, positive selling point for independents," says MSYS chairman Alan Toft.
Online is an opportunity
Recession or no recession, online shopping remains an avenue retailers can continue to exploit. IGD predicts the market value of online grocery shopping will grow by 20% this year, and almost double from £3.2bn to £6.2bn come 2013. It claims a greater reluctance on the part of consumers to use their cars is making home delivery more attractive.
There will be bargains
It’s highly likely some companies will go bust, but it also means the overinflated prices of the past will be replaced by genuine bargains. The ones that emerge will be able to steal a march when the economic downturn ends, as inevitably it will.
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