Top story

Total Till grocery sales at UK supermarkets continued to improve in June, but sales volumes decreased despite the overall increase due to inflation and the rising cost of living.

NielsenIQ found grocery sales were 1.5% up in the four weeks ending 18th June 2022, as warner weather the Platinum Jubilee boosted spending.

However, despite this uplift, volume sales are declining by 5.5%, as shoppers seek to manage their basket spend as a result of inflation.

Sales in the Jubilee period were buoyant at 3.7%, with growths across teatime treats and fizz, such as cream and custard (+48%), champagne (+47%), dough and pastry (+46%), sparkling wine (+40%).

Sales were also boosted during the week ending 18th June at +0.7% where Brits experienced the first spell of hot sunny weather and the hottest temperatures so far this year.

In absolute terms, NielsenIQ data shows that shoppers spent £10.4bn at UK supermarkets in the four weeks ending 18th June, compared to the £10bn spent in May, with more of this spend switching to the discounters.

However, while inflation is now helping to lift category growths across most of the store, volume sales were in decline in all fmcg categories at the UK supermarkets over the last four week period.

Moreover, rising prices are leading shoppers to consider cheaper meal alternatives, with sales increasing for frozen poultry (+12%), rice and grains (+11%), canned beans and pasta (+10%), gravy/stock (+9%) and canned meat (+9%).

In contrast, sales of beers, wines and spirits (still impacted by the slow reopening of the hospitality industry a year ago) fell 9.7%, as well as general merchandise falling by 6.1% as shoppers trimmed discretionary spend.

NielsenIQ data shows that in the four week period, visits to stores grew 7% - which is over 31m extra visits than this time last year. However, online sales fell 12% compared with last year, with almost half a million fewer online shoppers than in June 2021.

On an individual retailer basis, Tesco returned to growth of 0.4%, with the other three major supermarkets still in decline as Asda fell 2.4%, Sainsbury’s 2.3% and Morrisons 6.3%.

Aldi and Lidl were up 5.3% and 12.1% respectively, to now take 19.1% of the total market.

Other retailers in growth included Marks & Spencer, up 3.6%, Iceland, up 1.3% and The Co-op, up 0.7%.

Mike Watkins, NielsenIQ’s UK head of retailer and business insight, commented: “It is no surprise that with budgets squeezed some households are less willing or less able to spend on a large online shop. Moreover, with no restrictions on visiting stores, this is encouraging shoppers to shop around for the best prices as well as shopping little and more often to help manage the weekly food budget. Shoppers are starting to make different choices in how to compensate for their rising cost of living. For some households, the way to save money is to buy cheaper products and our analysis suggests that some of the increased cost of an overall basket can be mitigated in this way.”

“The outlook for the next four weeks is for further pressure on shopper spend and whilst there are some major sporting events over the next few weeks, such as Wimbledon, the F1 and the Women’s Euros, incremental volume growths to the end of July will probably remain subject to the vagaries of the weather. And in the meantime, as shoppers remain cautious, retailers will continue to offer differential price cuts and savings for their most loyal shoppers.”

Morning update

Farming supplies group Wynnstay has posted record interim results, ahead of management expectations, driven by strong farmgate prices boosting farmer sentiment and significant one-off gains from fertiliser caused by sharply rising natural gas prices.

Revenue in the six months to 30 April increased by 34% on the same period last year to £335.66m, with commodity price inflation accounting for an estimated £80m of the overall increase.

Revenue generated by the agriculture division increased by 45% to £263m, while the specialist agricultural merchanting division generated a 5% increase at £72.6m.

Its acquisition of poultry feed group Humphrey, completed in mid-March 2022, also contributed £6.4m to group revenues.

Adjusted operating profit rose by 84% to £10.4m, driven by one-off stock profits from fertiliser blending and improved margins, down partly to efficiencies.

Underlying pre-tax profit increased by 85% to £10.2m.

The group said that trading conditions remain positive, underpinned by firm farmgate prices

Its board believes group is well-placed to achieve growth prospects for the full year even if the exceptional gains of the first half are not expected to be repeated in the rest of the year.

CEO Gareth Davies commented: “These record interim results have been underpinned by a favourable sector backdrop, with strong farmgate prices across most sectors and positive farmer sentiment, as well as significant one-off gains in our fertiliser blending activity.

“The acquisition of Humphrey Feeds and Pullets is exciting. It significantly extends our geographic reach and opens up new growth opportunities.

“While there are still challenges with cost inflation and supply chain pressures, sector sentiment remains strong, and we are confident about achieving our growth goals for the full year.”

Elsewhere, National Lottery operator Camelot UK Lotteries has announced record returns to good causes from ticket sales for the second consecutive year despite a drop in ticket revenues.

This was generated from sales of £8.1bn for the 2021/22 financial year to 31 March 2022, which represented a decrease of £283.2m on last year record sales of £8.3bn.

Including unclaimed prizes, £1.91bn was generated for Good Causes over the period – an increase of £24.3m year-on-year.

This makes it the second best-ever total raised for Good Causes – second only to 2012/13 during London 2012 and when there were significantly more unclaimed prizes.

With approximately 1% of sales retained as profit by Camelot and 4% spent on operating costs during the period, The National Lottery returned around 95% of all sales revenue to winners and society.

Camelot CEO Nigel Railton said: “Achieving National Lottery sales of over £8bn two years in a row while maintaining very high levels of public participation – despite the challenging and changing external environment – proves that our strategy of offering great consumer choice in a safe and convenient way continues to be hugely successful. It’s also testament to the resilient, innovative and responsive business model that we’ve put in place over the last few years.

“In particular, our ongoing investment in The National Lottery brand – which this year saw us carry out an unmissable campaign to celebrate National Lottery players’ contribution to Tokyo 2020, as well as support a number of great money-saving promotions for National Lottery players as Covid restrictions eased – and our innovation in the flagship Lotto game continued to pay off.

“Generating record returns to Good Causes from ticket sales for the second year running is an outstanding achievement – and is fantastic news for people, projects and communities across the UK at a time when funding has never been more needed.”

On the markets this morning, the FTSE 100 is up another 0.9% to 7,323.8pts.

Early risers include Naked Wines, up 6.1% to 161.3p, McBride, up 2.8% to 17p and Devro, up 1.6% to 188p.

Fallers include THG, down 1.5% to 84p, Deliveroo, down 1.4% to 90.7p and FeverTree, down 1.3% to 1,394p.

Yesterday in the City

After a strong rally on Friday (up 2.7%) the market was up again yesterday, with the FTSE 100 closing up 0.7% at 7,258.3pts.

Risers included Cranswick, up 3.1% to 3,150p, Deliveroo, up 2.9% to 92p, Parsley Box, up 2.9% to 18p, Coca-Cola Europacific Partners, up 2% to €49.95, PZ Cussons, up 1.8% to 201p, Britvic, up 1.8% to 827.5p, Tate & Lyle, up 1.7% to 778,6p and Premier Foods, up 1.4% to 116.6p.

The day’s fallers included McBride, down 7% to 16.5p, Virgin Wines, down 2.6% to 95p, Bakkavor, down 1.9% to 97.1p, Devro, down 1.3% to 185p, Ocado, down 1.2% to 860p and PayPoint, down 0.5% to 572p.