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Asda’s Just Essentials ranges is winning over customers

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Brands are coming under increasing pressure from own-label as shoppers trade down to cope with soaring food prices, new research revealed this morning.

Asda benefitted most from the raised demand for own label to be the fastest growing of the top three supermarkets over the 12 weeks ended 8 October, with sales up 6.9%.

The Yorkshire-headquartered grocer’s growth was boosted by previously having weaker comparatives than the other retailers, but with almost 9% more shoppers than this time last year, the retailer’s new strategies around range and price were already having an impact, Nielsen said. Sainsburys (+5.1%) and Tesco (+4.2%) also gained market share during the period, but sales at Morrisons declined 2%.

Private label performed better than brands over the past 12 weeks and now accounts for 53% of fmcg spend, up from 52% a year ago, according to the latest NielsenIQ data.

Value sales of private label grew at 6% compared with brands at 2.4%. Own label performed better in bakery with volume sales up 1.9%, household up 0.5% and flat in dry grocery.

Total till sales at supermarkets in the past four weeks increased 4.7%, compared to 2.5% in the previous month. However, volumes declined 6% as shoppers spent more money but bought less.

Inflation pushed most categories into value growth, with pet recording the largest at 12.9%, followed by dairy (+11.8%), crisps and snacks (+11.3%) and bakery (+11.2%). Sales for fresh produce fell -3.2% and beer, wines and spirits was down 4.4%.

Volume growth was weakest in household (-9.4%), fresh produce (-8.3%), and meat, fish and poultry (-8%), as well as general merchandise (-7.1%).

The trend of consumers returning to shop in-store continued with store visits up +6.5% compared with a year ago, and online visits down -9.3%, with one in four households now shopping online, down slightly from last year. The online share of fmcg sales has now fallen to 10.9%, down from 11.1% last month.

Mike Watkins, NielsenIQ UK head of retailer and business insight, said: “In recent weeks there has been a small shift away from fresh to frozen, slightly less spend on fruit and vegetables and fresh meat, fish and poultry and slightly more spend on impulse confectionery and soft drinks, with the latter helped by warm weather at the end of summer.

“The start of the 2022 FIFA Football World Cup should boost some categories, such as drinks and snacks, and there may be more meal occasions at home as friends and family get together to watch the sport at home. But as we edge closer to December the challenging external economic factors that impact household budgets such as concerns on mortgages and rising energy costs become greater.”

He added: “It’s still very uncertain how big the all important Christmas weeks will be based on current trends and the added pressure on shoppers who may look to opt for cheaper alternatives. But what we do know is that shoppers will be monitoring their weekly grocery spend even more closely.

“Some households may wish to bring forward some seasonal spending to help with budgeting, such as seasonal biscuits, chocolates and affordable gifts to spread the cost of Christmas.”

According to data from NielsenIQ’s survey of shoppers in August, British shoppers are focusing on three main coping strategies to manage rising inflation. This includes monitoring the cost of their overall shopping basket (26%), opting for private label products (27%) and shopping more at the discounters (23%).

Morning update

Brits are changing their spending habits in a bid to save money needed to cover soaring energy bills this autumn and winter, according to the latest data from Barclaycard released this morning.

Average spending on utility bills jumped 48% in September, which is higher than the 45.2% seen in August and 43.9% in July, with nine in ten consumers feeling concerned about the impact of rising costs on their personal finances.

Barclaycard said consumers are adopting a number of tactics to cope with mounting cost pressures, including cutting back on unnecessary purchases, pulling back spending on new clothes and meals out and enjoying more evenings at home.

In September, spending on non-essential items grew just 1% year-on-year, significantly less than the previous month (3.6%), and a new low since February 2021 (-17.5%) when the second Covid lockdown measures were still in place.

Over half of Brits (53%) are planning to cut down on discretionary spending to be able to afford their energy bills this autumn and winter. Of these consumers, six in ten (60%) are reducing the amount they eat out at restaurants, a similar proportion (59%) are cutting down on buying new clothes and accessories, and just under half (47%) are spending less on drinking in pubs, bars and nightclubs.

To save money, over half of Brits (51%) are planning to spend more evenings at home over the coming months; opting to play board games (25%), stream films and box-sets (20%), and play video games (19%) instead of going out.

Supermarket shopping only saw a small uplift (2.8%) compared to September 2021, as 67% say they are looking for ways to get more value from, or to reduce the cost of their weekly shop. One of the most common ways for this money-conscious group to save is by cutting down on luxuries or one-off treats for themselves (40%). Similarly, one in five (19%) say that they are no longer able to afford small luxuries as a pick-me-up.

A third of workers (29%) are now taking a packed or home-made lunch into the office, instead of buying food on-the-go, while a similar proportion (28%) are cutting back on treats at work, such as coffees and snacks. One in eight (13%) are even skipping meals at work altogether.

Barclaycard director Esme Harwood said: “As the colder weather starts to set in and energy bills continue to rise, Brits are facing even tougher decisions about where they focus their spending.

“As a result, discretionary purchases like meals out and clothes have become less of a priority.

“However, Brits are still keen to have a good time while they save money, particularly when it comes to nights in. The increase in spending on digital content and takeaways in September reflects this, and could be a trend that continues into the festive period.

“Elsewhere, consumers continue to take a resourceful approach to money management – including putting aside money for Christmas – which will become even more important for weathering the unpredictable months ahead.”

Pernod Ricard has signed an agreement for the acquisition of a majority shareholding of Código 1530 Tequila, a range of ultra-premium and prestige tequila.

This new investment into the fast-growing agave category, mainly driven by the US market, complements the group’s portfolio across price points and occasions.

Founded in 2016 by Ron Snyder, Federico Vaughan and George Strait, Código is available within 50 states across the US and is at the early stage of its international development with a presence in over 30 markets.

Pernod Ricard CEO and chairman Alexandre Ricard said: “Código’s range of exquisite tequilas reinforces our offer of ultra premium+ agave products in the US, where the category is enjoying a very strong momentum.

“It is a privilege to partner with Ron Snyder, Federico Vaughan and George Strait with whom we share a common vision for Código 1530 and common ambition to strongly accelerate and strengthen the success of the brand.”

Ultimate Products, the owner of a number of homeware brands including Salter and Beldray, has renewed its trademark licence agreement with Spectrum Brands, which grants the group an exclusive licence to use the Russell Hobbs trademark in the UK, Europe, Australia and New Zealand for non-electrical kitchen and laundry products.

The new agreement is on a rolling four-year basis, rather than the previous fixed-term arrangement due to end in March 2023.

Ultimate Products has had the licence for cookware lines of the heritage kitchenware brand since 2011.

In FY22, the group generated unaudited revenues of £20.2m under the Russell Hobbs trademark, representing 13.1% of total sales.

Ultimate Products CEO Simon Showman said: “We are delighted to continue our relationship with Spectrum Brands and are privileged to be able to use the Russell Hobbs trademark on a range of non-electrical kitchen and laundry products. Moving from a fixed-term arrangement to a rolling four-year contract decreases the ongoing licence risks, allowing us to focus on the long-term growth of the brand, which will increase the benefits of the partnership for both Spectrum Brands and Ultimate Products.”

The FTSE 100 jumped another 1.1% to 6,994.36pts this morning.

Early risers included THG, up 8.2% to 49.6p, Just Eat Takeaway, up 5.6% to 1,301.2p, Glanbia, up 4.3% to €12.15, and Finsbury Food Group, up 3.5% to 88p.

Fallers so far included Science in Sport, down 3.2% to 15p, AG Barr, down 2.8% to 449.1p, Hotel Chocolat Group, down 0.8% to 120p, and Imperial Brands, down 0.6% to 1,995p.

Yesterday in the City

Investors breathed a sigh of relief yesterday after new chancellor Jeremy Hunt ripped up almost all the policies announced in the disastrous mini-budget, with government borrowing costs falling and sterling climbing as a result.

The FTSE 100 rebounded 0.9% to 6,919.49pts and the FTSE 250 jumped 2.6% to 17,479.95pts.

Food and drink shares mostly had a good day, with the risers being led by tech stocks Just Eat Takeaway, THG and Deliveroo, up 10.8% to 1,231.6p, 10.5% to 44.9p and 6.8% to 81.5p respectively.

Fallers included Virgin Wines UK, down 4% to 48p, Science in Sport, down 3.2% to 15p, and Haleon, down 2% to 268.5p.