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Grocery sales growth fell back in March as the industry lapped last year’s record-breaking spending during the first coronavirus lockdown,
Total grocery sales were down 3% year on year in the four weeks to 21 March, taking the 12 week grocery growth figure down to 7.4%.
On a two year basis grocery spending remains 15.6% higher than pre-pandemic levels in 2019.
All of the big four grew between 7% and 9%, with Morrisons the fastest grower at 8.7%, followed by Tesco at 8.5%, Asda at 7.6% and Sainsbury’s at 7.3%.
Aldi was once again the weakest of the physical supermarkets, growing by 1.5%. Notable Lidl’s growth also slowed to 2.9% during the period.
That meant both discounters have lost market share year-on-year, with Aldi’s share slipping from 8.2% to 7.8% and Lidl falling from 6.1% to 5.8%.
Iceland was the fastest growing physical grocer, with sales up 14..3%, while Ocado had the fastest overall growth with sales up 33.9%.
Kantar’s Fraser McKevitt commented: “Spring’s arrival signals the start of a really interesting period for the grocery market. The anniversary of the first national lockdown means we begin to compare grocery sales against the record-breaking levels seen in the early days of the pandemic and growth has perhaps not surprisingly dipped over the past four weeks as a result.”
“It’s important to look at these numbers within the bigger picture, and two-year growth figures allow us to examine retailer performance amid these moving parts. While grocery growth has slowed against 2020, sales are still much higher than the same 12 weeks in 2019 – up by 15.6%. As restrictions on dining out continue, the average household spent an extra £134 on take-home groceries compared with this period two years ago.”
Online grocery shopping levels dropped back as more people returned to stores, visiting 13 million more times than in February.
Online sales were 89% higher than this time last year, but the channel’s share of the market dropped back to 14.5% from the record of 15.4% in February 2021
There are signs that the largely vaccinated over 65s are growing in confidence, as they increased their trips to supermarkets by 6.8% – more than double the national rate.
Kantar found grocery inflation now stands at 0.9% for the 12-week period ending 21 March, with prices rising fastest in canned colas, chilled fruit juices & drinks and chilled desserts while falling in fresh bacon, vegetables and fresh beef.
Morning update
Irn Bru producer AG Barr has posted a double-digit drop in annual sales and profits as the coronavirus hammered out of home sales.
In the year to 24 January 2021, the drinks maker saw net sales fall 11.2% to £227m.
It said that having having entered the financial year with “strong trading momentum”, the “unexcepted and unwelcome” impact of Covid-19 in March significantly impacted performance thereafter.
While it ensured continuity of operations, trading was nonetheless disrupted, particularly in the hospitality and ‘out of home’ channels.
Its carbonated drinks reported revenue decline of 6.2%, impacted by Covid-19 as well as the loss of the Rockstar franchise from 1 November 2020.
Stills and water net revenue declined 36% driven by a 43.3% fall in volume, a direct reflection of the impact of pandemic restrictions on the brands in this segment.
Funkin sales were down 11.5% as it pivoted the brand’s focus towards branded ready to drink cocktails in the take home channels.
Profit before tax and exceptional items was down £4.6m at £32.8m, while statutory profit before tax fell 30.5% to £26m, driven by the adverse trading performance and a net P&L charge of £6.8m arising from a number of exceptional items detailed below.
The company said that the impact of Covid-19 and the termination of its UK Rockstar franchise required prompt and decisive action to reduce costs and to right-size operations, while ensuring it maintained appropriate capacity for growth.
All aspects of expenditure were reviewed including marketing investment, discretionary pay and organisational structural costs. The combined impact of these actions enabled gross and operating margins, pre exceptional items, to be maintained at levels broadly in line with the prior year despite the impact of lower sales.
AG Barr said that it is clear that 2021 will not be an entirely “normal” year, however it said there are many reasons to be positive as we look to the future.
It said the resilience of its teams, business model and brands have been highlighted in this most unusual and difficult year and that it gained considerable insight and experience in 2020 which will remain important for at least the early months of 2021.
CEO Roger White commented: “We delivered a resilient financial performance in a year that was difficult for all. I am extremely proud of everyone in our business for their commitment and flexibility, which allowed us to remain fully operational throughout the pandemic.
“Across the year, we continued to focus on our key strategic initiatives. We have significantly progressed our multi-beverage strategy, extended our reach into new channels and accelerated our roadmap towards net zero, which we aim to deliver by 2040. We closed the year in strong financial health, with our brands and business poised for growth on a like for like basis, and with the clear intention to recommence dividend payments in 2021.
“Whilst there now appears to be a route out of lockdown, the immediate future remains uncertain. Notwithstanding this current backdrop, our strategy for the year ahead is to support our core growth initiatives with significant investment.
“We have exciting plans to deliver across the Group and are confident of continuing to make further progress in the coming year.”
Elsewhere, cigarette and tobacco alternatives producer Imperial Brands has reported a “good” start to the year with trading in line with expectations in its first half to 31 March.
It said the business remains on track to deliver full year results in line with the guidance, with low-mid single digit organic adjusted operating profit growth at constant currency.
First half group net revenue is expected to grow by at least 1% on an organic, constant currency basis, driven by continued strong pricing in tobacco, as well as some benefit from growth in Next Generation Products revenues against a weak comparator period.
In tobacco, it has seen aggregate market share growth in its five priority markets with gains in US, UK and Spain more than offsetting declines in Germany and Australia. Overall tobacco volumes are in line with expectations although COVID-19 continues to affect consumer buying patterns across different channels and markets.
In NGP, it is focussed on improve performance, returns and capabilities. Preparations for market trials in vapour and heated tobacco later this year are on track.
First half Group adjusted organic operating profit growth is expected to be least mid-single digit at constant currency, benefiting primarily from significantly reduced losses in NGP and increased logistics profit.
Full year adjusted group operating profit will reflect increased investment and is expected to be in line with guidance for low-mid single digit organic growth at constant currency.
On the markets this morning, the FTSE 100 has opened up 0.7% to 6,782.2pts.
Early risers include Bakkavor, up 3.4% to 121p, Coca-Cola European Partners, up 2.1% to €44.86, SSP Group, up 2% to 358.2p and Greggs, up 2% to 2,306p.
Fallers include Science in Sport, down 3.2% to 60p, AG Barr, down 2.85% to 506.3p and McColl’s, down 2.3% to 31.8p.
Yesterday in the City
The FTSE 100 opened the week largely flat, edging down less than 0.1% to 6,736.1pts.
As the UK begins to emerge from lockdown, risers included food to go players SSP Group, up 4.5% to 351.2p and Greggs, up 4% to 2,262p.
Other risers included Glanbia, up 3.5% to €12.60, AG Barr, up 3.4% to 521p, Pets at Home, up 3.1% to 406.6p, Reckitt Benckiser, up 3% to 6,564p and Kerry Group, up 2.8% to €110.20.
The day’s fallers included Hotel Chocolat, down 5.7% to 395p, Premier Foods, down 1.7% to 96.9p, Just Eat Takeaway.com, down 1.5% to 6,672p, Ocado, down 1.3% to 2,077p and Compass Group, down 1.3% to 1,463.5p.
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