Supermarket promotions have reached record-breaking levels in 2007 with a third of all goods filling our shelves sold on special offer in the past month, The Grocer can reveal.

In the last month, to 1 December, promotions hit an all-time high of 29.8%, up two percentage points on the month before. But promotions have been consistently above the three-year average of 27% since July, a trend not seen before, according to Nielsen.

Hikes in categories such as bread and dairy - hit by rising commodity prices - have been offset with heavy price promotions in other areas, particularly frozen and alcohol. And The Grocer's Top Products Survey 2007, published this week, reveals further evidence that promotion is leading to lost sales.

In a market up 5.2% to £118bn, against last year's 4% growth, Stella Artois and Carling - the two biggest alcohol brands - both lost sales following consistently heavy discounting . The survey shows lager as a whole has suffered particularly at the hands of promotions, with growth at 0.6%.

Food inflation was now beginning to feed through and squeeze the consumer pocket, said Nielsen UK MD Justin Sargent. "Retailers have compensated the stretched consumer with offers and as a result 2007 has seen record high levels of goods on promotion. I expect it will become ever-more important for the industry to offer real value to shoppers in 2008."

However, some brands have defied the deep discounting - not to mention the poor summer - to post healthy increases. Cider has fared spectacularly with Magners and Bulmers Original soaring. And while frozen traditionally suffers the heaviest discounting, NPD by McCain in the frozen potato category boosted sales there by 10%, while multimillion pound spends by Birds Eye and Young's also helped bring the frozen category back into growth at 1.4%.

Health trends are also prominent, with Cathedral City toppling Dairylea as the biggest cheese brand, while Arla's Lurpak knocked Flora off the top spot in butters and spreads, a position it had held for almost 20 years. This indicates a shift to natural, or, as Arla puts it, a move to products "created by cows not chemists".

Unilever has promised a fight. Following its decision to end its London Marathon sponsorship in 2009, it will redirect Flora spend to educating the public about the dangers of saturated fat.

The average adult eats 33% more saturated fat than their Guideline Daily Amount, said a Unilever spokesman, "and the bulk of the spend post 2009 (and some before) will be focused on the dangers, as we become much more aggressive in the broader spreads market."

Top Products Survey pp48-139