Supermarket sales boosted by food inflation and veganism

Supermarket sales increased in value by 3.4% in recent weeks thanks to grocery inflation and a trend for veganism, with the 'big four' groups continuing to lose market share to discounters Lidl and Aldi.

Grocery sales increased 3.4% in the 12 weeks to 28 January compared with the same period a year ago, Kantar Worldpanel calculated based on till rolls at 10 major retailers, other multiple-store chains and independent retailers.

Meanwhile, grocery inflation stood at 3.6%, based on prices of more than 75,000 identical products compared year-on-year. Prices were seen rising fastest on butter, fresh fish and skin care, and were falling in only a few markets, including laundry detergents, washing up products and fresh poultry.

The growing interest in vegan and vegetarian diets was seen in supermarkets chiller aisles, with more than one in ten shoppers in January buying a meat-free ready meal, causing sales to jump 15% compared to this time last year, with spinach, cherries and aubergines the fresh foods that grew strongest in the period.

Fraser McKevitt, Kantar's head of retail and consumer insight, said: “As consumers look to more healthy alternatives following the holiday, trends like Veganuary have taken off and now 29% of evening meals contain no meat or fish at all."

Of the four largest grocery groups, Tesco sales grew fastest at 2.6% to £7.99bn but its market share fell by 0.3 percentage points to 27.8% as non-vegans generated stronger sales growth from its dairy and produce lines.

Second-placed Sainsbury's also saw a 0.3-point slip in its share to 16.2%, though sales increased by 1.5% to £4.65bn. Kantar counted an extra 311,000 shoppers chose to shop at Sainsbury’s over the 12 weeks, with shoppers particularly engaging with the supermarket’s convenience stores and online offer, which was boosted by its Argos arm.

Walmart subsidiary Asda and Morrisons both grew sales 2.2% and both lost 0.2 percentage points of market share, to 15.4% and 10.7% respectively. Morrisons saw customers make an additional five million trips to its stores compared to this time last year.

Lidl remained the UK’s fastest-growing grocer as sales roared up 16.3% to expand its market share 0.5 percentage points to 5.0%. Lidl will be eyeing Waitrose at 5.2% to become the seventh largest retailer in the sector or Co-op at 5.8% for sixth place.

Said McKevitt: “Traditionally focused on own-label lines, Lidl has actually seen fastest growth among its branded products, which are up by 28% and now account for 12% of all sales."

Not to be outdone, Aldi increased sales 16.2% to lift its market share 0.7 points to 6.9% as it enjoyed success with its premium ‘Specially Selected’ range.

Internet-only retailer Ocado, which was also reporting its annual results and a proposed fundraising on Tuesday, held onto its 1.3% market share with continued rapid sales growth of 7.8%.