NFU 2010: Positive signs from retail sector

Evidence is emerging that consumers are starting to trade up again, looking for better quality food and paying a higher price for it.

That was the view of market analyst Ed Garner of Kantar Worldpanel, though he warned that it could be a “blip” and 2010 still held a number of threats.

During 2008 there had been a rush to the discounters, with shops such as Lidl and Netto seeing a 25% increase in turnover. Consumers sticking with the major supermarkets had also traded down, buying more own label and “value” products as the recession started to bite, he explained.

But towards the end of last year retail data showed that this was reversing and premium ranges, such as Tesco’s Finest and Sainsbury’s Taste the Difference, had started to increase again.

Top-of-the-range retailers such as Waitrose and M&S were also seeing rapid growth in grocery sales again, as consumers started to increase their spending on food offering greater provenance.

But Mr Garner warned that, while encouraging for farmers and the food sector in general, it did not mean that the recovery would be sustained.

“2010 could have a few nasty gremlins in it,” he warned. With a change of government on the cards, the probability of tax increases and a lift in interest rates, food producers should not rely on the recession being over.

* For a comment on this story, see Phil Clarke’s Business Blog


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