How consumers are spending on food and drink now

The latest lockdown has boosted spending on food once again, with research from Kantar showing that in January alone shoppers spent £1bn more on supermarket food and drink compared to the same four-week period in 2020. Take-home grocery sales rose by 12.2% during the 12 weeks to 24th January as the restrictions on cafés and restaurants continued to drive at-home eating.

This comes as new data from Tyl by NatWest reveals shoppers spent an estimated £7.2bn at local independent businesses in 2020, the majority of which (45%) was spent in grocery stores. Other businesses that received more support last year were butchers, local markets and corner shops.

“As an independent retailer, we’ve certainly seen demand from customers over the last 12 months,” Candice Fonseca of Liverpool’s Delifonseca told Speciality Food. Although the restaurant arm of the business was closed through much of 2020 and into 2021, the site’s award-winning food hall has remained open.

Candice believes customers are seeking more from their food thanks to the Covid-19 pandemic. She said, “We’ve always aimed to offer our customers something a little bit extra with a shopping experience that feels much more special than a trip to the supermarket, and I think that’s been highlighted even more recently. With many people isolating and unable to go out, they’ve been turning to us to help them create a restaurant experience at home through quality products, enhanced by our expertise and knowledge of all things food.”

Plus, in lockdown, Candice said more shoppers have been going to Delifonseca for their basics, such as fruit, veg and meat from the shop’s in-house butchery concession. “Customers are essentially using us for everything rather than just popping in occasionally and buying what they would regard as indulgences,” she said.

The butchery has seen an increase in numbers of customers – but also, shoppers are spending more on higher priced, prime cuts such as steaks. “Likewise, wine sales have grown both in volume, but also the average price point is now higher as people have been ‘treating’ themselves more.” Kantar’s data revealed that while Dry January boosted spending on no-alcohol beer in January (up 12%), overall alcohol sales grew by £234m, up 29% on last year.

“Then there is the obvious increase in baking lines such as Wessex Mills flours and sugars, which have risen by at least 400%,” Candice added.

Local shopping boom

“Not only this, but I think recent events have really changed the way that people shop overall, with an emphasis now on supporting local businesses over chain brands, for example,” Candice continued.

This was reflected in Tyl’s research, which found that 84% of UK respondents were actively supporting local independent businesses in 2020. A fifth, meanwhile, said they planned to increase spending at indie shops “significantly” this year.

Supporting their local economy was a big driver behind visits to small businesses, with 35% of respondents citing this. “Every penny spent with us, and other independents, goes towards supporting the local economy and helps to keep people’s livelihoods intact,” Candice said. Shoppers were also keen to reduce their environmental impact (21%) and find better quality or more interesting products (15%).

“The pandemic has fundamentally shifted consumer preferences, with the importance of developing card payment, cashless and online solutions made abundantly clear,” said Mike Elliff, CEO of Tyl. “Through this research, we wanted to highlight the rising tide of support they have amongst locally conscious consumers and the opportunities this presents for recovery and growth. Now is the time to think about what steps you take as a business to cement the new relationships that have been built with your loyal local customers to make sure their business is retained beyond lockdown and the pandemic.”

New shopping habits

Kantar’s data also highlights the patterns that have emerged in shopping habits of different age groups. For example, over January, people under 28 increased their spending in larger physical stores by 12%, while over-45s cut back spending in big supermarkets by 1%.

Older age groups were also driving the growth of online shopping, which reached a record share of 14% in January. Retired households have boosted their online spending on food and drink by a whopping 229% year-on-year.

The return of homeschooling also drove demand for certain products in January: fresh pasta (up 22%), chocolate spread (up 42%) and peanut butter (up 39%) all witnessed an uplift.

However, the high demand for groceries is likely to taper off as the vaccine rollout proceeds, and following the eventual reopening of the hospitality sector. “We expect to see strong growth for all the grocers fall off as we reach the anniversary of the first national lockdown in March. Sales will then be measured against the high volumes recorded in spring and summer 2020,” said Fraser McKevitt, Kantar Worldpanel’s head of retail and consumer insight.

These new findings show that consumers are keen to support their local food retailers this year, and the desire for small luxuries is still going strong. Older shoppers, meanwhile are becoming more familiar and comfortable with online shopping, while younger generations are happy to shop in-store despite Covid-19. By staying on top of the latest changes in consumer behaviour and shopping habits, retailers will ensure they are up to date with the trends shaping the food and drink sector.