A snapshot of the UK food and drink market in the current climate
While 2020 has had its challenges for many businesses across the UK, the food and drink industry proved to be incredibly resilient for the most part. The pandemic resulted in consumer buying habits changing significantly with some brands experiencing substantial growth, while others declined.
The way we consumed content/information changed significantly too, as we spent increasingly more time at home, meaning marketers had to rethink their strategies - particularly the messaging they were rolling out to consumers and the channels they were utilising.
Last week, we attended Kantar and CIM’s (The Chartered Institute of Marketing) ‘The UK food and drink market 2020 and beyond – where to now?’ webinar, which provided a snapshot of the current market, along with expectations for the next 12 months and beyond.
The impact of the pandemic and changing consumer lifestyles
In the first instance, the webinar took a deep dive into changing consumer lifestyles and the impact this has had on priorities, as well as needs. Categories like flour grew by an incredible 66% on last year, mainly down to the increase in at home baking as more consumers looked to enjoy treats at home; along with the likes of beer/lager which grew 36%, as consumers looked to create out of home (OOH) hospitality-type experiences at home. While categories like fromage frais and bottled mineral water declined by 11% and 1% respectively, as OOH packed lunches were no longer required and consumers were on the go much less than pre-pandemic.
The biggest winners for 2020 in the broader FMCG space, which are expected to continue thriving through 2021 and beyond, were health and hygiene products, plus those deemed as treats.
A shift in the way consumers shop
The way consumers shop has also changed considerably in recent months, with frequency dropping but spend increasing. People became more uncomfortable spending a lot of time in stores, so made less trips, but typically bought more during those trips.
Shoppers were however spending less time browsing and are now considering other brands 40% less than in pre-COVID times. Meaning it’s now harder for brands to steal market share from competitors and the likes of innovation, plus ensuring marketing messages cut through the noise, are essential for growth. Path to purchase is also now shorter than it was pre-pandemic, resulting in there being less opportunity for marketers to interact during this process.
The growth of online shopping has noticeably accelerated, with the internet up 58% year-on-year – and while eCommerce still only represents 13% of the market, through the initial six months of the pandemic, it gained decades worth of growth to become the fastest growing channel for shopping.
In terms of looking to the future from a shopping standpoint, supermarkets are expected to lose market share to online retailers and discounters. Discounters in particular are predicted to grow substantially due to the recession, as more people typically turn to these more during times of economic crisis. While convenience stores are expected to maintain share, and high street plus OOH are anticipated to decline, with footfall dropping across both.
The sustainability factor
Another key takeaway from the webinar centred around sustainability and, despite the pandemic, consumer interest in how brands fare on their environmental practices has continued to take precedence. Consumers also place little responsibility on retailers in this area, with the majority falling to manufacturers, with 43.3% saying this is where the responsibility should fall - particularly when it comes to tackling plastic waste. Furthermore, only one-in-five consumers can name someone doing a good job in this area, meaning there’s a huge opportunity for brands to really own this space.
Looking to 2021 and beyond
All-in-all the key areas that are expected to remain prevalent through 2021 and beyond, which will be essential for brands to offer, include value, health benefits, sustainability and innovation. There’s also a huge opportunity for traditionally OOH brands/products to move into ‘at home’ avenues, which we’ve already started to see – for instance Pret A Manger’s transition into at home ground coffee and TGI Fridays’ Iceland range, amongst others.
Articulating your brand’s value will become more important than ever before and, while the focus on innovation dropped for many during 2020, bringing something new to the table will be essential for future growth – as there’s now an innovation gap to fill.
If you’re operating in the food and drink industry, and think we could help you stand out from the crowd through PR and marketing, give us a call on 0161 871 1188 or contact us here.