New data suggests that total UK food and drink sales declined by 12% during 2020, while grocery retail’s share of the market grew to 81% from 64% the year before.
The figures from IGD’s ‘Eating In vs Dining Out 2021’ report also show the eating out sector shrank by more than 50% after restaurants and pubs were closed for much of the year.
Nicola Knight, Senior Retail Analyst at IGD, commented: “Food and drink retail sales grew by 9.9% in 2020 and e-commerce was the clear winner in the sector as shoppers switched to online due to lockdown restrictions and stay-at-home guidance. But the overall food and drink market declined by 12%, predominantly driven by consumers eating more meals at home due to government closures within the eating out sector.”
The report also assesses the many factors that are expected to shape the UK food and drink market in 2021, which include consumer behaviour, government support, supply chain resilience, the lasting impact of the economy and labour market, and EU exit.
Peter Backman, a foodservice consultant that contributed to the IGD report, said: “The second quarter of 2021 is going to be critical for the eating out market. Without any current indication of when the industry will reopen or government support, many businesses are sitting on a knife edge. We’ll see property debts, plus substantial hospitality costs due and the end of support measures, which will sadly mean that many businesses will have no choice but to shut up shop.
“That said, the swift roll-out of the vaccine and an increase in consumer confidence are likely to paint a brighter picture for the second half of the year.”
In the short term, whilst eating out remains largely ‘closed’, IGD highlighted that the grocery retail market will need to continue to deliver for food and drink shoppers that have few alternatives. This will manifest itself in high levels of demand for online. For out-of-home, the agility with which operators responded in 2020 will need to continue in the face of continued unpredictability.
Knight said: “With normality hopefully beginning to return in the second half of the year, we’re expecting to see a return to some pre-COVID shopping habits, albeit with some more frugal habits emerging.”
The IGD report takes a quarter-by-quarter view on the potential outlook for 2021 to help retailers, operators and suppliers plan for the next 12 months. Updates will be launched throughout the year.
NAM Implications:
- Seeing a 50% drop in the eating out sector, although anticipated…
- …is still shocking in print.
- It could also be said that hidden behind the reported figures is a basis for consumers to compare hospitality prices…
- …with the retail cost of the ‘same’ ingredients cooked at home.
- Possibly a difficult lesson to ‘unlearn’…
- …as super-savvy consumers emerging from Lockdown.
- Peter Backman’s reflection re Q2 in hospitality are worthy of note.
