Mintel is forecasting that total UK consumer spending will fall by a staggering £183.6bn (14.9%) this year due to the Covid-19-induced lockdowns. This equates to a drop in spending of around £6,600 per household – with the biggest decreases occurring in the transport, foodservice, and holiday industries.
Consumer spending in these three categories is expected to fall be £140.1bn in total, or just over £5,000 per household – representing around 77% of the overall decline in consumer spending this year. Foodservice is one of the worst-hit, down 57.8% to £44.3bn.
However, these categories are also expected to bounce back the strongest in 2021 with spending on transport increasing by £32.3bn compared to 2020, foodservice up by £17.7bn, and holidays growing by £19.2bn. Whilst this represents an increase in spending of just under £2,500 per household, these sectors will still struggle to return to pre-pandemic levels.
Meanwhile, the three sectors that will experience the biggest increase in consumer spending this year – totalling £11.2bn, or just over £400 per household – are food, alcoholic, and non-alcoholic drinks purchased in the retail channels (e.g. supermarkets) and consumed at home.
Food sales are forecast to grow 8.1%, whilst alcoholic drinks are expected to rise 16.3% after people swapped going out for staying in. Non-alcoholic drink sales are on track to grow by 5.7%.
Mintel highlighted that the current recession opens up opportunities for premium own-label drinks to grow in popularity as consumers look for ways to cut back if their financial position worsens.
Following five years of lacklustre sales, the research also suggested the crisis has reversed the fortunes of the traditional tea category with sales expected to increase by 7% in 2020. Meanwhile, the in-home coffee market is set to grow by 13% in value terms this year as consumers seek to elevate their coffee drinking experience from the comfort of their home.
Jack Duckett, Mintel Associate Director of Consumer Lifestyles Research, commented: “The Covid-19 lockdowns have had a profound impact on consumer spending, decimating the transport industry, and broader travel and leisure sectors. But some sectors have benefited from the lockdown, with retail sales of food and drink boosted as all eating and drinking occasions moved into the home.
“Although consumer spending will recover from this year’s astonishing £180bn drop, it will undoubtedly be a long path to recovery: Mintel forecasts suggest that pre-Covid levels will not return until 2023 at the earliest.”
He added: “The last recession created a boom in the private label market, and supermarkets have improved their private-label offerings in the intervening years, with a significant expansion of ranges. In the mid-term, more cautious and value-seeking shoppers will further fuel the pre-existing shift in the food and drink market in favour of private label.”
