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UK: German discounters Aldi and Lidl grow with a stunning 27% resp. 24% in UK

Another great sales period for the discounters and continuing strong growth of own label are the headlines from the Kantar UK data for 12 w/e 25th Dec 2022, released at 04.01.2023:

12-wk sales are up 7.6%, increasing from +5.2% from the last period, and the sixth period of positive market value growth. Kantar report value growth accelerated in the last 4 weeks to +9.4%, with Christmas sales hitting a record high of £12.8bn.

Inflation hit 14.2%, meaning the market is in volume decline. Kantar claims this is down by 1%, but the numbers would suggest a much larger decline of over 6%.

The 14.2% inflation rate has fallen slightly from the previous 14.6% reported, perhaps driven by retailers holding back price increases before the festive trading period, combined with some aggressive pricing on Turkeys and vegetables especially from the discounters.

Aldi had the highest year on year growth at +27% followed closely by Lidl at +23.9%. Between the two leading discounters they have added +2.3% market share in 12 months; to put that in perspective that is half the sales of Waitrose

Aldi’s success over the past four weeks is of no surprise. Yet again, they offered the most amazing and diverse seasonal range, in particular in the week leading up to Christmas Day with fresh offers such as British Wagyu Rib Joints, Game Selection Boxes and Raspberry & Madagascan Vanilla Panna Cotta Stars. Their message on price was relentless, ensuring they always offered the equal lowest price on British Whole Turkeys and Turkey Crowns, and they came out the cheapest in the IPLC survey of 30 key Christmas Dinner products.

All of the big three saw growth, but all lost market share, down a combined -0.8%.

Iceland seems to have had a very good trading period showing growth of +10.2% and increasing market share by +0.1%, perhaps benefiting from consumers moving into frozen as highlighted by Tesco's CEO Ken Murphy in his recent interview on BBC News.

Private label continues to see very strong growth at +13.3% vs. brands at +4.7%. Consumers were still prepared to trade up so that Premium Tier PL recorded sales of £700m, growing at 10.2%.

Online sales account for 11.6% of the market, slightly down year on year but significantly up on its pre-pandemic level of 7.4%

Next 4-week outlook:

January always sees price campaigns from the established retailers. This week we have already seen Morrison's announce price cuts across half of their private label value tier range “Savers”, likely to be in response to Asda's very successful extended Just Essentials range. Without doubt, private label will remain a key strategic battle ground throughout 2023 as retailers push the “value for money” message in a bid to retain customers.

Despite the price led marketing campaigns, we will see many prices rising further, as cost increase pressures have not disappeared and new negotiations commence between suppliers and retailers.

Source: Kantar and Paul Stainton

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