Premium and Convenience Opportunities UK FOOD MARKET Please insert a suitable picture in this size OFFICIAL PROGRAM PARTNER UK FOOD MARKET CONVENIENCE & PREMIUM OPPORTUNITIES Date: 24.08.15 Language: ENGLISH Number of pages: 19 Author: JANE MILTON Other sectorial Reports: Are you interested in other Reports for other sectors and countries? Please find more Reports here: s-ge.com/reports DISCLAIMER The information in this report were gathered and researched from sources believed to be reliable and are written in good faith. Switzerland Global Enterprise and its network partners cannot be held liable for data, which might not be complete, accurate or up-to-date; nor for data which are from internet pages/sources on which Switzerland Global Enterprise or its network partners do not have any influence. The information in this report do not have a legal or juridical character, unless specifically noted. Contents 5.2.5. Harvey Nichols _______________________ 14 1. FOREWORD____________________________ 4 5.2.6. Selfridges ____________________________15 2. INTRODUCTION ________________________ 5 5.2.7. Fortnum and Mason ____________________15 5.2.8. Wholefoods Market _____________________15 3. FOOD & DRINK MARKET KEY TRENDS _____ 6 5.3. Distribution Channels ___________________15 3.1. Clean eating __________________________ 6 5.4. Opportunities for Swiss Businesses in the Premium 3.2. Rise in online food shopping _______________ 6 Sector ______________________________15 3.3. Sugar backlash ________________________ 7 6. KEY TRADE SHOWS AND EVENTS FOR THE 4. CONVENIENCE MARKET _________________ 8 SECTOR ______________________________ 16 4.1. MARKET DEVELOPMENT _______________ 8 6.1. Speciality and Fine Food Fair, London _______ 16 4.2. MAIN PLAYERS ______________________ 10 6.2. Lunch, London _______________________ 16 4.2.1. Co-operatives ________________________ 10 6.3. Farm Shop and Deli, Birmingham __________ 16 4.2.2. Convenience forecourts _________________ 10 6.4. IFE, London _________________________ 16 4.2.3. Convenience multiples __________________ 10 6.5. National Convenience Show, Birmingham _____ 16 4.2.4. Symbol groups _______________________ 10 6.6. Food Matters Live, London : ______________ 16 4.2.5. Unaffiliated independents _______________ 10 6.7. London Food Week from 2016 ____________ 16 4.3. BOOKER ____________________________ 11 4.4. NISA _______________________________ 11 7. REGULATORY OVERVIEW ______________ 17 4.5. Costcutter __________________________ 12 7.1. The Food Standards Agency _______________ 17 4.6. SPAR______________________________ 12 7.2. BRC ( British Retail Consortium) Global Standards17 4.7. M&S Simply Food _____________________ 12 7.3. SALSA ______________________________ 17 4.8. Opportunities and suggestions for Swiss companies12 8. CASE STUDY _________________________ 18 5. PREMIUM FOOD PRODUCTS ____________ 14 8.1. Du Rhone Chocolates - Selling to Harrods, London18 5.1. Market Development ___________________ 14 9. APPENDIX ____________________________ 19 5.2. Main Players ________________________ 14 9.1. References __________________________ 19 5.2.1. Waitrose ___________________________ 14 5.2.2. Booths _____________________________ 14 10. APPENDIX 2 __________________________ 19 5.2.3. Ocado _____________________________ 14 10.1. Definitions of different classifications of stores _ 19 5.2.4. Harrods ____________________________ 14 1. Foreword 1. Foreword The food industry in the UK is an incredibly vibrant sector, open to new products but also very competitive. Swiss premium and convenience products have a long history of success, however, often face significant challenges. As operating in the high end sector is imperative for Swiss companies in the UK food and drinks industry, this report is intended as an overview and guide to the UK convenience and premium market. Comissioned by the Swiss Business Hub UK and written by Jane Milton, a certified expert of the Switzerland Global Enterprise Expert Directory, we are delighted to be able to present you with this report. The report is to be presented at the 2015 Food Impulse at which Jane Milton will speak and Du Rhone, our UK case study, will present. We very much hope that this will provide a useful backdrop to understanding the UK market and we look forward to supporting you with your market entry and/or market development. Geraldine Mortby Head of Trade Promotion Swiss Business Hub UK 16-18 Montagu Place London, W1H 2BQ Mail [email protected] Phone +414 20 7616 6008 s-ge.com 2. Introduction 2. Introduction In 2014, the UK population was recorded as 64.6million (Office for National Statistics) and the UK grocery market was worth £177.5 billion in the year to March 31st 2015, an increase of 1.7% on 2014. The Institute of Grocery Distribution (IGD) forecasts that the UK grocery market value will be worth £200.6bn in 2020, a 13.0% increase on 2015. The grocery market accounts for 51.3p in every £1 of UK retail sales, meaning many businesses see it as a worthwhile market to be in. WHAT IS THE SIZE OF THE UK GROCERY MARKET? A BBC Good Food Magazine Survey in 2014 of 10,000 UK consumers found that while 52% of the population could confidently cook 10 or more dishes, 10% cannot cook at all. Despite the growth in global food trends, the UK is perhaps surprisingly still a nation fond of familiar favourites, as 50% selected a traditional roast dinner as a dish they regularly cooked. London (44%), Scotland (50%) and the South of England (52%) were regional exceptions, cooking a plate of spaghetti Bolognaise more frequently than the Sunday classic. 56% of consumers questioned listed their microwave as the most important piece of kitchen equipment they had, showing that speed and convenience are still key. 48% of consumers ate with others at least once a day and 77% found time to eat as a family at least once a week. Noticeably 16- 24 year olds were likely to eat alone all week, with 19% saying they ate with their household less than once a week or not at all. Only 32 % of those questioned regularly made their own lunch with many opting to buy food, showing that the ‘food to go’ trend is not showing any sign of losing popularity. This report focuses on 2 sectors of the food market where Swiss food businesses can often do well, the convenience sector and the premium retail sectors We have explored each sector under the following headings • Market development • Main players • Opportunities and suggestions for Swiss companies It is hoped this information will help Swiss companies formulate a suitable entry and/or expansion strategy for the UK, and maximise their opportunities of being successful in these sectors. UK FOOD MARKET 5 3. Food & Drink Market Key Trends 3. Food & Drink Market Key Trends In 2015 there are a few key trends that are prevalent across all areas of food retailing and are likely to have major influence on the food market for the next few years. 3.1. CLEAN EATING A move towards ingredient declarations on products that closely mirror what a consumer would find in their kitchen, so no preservatives, stabilisers, thickeners etc. This trend has also expanded to include people avoiding a number of ingredients or food groups for instance avoiding dairy, gluten, meat or cow’s milk and wheat. These people are not allergy sufferers, this is more of a lifestyle choice. A number of food bloggers have become very popular and written recipe books supporting this more extreme form of clean eating. These include Hemsley and Hemsley, Ella Woodward, The Detox Kitchen and Madeleine Shaw. As a result of this phenomenon a number of ingredients have entered the mainstream supermarkets from more traditional health food stores for instance, coconut sugar, chia seeds, agave syrup, coconut oil and coconut flour. 3.2. RISE IN ONLINE FOOD SHOPPING According to the IGD Over a quarter (26%) of all British grocery shoppers say they shopped online for their groceries in January 2015, which is a rise from just a fifth of shoppers four years ago. Source: ShopperVista 11% of consumers now claim they buy the majority of their food shopping online, against just 6% in 2011. The IGD predict that online will be the fastest growing part of the UK grocery market, more than doubling in value to £17bn by 2019. It will be worth 8% of the market over the same period, boosted by a surge in usage of not only home delivery, but also click and collect services where consumers can collect items in store having already selected and paid for them, or where they can collect them at other locations eg local rail station or at special lockers outside local convenience stores. Amazon are set to come into fresh food in the UK during this quarter and then are set to introduce frozen food too. This greatly increases the opportunity for producers to sell to other channels outside of the 4 major supermarkets and with Amazon Prime customers being able to access free delivery on many eligible purchases, this will further boost the chances of people using Amazon for a few items they are unable to source elsewhere. UK FOOD MARKET 6 3. Food & Drink Market Key Trends Additionally the increasing use of smartphones for mobile web access will further boost the use of online shopping as people can place their orders while they are on the move. 3.3. SUGAR BACKLASH There has been a considerable negative press around the high level of refined sugar in the UK diet and the rise of the prevalence of diseases such as obesity and Type 2 diabetes. Jamie Oliver, the well known celebrity chef and food campaigner, has been calling on the government to tax sugary foods, to discourage people from eating so many. The sugar industry saw sales drop by 14% in 2014 to £298m as nearly 50% of consumers reported trying to cut down on sugar. There is still a great deal of confusion in the market place with many consumers believing that non refined sugars such as maple syrup, brown rice syrup and honey are healthy.