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11/23/2020

Mintel: Private brand opportunities arise as U.K. consumer spending plummets

Dan Ochwat
Executive Editor
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Consumer spending in the United Kingdom is expected to fall by 14.9% in 2020 due to stay-at-home orders and impacts of COVID-19 on shopping, according to a new report from Mintel. The total spending is slated to reach £183.6 billion, a drop in £6,600 per household — with the biggest decreases occurring in the transport, foodservice and holiday industries. 

Despite the dour news, the report does expect a bounce back in 2021 and partly driven by a jump in value-based private brand purchases.

"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,” said Jack Duckett, associate director of consumer lifestyles research, Mintel, London. “In the mid-term, more cautious and value-seeking shoppers will further fuel the pre-existing shift in the food and drink market in favor of private label.”

Mintel’s 2021 forecast predicts spending will increase by £32.3 billion compared to 2020, foodservice will rise by £17.7 billion, and holidays by £19.2 billion. This represents an increase in spending of just under £2,500 per household; however, this will still only represent a return to pre-pandemic levels.

Duckett said more than a third of adults in its latest survey said they have done more cooking from scratch as a result of the pandemic and that grocery shoppers will be focused on doing so at a value. “There are opportunities to cater to a ‘trading up while trading down’ mentality as consumers continue to turn away from foodservice.”

Interestingly, Duckett also pointed out that private label alcoholic drinks could be a trend going forward.

“Learning from previous recessions, consumers know that one way of cutting back is to buy private label. In fact, 18% of premium alcoholic drink buyers would buy premium own label drinks if their financial position worsened,” he said.

Mintel said alcohol sales in the U.K. are expected to hit a 10-year record high. "We estimate that retail value sales of alcoholic drinks will grow 16% year-on-year — the fastest growth rate experienced for at least a decade — to reach £25.5 billion in 2020, as people trade nights out for evenings in,” Duckett said.