2023-05-11 20:22:48
L’inflation was by far the most influential factor in the food sector throughout 2022. The run-up in prices has, on the one hand, put the families who have reduced their purchases; on the other hand it put pressure on i operators’ margins who had to deal with declining sales in terms of volumes and more expensive supplies. However, the situation is improving: the drop in inflation has favored a recovery of consumer confidence. Confidence which, however, has not yet returned to pre-Covid levels.
This is the picture of the European food sector that emerges from the research “State of grocery Europe”made by McKinsey in collaboration with EuropeCommerce based on interviews conducted with 12,000 consumers in 11 European countries and around 50 industry executives in over 20 countries.
“The inflation rate inEuropean Union it went from 2.9% in 2021 to 9.2% in 2022, reaching a peak of 11.5% in October – write the experts of the consultancy firm – Food inflation was even higher: in some countries it was even double the overall figure. The economic situation of families has come under significant pressure as expenditure has increased much faster than disposable income and consumers have responded by reducing spending.” Overall food sales in Europe thus grew by only 2.9% in 2022 compared to 2021. An increase due exclusively to the price component (+10.7%). Volumes in fact fell by 3.6% and another 3.6% was lost due to the switch from higher-end products to lower-end products (downtrading).
This last phenomenon has favored the private label sales. In twelve months the market share of Mdd increased by 1.9 percentage points. However, only 0.8 percentage points are explained by intra-store downtrading. The remainder was caused by above-average price increases for private label products (0.8 percentage points) and by above-average growth in the discount channel, which has a higher share of high MDD (0.3 points percentages).
Is exactly discounters were the real winners of 2022: they gained 1.4% in terms of market share. This performance was favored by the concomitance of numerous factors: an aggressive growth in the openings of new stores in recent years, the post-pandemic recovery and greater attention to prices by consumers. Discounters have thus grown at the expense of other channels. Self-service lost 0.8 percentage points of market share, hypermarkets 0.2 percentage points, online 0.3 percentage points and supermarkets 0.1 percentage points.
“Due to cost inflation, lower volumes and more price-sensitive customers, the margins of many European food retailers have come under severe pressure,” the study continues. McKinsey – Between 2019 and 2022, the average margin of European operators decreased by three percentage points”.
The consumer confidence However, it is in the recovery phase thanks to the cooling of inflation: there have been five continuous months of progress. February’s figure was the highest (-20.6) since the start of the war in Ukraine. However, in January 2022, before the start of the conflict in Ukraine, the figure was much higher (-10.9) and in January 2019 it was even higher (-5.9).
A certain amount of pessimism also remains among the food industry executives. 44% of those surveyed by McKinsey expect 2023 to be worse than 2022, and another 33% believe it will be as difficult as 2022. Only 23% think things will be better. The key themes will remain rising costs and pressure on margins, downtrading and a greater focus on private labels.
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