Premium fresh meat category boosts sales for Tesco

Retail giant Tesco has experienced its second consecutive month of good news, after sales grew at their fastest rate in three years. In part, this can be attributed towards the premium Tesco Finest fresh meat range. 

Meanwhile, overall supermarket sales grew 0.8% year-on-year for two months in a row, according to Kantar Worldpanel’s latest grocery share figures, released today (15 November), for the 12 weeks ending 6 November 2016.

“Tesco’s 2.2% growth is a considerable improvement on the numbers it was delivering this time last year, and indeed in 2014,” said Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel.

“Branded sales did see an increase, but most of the gains were made through its own-label products, both at the cheaper and more premium ends of the price spectrum. Tesco’s Farm Brands continue to benefit from sales growth in fruit and vegetables, while the premium Tesco Finest range has grown 6% in the past 12 weeks, notably in crisps, fresh meat and chilled convenience. Much of Tesco’s growth has come from more affluent shoppers returning to the store, and average spend per trip is up by 2.1% to £20.69.”

McKevitt added that grocery prices had been falling continuously since September 2014 and, on a like-for-like basis, goods were 0.5% cheaper than last year. However, this did not represent a significant reduction in the rate of summer deflation, he said. “We’re likely to see prices starting to creep up again in December, unless retailers choose Christmas to unleash a new round of price cuts. Although it’s tempting to link any potential price increase to Brexit and the devaluation of sterling, it’s worth remembering that deflation has been easing since December last year, well before the referendum.”

Iceland also experienced a productive 12 weeks, with sales growing 8.3%, ahead of the rest of the industry and helping the discounter to increase its market share by 0.2%, to 2.1%.

“Much of Iceland’s growth is from its chilled and ambient lines, though there are still notable successes in the freezer aisles, such as fish, ready meals and its product tie-ins with Slimming World and Pizza Express,” commented McKevitt.
“Iceland’s recent high-profile store opening in Clapham, London – clearly targeted at millennials – supports the retailer’s wider strategy of steadily moving its product range upmarket.”

Sainsbury’s saw sales decrease by 0.7% during the period, adding to a 0.3 percentage point fall in market share to 16.3%. Asda’s rate of decline slowed to 5%, although increased sales in its premium own-label lines helped the supermarket.
Morrisons also saw a boost in premium own-label, thanks to its ‘The Best’ line. However, total sales fell by 2.4%.

While the discounters might be growing at their slowest rate since 2011, Aldi and Lidl are both still attracting new customers. Aldi grew sales by 10.2%, with 547,000 more shoppers visiting over the 12 weeks – a larger increase on visitor numbers than any other supermarket. Lidl’s sales increased by 6.1%, slower than in other months but still faster than the overall market.

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