Friday, 18 October 2013

Meat Eating Trends – Beef and Pork Meat Down, Lamb up, Chicken Nearly 50% of All Meat Purchases

From grocery researchers Kantar Worldpanel comes news that after years of plummeting consumption volume sales of lamb grew by 14% in the year ending August 13th 2013. (Source: BPEX). By contrast pork consumption dropped by 5% and beef by 2%.

The reason is price of course. Over the same period the price of lamb per kilo dropped by 5% to £7.85 per kilo, compared with an increase of 6% for both beef and pork.

Staples like bacon and sausages have suffered from price increases too. The price hikes have led to a  2% drop in bacon sales, and sausage sales are down by 4%. The only other sector to show an increase is sliced cooked meats which grew sales by 1%.

At the same time as these figures were released we heard Andrew Large of the British Poultry Council predicting that by next year chicken will account for over half of all meat eaten, up from just over a third 20years ago.  He attributes the growth in sales to price. In the last two decades he says, chicken prices went up by 31%, whereas beef prices went up by 50% and lamb prices have doubled.

It is easy to over analyse the figures. We can though conclude that price dictates consumers’ buying habits and they readily switch from one type of protein to another. Which means that the price of, say, beef cannot rise in isolation without there being a knock on effect on consumption.

We might also conclude that the image and benefits of red meat, particularly British produced meat, need to be constantly reinforced to consumers. If they felt that red meat was a “must have” then they would bite the bullet and purchase the same quantity regardless of price rises. Yet despite the increase in lamb sales in the last year, the overall volume sold of red meat including bacon and sausages dropped by 2 %. This may seem small, but from a producer perspective a drop in demand is a cause for concern as it all too often leads to oversupply and a consequent fall in farm gate prices. 

Wednesday, 2 October 2013

ALDI - Delivering Booming Sales and Profits

Companies usually deliver either booming sales or booming profits – it is rare to see both in combination but discount supermarket Aldi managed to do just that in 2012.

Results posted on Monday at Companies House show that revenue grew by 40.9% to £3.9bn, and profit more than doubled, up from £70.5m to £157.9m. And this at a time when the total grocery market was growing by less than 4%. The result is all the more remarkable given that the company went into the red in 2010.

Why the great performance?

Above all Aldi wins customers because it is cheap. Price is key in these straightened times, and according to Aldi the average basket of goods bought from them comes in at 20 – 25% cheaper than the “Big 4” grocers, Tesco, Sainsbury, Asda and Morrisons.

They are adapting their business model to be more like the Big 4, both in the products carried and in the service provided. The range been extended from a basic 800 lines to 1350, and a premium brand “Specially Selected”  introduced to compete with the likes of Tesco’s Finest and Asda’s Extra Special.

More emphasis has been given to fresh food. Sales of fresh meat have grown by 60% in the last year and fresh vegetables by 50%.

More staff have been recruited and more tills opened in stores to cater for the growth in sales.

According to Aldi, “We learnt from customers that we needed to become more British”. This has  meant a greater commitment to buying British meat, milk and eggs, but it also seems to reflect a recognition that to grow, Aldi has to become more like the shopping experience British customers are used to, hence the move to premium, to British sourcing and to wider choice.

As to future growth, Aldi  currently have around 500 shops and plan to increase by 84 before the end of 2014. Running counter to conventional thinking about growth channels, they have stated that they will not expand into convenience stores or sell food on line. Instead they will concentrate on doing exactly what they are doing now.

Their challenge will be to hang on to their price advantage at the same time as absorbing the increased costs which come as they adapt to being more like a standard supermarket. If they lose their price competitiveness then they lose the prime reason why shoppers choose Aldi.