Tightening belts restrict growth

In the UK, concerns over job security are high. This is caused by worries over high levels of personal debt and consumers’ fears over the financial implications of losing their jobs. Because of this, combined with the continued dramatic rise in utility bills and fuel costs, some consumers are feeling the squeeze on their disposable income.

When the cost of living is rising faster than salaries the world’s consumers are fairly unanimous about what they cut back on to avoid blowing their budget. ACNielsen regularly polls over 23,500 consumers in 42 markets globally to gauge consumers’ attitudes and opinions towards a variety of topical issues, and cutting back on out-of-home entertainment is top of belt-tightening strategies worldwide.

With many consumers in the UK starting to tighten their financial belts, we are perhaps already seeing the beginning of cutting back on out-of-home entertainment, with only slight growth in the value of deliveries into catering outlets via delivered catering wholesale in the current year to date.

Utilising the recently launched ACNielsen Delivered Catering Wholesale Service, which tracks deliveries through this route to market into catering outlets on a four-weekly basis, we are seeing slight growth of 0.5% from January 1 to June 11 this year, compared with the same period in 2005.

By comparing this to the annual growth of 1.9% in the 52 weeks to June 11, it is clear that this sector’s growth is slowing.

Frozen, ambient, chilled and fresh foods are collectively showing just 0.2% growth in the same period. Total beverages and non-food are out-performing the market with 2.4% and 2.3% growth respectively.

After job security, health is currently one of our major concerns in the UK – from diet and well-being to the quality of the National Health Service (ACNielsen Global Consumer Confidence Survey UK Results).

One segment of foodservice under the spotlight for healthier eating is education. As the menus change so too does the product mix, with the major casualties being frozen potato products, frozen meat and poultry, confectionery, and crisps snacks.

The trend toward “natural” is becoming established both in terms of attitudes and purchasing behaviour in the grocery sector. There is a move away from products that are pre-packed and processed – and an increase in purchasing natural and organic products. This too can be seen within education – with chilled and fresh meats, poultry and fish showing strong growth – highlighting the return of “from scratch” preparation in the school canteen and the inclusion of more natural ingredients.

Biscuits and cereal bars are another notable area of growth within education. The perception of them being the healthier alternative to the vilified confectionery category appears to be the key to their success. This trend is set to continue even after the new government guidelines come into play, as this category is largely exempt from the banned food list.

Education is showing annual declines of 2.5% through delivered catering wholesale. This is driven through the change in product mix, with treated and frozen products generally holding a higher price point than natural untreated lines. The other contributing factor is a fall in the number of pupils taking school meals.

According to the latest report commissioned by the School Food Trust, 2.6% fewer primary pupils and 2.2% fewer secondary pupils in England had school meals in 2005-2006. Could it be that parents concerned over the quality and healthiness of school meals, or perhaps facing a revolt from their kids over the unavailability at school of foods they like, are choosing to provide packed lunched as an alternative?

From September 2006, when the new school year begins, children will be facing a new set of menus and a different range of packaged products within their schools. Is it right to assume that these trends will continue unabated as the government guidelines are implemented? Whatever the trend, ACNielsen’s Delivered Catering Wholesale Service will continue to track them.

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