UK's online meat market has grown in 2020
UK grocery sales have increased fast last year, according to the latest data issued by AHDB. The online grocery market has witnessed an increase in sales of 77%. With online grocery sales reaching £18bn in 2020, online share of total grocery in 2020 even exceeded IGD’s pre-COVID forecasts for 2024, reaching 8.8% in 2020, when their previous forecasts in 2019 anticipated a 7.7% share by 2024.
The main driver of this has been an influx in new online shoppers. When the pandemic first started in 2020, the proportion of households buying food online immediately jumped up. The proportion of households buying food and drink (excl alcohol) online is now around nine percentage points higher than it was in 2020, averaging out at 29% (Kantar, 12 w/e 21 Feb 21 vs previous year). Meat, fish and poultry (MFP) saw the biggest increase when compared to its pre-Covid trend, reaching 26%.
Due to COVID-19, 2020 saw a very different online shopper profile emerge. Prior to the pandemic, online grocery was especially focussed on families (including those with older dependents) – who accounted for over half (52.8%) of online grocery spend in the year ending Feb 2020.
However, the pandemic has brought about an older online shopper. Kantar data shows that the proportion of retired households buying food and drink online (excluding alcohol) more than doubled between Feb 2020 and Feb 2021, from 17.3% to 35.6% (Kantar, 52 w/e 21 Feb 21).
One area performing better online versus the market average is primary lamb. This is a real positive for the lamb category, as previous research has shown that some shoppers are apprehensive about buying meat online. Primary lamb cuts that have done particularly well online are steaks and shoulder roasting joints, both up 125% in volume terms in the 12 w/e 23 Feb 21 and attracting younger shoppers. Online growth for leg roasting joints is one of the slower areas (+53%) so ensuring prominent position on virtual stores is important. However, there are still opportunities to improve the shopping experience for meat online.
According to AHDB analysts, online grocery growth will slow down this year as COVID-19 restrictions are slowly eliminated but the trend is to remain popular. Some shoppers remain cautious about visiting big supermarkets. The AHDB/YouGov Consumer Tracker shows that, in February 2021, 40% of consumers were still avoiding big supermarkets more than they were prior to the pandemic – although this was down from 49% at its peak in April 2020.
However, others are feeling more confident. Older shoppers, who have been key to online growth over the past year, are some of those who have reverted back to supermarkets, with 143,000 fewer over-65s making digital grocery orders in March when compared to the month prior (Kantar).
A year on from the onset of the pandemic, online grocery growth has started to slow. Despite total grocery online sales still being 89% higher in the four weeks ending 21 March 2021, compared to the same period a year earlier, the channel’s overall share of the market dropped back to 14.5% from the record of 15.4% in February 2021. Due to the huge growth seen in 2020, further forecasts expect a slowdown in online channel growth as the market rebalances. IGD’s forecast for online grocery sales in 2021 is just 0.8%. However, online grocery is far bigger than it was prior to the pandemic, with new shoppers and increased capacity from the retailers. This means online grocery has gone from an £11.8bn market in 2019, to an anticipated £18.1bn in 2021 (IGD).
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