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European Trends in Food Shopping Market Assessment 2009
Key Note Publications Ltd, Feb 2009, Pages: 132
The European retail market for food and drinks is entering a crucial phase as the region hovers on the brink of an economic slowdown. With food prices having risen across many sectors, European food shoppers have become increasingly price-conscious and more discretionary in their spending patterns.
The European region contains some of the world's largest retail markets for food and drink, major examples of which include the UK, France and Germany. However, recent growth has been much higher in the world's developing markets such as the People's Republic of China (PRC), India and Russia, the last of which appears set to become Europe's largest retail grocery market at some point within the next decade, if present growth trends continue.
Even prior to the worsening economic situation being experienced at present, many of the larger retail food markets in Western Europe were displaying fairly modest levels of annual growth, as a result of their size and maturity and the fact that consumer expenditure is increasingly moving away from basic necessities such as food and drink towards areas such as household and leisure items. However, growth has been apparent in various sectors of the food and drinks market within recent years, with notable examples including:
-Healthy foods, with a current trend towards natural varieties containing fewer artificial additives
-Premium and indulgence foods, especially in sectors such as ice cream and confectionery
-Ethical foods, such as organic, Fairtrade and locally sourced varieties
-The online retail grocery market, which has resulted from technological advancements such as the advent of broadband, coupled with growing usage of the Internet.
In the newer EU entrants of Central and Eastern Europe, market performance has been rather more dynamic. In many of these countries, consumer spending on food and groceries has grown as a result of rising income levels and greater availability of higher-quality branded goods. Many markets are developing fast, with modern retail outlets such as supermarkets and hypermarkets replacing small independent stores as the main source of grocery purchases.
From a supply perspective, the European retail food and drinks market is experiencing increasing consolidation. Many of the major retail groups are keen to increase their presence in developing economies where growth levels are higher, not just in the newer EU countries but also in other parts of the world, notably the PRC and India. As a result of this expansion strategy, many of the European giants (such as Carrefour and Tesco) have become truly global players, operating in many markets outside their European heartlands.
The pace of expansion has been fastest among Europe's leading discount retail operators, of which the most significant are Schwarz/Lidl and Aldi. Both of these companies operate throughout most of Europe, although their share of grocery sales in many countries remains on the low side. In response to these developments, many of the mainstream retail groups have been increasing their presence in this sector, either by acquiring discount retail chains or by extending their lower-priced own-label ranges.
Consumers throughout Europe share a number of similarities when it comes to food and grocery shopping. Most have a strong desire for good value for money and cheap prices, especially given the present economic circumstances and the rising cost of food in sectors such as dairy and bakery products. Obtaining good value for money is especially important for food shoppers in Germany and Austria (where discount retailers hold a particularly well-established position), although European consumers are generally quite price-sensitive as a whole. Other strong consumer concerns include location of the store and ethical considerations.
Over the coming years, growth is likely to remain higher in the developing markets of Central and Eastern Europe, as spending patterns and living standards continue to catch up with the West. Consumers across the region as a whole are likely to be ever more price-conscious, as a result of which the appeal of discount chains is expected to continue rising. More people are expected to use the Internet for grocery shopping, although the share of the retail food and drinks market taken by this channel is forecast to remain fairly small.
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