Digesting the figures on horse meat crisis
As more retailers are caught up in the horse meat crisis, the scale of the impact on sales at UK supermarkets is starting to emerge. Not surprisingly, frozen beef burgers have taken the biggest hit, with sales plummeting 43 per cent in the four weeks to February 17th, according to data from research firm Kantar Worldpanel. Sales of frozen ready meals have also been hit, falling by 13 per cent year-on-year.
Furniture giant Ikea is the latest retailer to become embroiled in the scandal. On Monday it withdrew its popular meatballs dish – it sells some 60,000 portions a week at its UK and Irish outlets – from stores across Europe. It joins a lengthening list of companies caught up in the crisis, which erupted in mid-January. Affected companies include Tesco, Iceland, Aldi, Nestlé, Findus and restaurants group Whitbread.
The Kantar figures are the first firm data on the impact of the contamination and the sales declines have been dramatic.
Fall in market share
The research firm also released market-share data for the grocery chains. Its figures show that Tesco – the first major retailer to pull frozen burgers from its stores last month – has suffered a slide in market share to 29.7 per cent, down from 30.1 per cent a year ago.
But it’s not burgers behind the fall at Tesco, according to Kantar. The supermarket chain is feeling the impact of the hefty price promotions it was running a year ago, when it wooed shoppers with £5 (€5.79) vouchers for every £40 spent instore. It has not continued the offer this year and its less loyal customers have gone elsewhere.
The good news for the grocery retailers that have had to withdraw products is that it does not appear to have alienated their customers. They are still shopping in the same stores but are putting different products in their baskets, such as chicken and fish, to replace the ready meals and burgers. Customers at Whitbread, which owns the Beefeater and Brewers Fayre pub chains, also seem to be taking the crisis in their stride.
Burgers will be back on its menus by the end of the week, having been withdrawn, along with lasagne, after the discovery of horse DNA.
Whitbread chief executive Andy Harrison, who yesterday called for tighter regulation of the processed meat industry, said pub food sales had proved resistant to the crisis, with customers switching to other items on the menu.
Frozen food generally appears pretty robust, with the Kantar figures showing the specialist Iceland chain, which has had to withdraw products, pushing overall sales up by more than 10 per cent.
Of the big four, Sainsbury’s was the only one to increase its market share, which rose from 16.9 per cent to 17 per cent as sales advanced by 4.6 per cent, outstripping the market’s 3.7 per cent rise. Morrisons, which has lagged its rivals in recent months, was the only one to post a sales decline.
The problem for Morrisons is its lack of an online grocery service. It has linked up with home shopping group Lakeland to launch a kitchenware website and is launching a clothing range.
The City is awaiting details of Morrisons’ plans to launch an online shopping service but in the meantime it is pressing ahead with expansion into the convenience store market, taking advantage of the dire state of the high street to snap up some bargains. It bought a bundle of 50 shops from failed DVD rental chain Blockbuster, and has bought shops from the administrators of camera chain Jessops and failed entertainment chain HMV.
It has opened its first convenience store in London, taking its chain to just 13. But it plans to expand this to more than 70 by the end of the year.
Morrisons has a long way to go before it can give rivals Tesco and Sainsbury’s a run for their money. But it appears determined to grab a slice of the lucrative “top-up” shopping market. So keen is it to secure new sites that staff are being offered a £500 finder’s fee if they spot a suitable store.
Fiona Walsh writes for the Guardian newspaper in London