2021
9
COVID-19 and Food and Drink: A Year On in the UK Market Report 2021
2021-06-11T04:03:03+01:00
OX1044873
2195
139329
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“Despite the inevitable fall of retail food and drink sales from their 2020 peak, pandemic-related factors, especially the new era of remote working, will keep these elevated above their pre-COVID…

COVID-19 and Food and Drink: A Year On in the UK Market Report 2021

£ 2,195 (Excl.Tax)

Report Summary

Providing the most comprehensive and up-to-date information and analysis of the COVID-19 and Food & Drink market, including the behaviours, preferences and habits of the consumer.

While scratch cooking and baking boomed while people were confined to their homes for much of 2020 and the first half of 2021, it is surprising how eager many young people are to continue with these activities when restrictions ease. 36% and 34% of under-35s plan to do more cooking from scratch and baking respectively compared to before the pandemic. The continued appeal of these trends will be underpinned by health and emotional drivers, more home-centric lifestyles as more people work remotely and an improved culinary knowhow among the younger generation.

The value of food sales through retail shot up by 8.6% year-onyear in 2020 to reach £93.1 billion, owing to the seismic shift in calories consumed from foodservice and catering to retail during the pandemic. While the market will fall from its peak, sales will continue to be elevated from their pre-pandemic projections. Meanwhile, both the non-alcoholic and alcoholic drinks categories’ overall sales were hit by the demise of the on-trade in 2020, with annual value declines of 21% and 27% respectively, but will start to rebound from 2021.

The long-term shift to home-based working threatens food and drink retail categories that cater to on-the-go consumption and rely heavily on impulse purchasing. These typically high-cost products are not expected to fully regain ground from the larger, better value formats ideal for at-home consumption, suppressing average prices. This change to working habits will also hamper the on-trade drinks market’s recovery.

The accelerated trends around wellness fuelled by COVID-19 offer lucrative opportunities for the food and drink market. Widespread concerns around weight will provide some much needed reinvigoration for the ‘diet’ food and drink market and pave the way for more innovation in L/N/R products and formats promoting portion control. Meanwhile, forging associations with emotional benefits would be timely given the heightened appeal of ‘mood foods’.

Read on to discover more details or take a look at all of our Food and Foodservice market research.

Quickly understand

  • The impact of COVID-19 on sales of food through retail and the total alcohol and non-alcoholic drinks markets.
  • The impact of COVID-19 on macroeconomic factors, including consumer confidence and household finances.
  • The impact of COVID-19 on broad consumer behaviour, including lifestyles and future habits.
  • Consumers’ concerns related to food and drink during the pandemic.
  • The impact of COVID-19 on consumers’ food and drink behaviours during 2020 and into 2021 and its lasting influence on these.
  • COVID-19 food and drink trends.

Covered in this report

Brands: Wall’s, Morrisons, Go Ahead, McVitie’s, Swizzels, Barratt, Bonds of London, Viabiotics, BumbleZest, Fungtn, Marks and Spencer, Fever-Tree, Taste the Difference, Aldi, Warburtons, Hovis, School of Wok, Mr Kipling, Smirnoff, Kopparberg, Lidl, Smarties.

Expert analysis from a specialist in the field

Written by Emma Clifford, a leading analyst in the Food & Drink sector, her extensive knowledge delivers in-depth commentary and analysis to highlight current trends and add expert context to the numbers.

Despite the inevitable fall of retail food and drink sales from their 2020 peak, pandemic-related factors, especially the new era of remote working, will keep these elevated above their pre-COVID levels. The ongoing revival of scratch cooking/baking and the shift towards shared household meals, as well as the accelerated trends around healthy eating, ‘mood foods’, sustainability and buying British stand out as key themes for companies to harness.

Emma Clifford
Associate Director – Food and Drink Research

Table of Contents

  1. Overview

    • Key issues covered in this Report
    • COVID-19: Market context
    • Economic and other assumptions
    • Products covered in this Report
  2. Executive Summary

      • Figure 1: Impact of COVID-19 on food sales through retail and the alcoholic and non-alcoholic drinks markets, in short, medium and long term, 15 May 2021
    • A fallback in retail sales of food in 2021, but the pandemic will leave a lasting uplift
      • Figure 2: Forecast for the value of UK food sales through retail, at current prices, 2015-25
    • The alcoholic drinks market set to bounce back to pre-COVID levels by 2023
      • Figure 3: Forecast for the value of the UK total alcoholic drinks market, at current prices, 2015-25
    • The non-alcoholic drinks market was the biggest casualty of the pandemic in 2020
      • Figure 4: Forecast for the value of the UK total non-alcoholic drinks market, at current prices, 2015-25
    • The consumer
    • An unprecedented focus on the nation’s health; a step-change in working habits
      • Figure 5: Post-pandemic lifestyle intentions, March 2021
    • Concerns over weight gain and mental wellbeing are prevalent
      • Figure 6: Concerns around food and drink during the pandemic, March 2021
    • More emphasis on buying British, experimentation, ‘preparedness’ and waste reduction
      • Figure 7: Food and drink behaviours relating to the pandemic, March 2021
    • The scratch cooking and baking trends will continue; household dining to become more united
      • Figure 8: Expectations for changes to food and drink behaviours compared to pre-COVID, March 2021
  3. Category Winners and Losers

    • Winners
    • Cooking and baking ingredients and meal components
    • Dairy-free market
    • Bread, spreads and selected baked goods
    • Coffee and hot chocolate
    • Recipe delivery boxes
    • Standout retail performances from RTDs, non-cream liqueurs and white rum
    • Losers
    • Ready meals and ready-to-cook foods
    • Sugar and gum confectionery
    • Fresh prepared lunches
    • Celebration and occasion cakes, cake bites and seasonal confectionery
    • Energy drinks, sports drinks and sports nutrition
    • Juice drinks and smoothies
    • Baby food, drink and milk
    • Bottled water
  4. COVID-19 Consumer Timeline

    • Phase 1 – January-March: Consumers go into lockdown
    • Phase 2 – March-June: Adapting to life in lockdown
      • Figure 9: Recorded daily number of confirmed cases of COVID-19 and deaths registered as relating to the virus, 30 January-31 August 2020
    • Phase 3 – June-September: Emerging from the initial lockdown
    • Phase 4 – September-December: Rise of the next wave
      • Figure 10: Recorded daily number of confirmed cases of COVID-19, 30 January 2020-28 March 2021
    • Phase 5 – January-March: Winter lockdown and vaccine rollout
      • Figure 11: Cumulative number of first and second vaccines delivered in the UK, 10 January-31 March 2021
    • Phase 6 – March onwards: The roadmap out of lockdown
  5. The Post-pandemic Outlook for Food and Drink

    • The home cooking and baking trends are here to stay
    • A heightened desire to buy British
    • The role of food within emotional wellbeing is accelerated
    • Weight management will have a bigger influence
  6. The Economic Impact

    • A record drop in economic activity…
      • Figure 12: Annual percentage change in GDP, 2007-25 (fore)
    • …as COVID-19 restrictions caused a severe fall in spending
    • Consumer spending is heavily dependent on the path of the pandemic
      • Figure 13: Household consumption index, 2019-25 (scenario forecasts)
    • Furloughs have saved millions of jobs…
      • Figure 14: Number of employments furloughed, time series, March 2020-February 2021
    • …but unemployment is forecast to rise when state support ends
      • Figure 15: Quarterly unemployment rate, Q1 2008-Q1 2026 (fore)
    • Under-25s have taken the brunt of COVID-19 job losses
      • Figure 16: Change in number of employees on payroll, by age, February 2021 vs February 2020
  7. Market Size and Performance

    • Impact of COVID-19 on food and drink
      • Figure 17: Impact of COVID-19 on food sales through retail and the alcoholic and non-alcoholic drinks markets, in short, medium and long term, 15 May 2021
    • A 9% rise in retail food sales in 2020
      • Figure 18: Value of the UK food sales through retail, 2015-20
    • The value of the alcoholic drinks market plunged by 21%
      • Figure 19: Value of the total UK alcoholic drinks market, 2015-20
    • The non-alcoholic drinks market is the biggest casualty; values plunge 27%
      • Figure 20: Value of the total UK non-alcoholic drinks market, 2015-20
  8. Market Forecast

    • A fallback in retail sales in 2021 as foodservice regains ground
      • Figure 21: Forecast for the value of UK food sales through retail, at current prices, 2015-25
    • The pandemic will leave a lasting uplift for the retail food market
    • The alcoholic drinks market set to bounce back to pre-COVID levels by 2023
      • Figure 22: Forecast for the value of the UK total alcoholic drinks market, at current prices, 2015-25
    • Non-alcoholic drinks sales forecast to increase 15% in 2021
      • Figure 23: Forecast for the value of the UK total non-alcoholic drinks market, at current prices, 2015-25
  9. COVID-19 Scenario Performance

    • Mintel’s approach to predicting the impact of COVID-19
    • Fundamental differences in how COVID-19 is affecting consumer markets
    • The risk of vaccine-resistant strains of COVID-19 adds uncertainty
      • Figure 24: COVID-19 scenario forecasts for the retail food market, 2015-25
      • Figure 25: COVID-19 scenario forecasts for the total alcoholic drinks market, 2015-25
      • Figure 26: COVID-19 scenario forecasts for the total non-alcoholic drinks market, 2015-25
    • A sizeable sales difference between Mintel’s rapid COVID recovery and extended COVID disruption scenarios in 2021
    • A setback to the vaccination programme could extend social distancing into 2022
    • Mintel’s rapid recovery scenario indicates a return to pre-COVID sales by the end of 2023
    • COVID-19 market disruption: risks and outcomes
      • Figure 27: Summary of Mintel scenario expectations and the impact on the foodservice and on-trade drinks markets and on sales of food and drink through retail, May 2021
  10. Consumer Concerns over the Impact on Health

    • Exposure anxieties align with case numbers
      • Figure 28: Mintel COVID-19 exposure anxiety and lifestyle impact index, 28 February 2020-12 March 2021
    • Exposure anxiety typically higher among over-55s
      • Figure 29: Proportion of adults indicating higher levels of anxiety (‘4’ or ‘5’) towards being exposed to the coronavirus, by age, 28 February 2020-26 March 2021
    • Middle-age band fear transmitting virus
  11. Consumer Concerns over the Impact on Lifestyles

    • Concerns about lifestyles impact outweigh exposure fears
    • Consumers react to unprecedented lifestyle restrictions
      • Figure 30: Mintel COVID-19 exposure anxiety and lifestyle impact index, 28 February 2020-12 March 2021
    • Lifestyle impact concerns high across all age groups
      • Figure 31: Proportion of adults indicating higher levels of anxiety (‘4’ or ‘5’) about how the outbreak could impact their lifestyle, by age, 28 February 2020-26 March 2021
  12. Impact on Household Finances

    • Financial wellbeing has hit new heights despite the crisis…
      • Figure 32: The financial wellbeing index, January 2015-March 2021
    • …but many still feel worse off than a year ago
      • Figure 33: Changes in household finances, January 2015-March 2021
    • One in six have been furloughed at least once
      • Figure 34: Impact of COVID-19 on employment and working patterns, February 2021
    • Income trends point to a two-track crisis and recovery
      • Figure 35: Impact of COVID-19 on personal income, February 2021
    • Cuts to discretionary spending have kept household finances afloat…
      • Figure 36: Impact of COVID-19 on household debts and spending, February 2021
    • …and led to a record savings boost
      • Figure 37: Impact of COVID-19 on the value of savings in different products, February 2021
    • Most are optimistic about the year ahead…
      • Figure 38: The financial confidence index, January 2015-March 2021
    • …and looking forward to getting back to experiences
      • Figure 39: Financial priorities when COVID-19 is no longer a concern, February 2021
  13. How the Pandemic Shaped Consumer Behaviour

    • An unprecedented focus on the nation’s health
      • Figure 40: Healthy eating as a priority since the COVID-19 outbreak, by gender and age, 4-12 February 2021
    • COVID-19 to mark a step-change in working habits…
      • Figure 41: Expectations for changes to working at home, by employment, March 2021
    • …with wide-ranging implications for the food and drink habits
    • The swing to homeworking will support local food and drink businesses
    • Pent-up demand for on-premise eating and drinking
      • Figure 42: Consumer anticipation of going out for a meal and for a drink, 4 February-12 April 2021
    • However, ongoing challenges will hinder the on-trade’s recovery
    • Safety concerns drive radical changes to shopping habits
    • Limiting time spent in stores common throughout pandemic
    • Greater reliance on the online retail channel
      • Figure 43: COVID-19 Tracker: Impact on online shopping and time spent in-store, 16 April 2020-6 May 2021
    • Planetary health brought into further spotlight
      • Figure 44: Post-pandemic lifestyle intentions, March 2021
  14. Concerns around Food and Drink during the Pandemic

    • Weight gain concerns are prevalent
      • Figure 45: Concerns around food and drink during the pandemic, March 2021
    • More impetus behind L/N/R innovation
    • Portion control becomes more important
      • Figure 46: Examples of launches of products in a ‘bites’ format to deliver portion control, 2020-21
    • The role of personalisation in diet will evolve
    • The mental health crisis intensifies
      • Figure 47: Consumers who say their mental wellbeing has been a concern to them during the pandemic, by age and financial situation, March 2021
    • People will gravitate towards mood-boosting food/drink behaviours
    • Interest in ‘mood foods’ rises
    • Marketing activity forging associations with emotional wellbeing would be timely
      • Figure 48: Food launches playing on the power of nostalgia, 2020-21
      • Figure 49: Bonds of London’s Stay Positive range of sweets, 2020
    • Opportunities for NPD starring ingredients with links to emotional benefits
      • Figure 50: Examples of drink launches featuring ingredients with links to emotional wellbeing, 2020-21
    • One in 14 have been concerned about struggling to feed themselves/their family
      • Figure 51: Marks & Spencer shares ideas for five breakfasts and five lunches for 2 children for £20, 15 January 2021
  15. Food and Drink Behaviours Relating to the Pandemic

    • Britishness becomes an even more persuasive selling point
      • Figure 52: Food and drink behaviours relating to the pandemic, March 2021
    • Narratives around UK provenance and the human angle will resonate widely
    • Local businesses stand to benefit
    • Experimentalism has come to the fore
    • Adventurous NPD, recipe inspiration and immersive experiences can build engagement
      • Figure 53: Examples of launches of products featuring global flavour inspiration, 2020
    • Most adults have become more budget-oriented
      • Figure 54: Aldi’s healthy shopping basket, 2020
    • Demand for ‘savvy luxuries’ rises
    • The pandemic has fostered ‘preparedness’
    • Waste reduction becomes more front-of-mind
    • COVID-19 stimulated interest in immunity-boosting diets
      • Figure 55: Warburtons and Hovis calling out immune support, 2020
  16. Expectations for Changes to Food and Drink Behaviours

    • Household dining to become more united
    • This will encourage more effort being put into mealtimes
      • Figure 56: Expectations for changes to food and drink behaviours compared to pre-COVID, March 2021
    • Long-term revival for the scratch cooking and baking trends…
    • …underpinned by health and emotional drivers and more home-centric lifestyles
      • Figure 57: Consumers who expect to cook from scratch and bake more compared to pre-COVID, by gender and age, March 2021
    • Opportunities to offer a helping hand in home cooking and baking
    • Consumers are hungry for more meal inspiration
    • The future looks bright for meal kits, baking kits and recipe boxes
      • Figure 58: School of Wok Gyoza Ginger & Garlic Kit with QR code to access online tutorial and social media competition, 2020
      • Figure 59: Examples of Mr Kipling cake mixes, 2020-21
    • Educational content will appeal
    • Alcohol moderation to become more ingrained
    • A rosy outlook for the rapidly evolving low/non-alcoholic drinks market
    • Premiumisation and ‘better-for-you’ trends in alcohol to accelerate
      • Figure 60: Examples of hard seltzers launches, 2020
    • Environmentally friendly packaging to carry more influence
    • Pushing the envelope in ‘green’ innovation will reap rewards
      • Figure 61: New recyclable paper packaging for Nestlé Smarties, 2021
  17. Appendix – Data Sources, Abbreviations and Supporting Information

    • Abbreviations
    • Consumer research methodology
  18. Appendix – Central Forecast Methodology

    • Market forecast and prediction intervals
      • Figure 62: Market forecast and prediction intervals for sales of food through retail, 2020-25
      • Figure 63: Market forecast and prediction intervals for the total alcoholic drinks market, 2020-25
      • Figure 64: Market forecast and prediction intervals for the total non-alcoholic drinks market, 2020-25
    • Market drivers and assumptions
      • Figure 65: Key drivers affecting Mintel’s market forecast, 2020-24 (prepared 12 March 2021)
    • Forecast methodology
  19. Appendix – COVID Scenario Performance Methodology and Assumptions

    • Scenario performance
      • Figure 66: Scenario performance for sales of food through retail, 2015-25
      • Figure 67: Scenario performance for the total alcoholic drinks market, 2015-25
      • Figure 68: Scenario performance for the total non-alcoholic drinks market, 2015-25
    • Rapid COVID recovery, central and extended COVID disruption scenarios outline
    • Scenario methodology

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