UK grocery growth lags inflation amid Sainsbury bid

By Eamon Quinn

The growth in UK grocery spend failed to keep up with British price inflation in the first four months of the year, showing the pressures bearing down on British supermarkets as Sainsbury pitches its audacious €8.3bn takeover bid for Asda.

The new figures from researcher Kantar Worldpanel also confirm a combined Sainsbury-Asda force would command up to a third of the British supermarket spend, above leader, Tesco with a 27.6% share.

Analysts on both sides of the Irish Sea say they would be surprised if the UK competition regulator were to wave the takeover through without conditions and believe its effects will hit Irish exporters selling into the UK through the big chains, as well as potentially luring Sainsbury with its enhanced buying power into Ireland for the first time.

According to Kantar, the British grocery market increased 2% in the 12 weeks to late April, while prices rose 2.1%. Based on 750,000 grocery items, prices rose fastest for butter, bottled colas, and bread, it said, while prices fell for detergents.

Consumer insight head Fraser McKevitt said that the proposed deal comes at “a pivotal moment for the British grocery market”.

“A merger between Sainsbury and Asda would transform the traditional landscape placing nearly a third of market share in the hands of the joint supermarket giant, though the march of the discounters, and any enforced store closures, could impact this figure,” he said.

However, his analysis offers some hopes that the UK regulator could pass the deal without too onerous conditions: Two-thirds of Asda’s sales are generated outside London and the southeast of England, against around 60% of sales for Sainsbury.

The latest figures show that Morrison’s with 10.5% is the fourth largest British supermarket, ahead of Aldi on 7.3% and the Co-op with a 6% share. Lidl in the UK has a share of 5.4%.

In Ireland, the most recently available Kantar Worldpanel Ireland figures show SuperValu and Dunnes are tied as the largest grocer with a market share of 22%, closely followed by Tesco. Lidl and Aldi together have a 22.8% share of the spend.

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