Positive food-to-go market growth predicted, but is driven by inflation in short-term
The total value of the food-to-go market is set to shrink by 3.3% in real terms this year, according to the latest market report.
The total value of the UK food-to-go market in 2023 is forecast to reach £22.9bn – a 6.2% increase from 2022. However, the main driver of this growth is inflation. Declining frequency, penetration and down-trading means that in real terms, the market will be down 3.3% vs 2022.
UNCERTAINTY REMAINS
The Institute of Grocery Distribution’s (IGD) latest market outlook has forecast the value of the market and its five sectors to 2028. These forecasts are aligned with the eating out and retail channel forecasts, covering the food-to-go market specifically across the following five sectors:
* Food-to-go specialists
* Convenience stores, forecourts and other retailers
* Supermarkets and hypermarkets
* Coffee and drinks specialists
* Fast food specialists
The IGD forecast includes three scenarios based on distinct assumptions about the economy’s performance and consumer behaviour, to cover outcomes from best to worst case.
The UK food and drink market continues to operate in an unpredictable macro environment, with uncertainty remaining on how consumers will react to future changes. To take into account a variety of potential outcomes, IGD considered three scenarios.
Their mid-growth scenario assumes retail food inflation peaks in early 2023, but food service food inflation lags as operators absorb more of their increased costs.
‘RETURN TO REAL GROWTH’
Although all sectors will experience growth from 2023 to 2028, fast food specialists and convenience stores will be the long-term winners, stealing share from the other sectors, states IGD.
Convenience stores, forecourts and others will benefit from being accessible for food-to-go missions and their strong value positioning, especially with meal deals, they forecast, adding they are “often designed with the food-to-go customer in mind, resulting in an optimised journey and seamless experience for the consumer”.
IGD insight analyst, Shannon Goldsmith said that real growth will return in 2024, but growth will be driven by inflation.
“The total food-to-go market will return to real-term growth in 2024. However, this will only represent a small proportion of overall growth, as continued inflation and reduced disposable income will dampen demand,” she said.
“In 2025 and 2026, consumers will return to food-to-go more frequently and spend more as their budgets start to allow. This will see real growth rates increase and become the main contributor to overall market growth, rather than inflation,” she added.
