Executive Summary

In 1993, retail sales of perishable fast-moving consumer goods (FMCGs), as defined in this report, were estimated at £23.16bn, representing 51% of total retail sales of food. The main sectors of the market are fresh meat, fresh fruit and vegetables, dairy products, bread and cakes, fresh fish, and selected chilled products. Total expenditure on perishable FMCGs grew by only 0.9% in 1993, but this increase hides considerable variations in growth between sectors. Markets experiencing healthy sales increases were yoghurt and chilled desserts, cheese, fresh fruit, cakes and chilled ready meals. Markets where value sales fell in 1993 were carcass meats, fresh fish, liquid whole milk and eggs.

Factors affecting sales in the sector include the trend towards low-fat products, such as skimmed milk and low-fat spreads, and the general trend towards convenience foods which has affected sales of basic foodstuffs such as potatoes, fresh meats and eggs. Certain sectors of the market have been trying to develop more value-added products and premium lines have been launched in the cheese, bread, milk, and meat sectors and these products include speciality cheeses, premium white bread, flavoured milks, and meats such as ready-stuffed joints, turkey rashers and marinaded bacon.

Industry supply is becoming increasingly concentrated and the major producers are the large national food groups such as Hillsdown Holdings, Northern Foods, Unigate and Associated British Foods (ABF). UK farmers and producers supply a considerable amount of fresh produce for UK households, but there is still a considerable trade deficit in many markets where imports play an important role. These markets include fresh fruit, meat, fish and dairy products.

Retail sales of perishable FMCGs are dominated by the national supermarket chains which have increased their range of perishable foods in recent years and improved the stock control of these products. They have also developed specialist units such as in-store bakeries, delicatessens and fresh fish counters. Retailers' own-label products are important in this area. Home deliveries are significant in the milk market, but even here the low price of milk in supermarkets is eroding the share of sales taken by home deliveries. In the mid-1980s, 80% of households were supplied with home deliveries but this percentage has now fallen to less than 60%.

In recent months, intense competition in the retail trade has forced down prices of many perishable foods, such as bread and milk. There are worries that these low prices will become permanent, putting pressure on suppliers' margins.

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