Luxury food and drink purchases will rise

Published: 23 July, 2008

Consumers in the UK are set to drive luxury food and drink purchases above 20bn a year by 2012.

This represents growth of 7% a year, more than twice as fast as the overall grocery market, according to IGD research.

The strongest growth will come in retailers' private label ranges, locally and regionally sourced products, Fairtrade and organics.

One in every eight pounds flowing through grocery tills in five years' time will be spent on premium products, IGD said.

The current UK market for premium products is 14.6bn, up from 12.8bn last year.

IGD predicts total grocery sales will reach 133.3bn in 2007, up from 128.2bn last year, a growth rate of 4%. It forecasts market growth will average 3.2% over the next five years.

Sales of premium private labels, pioneered by the likes of Tesco's Finest and Sainsbury's Taste the Difference, are now growing strongly across the UK grocery market, with Asda, Morrisons, Aldi, the Co-operative Group, Somerfield and Budgens all launching, relaunching or expanding ranges in the past year.

Gavin Rothwell, senior business analyst at IGD, said: "The market for premium food is set for strong growth in the coming years, but opportunities will be on a more selective basis. Demonstrating provenance has emerged as one of the most important success factors."

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