Inflation munches on UK’s F&B market growth: report

2022 is expected to finish with a 2% decline in growth compared to last year.

The total food and drink market across eating in and out is forecast to finish 2022 with a growth of 6.6% vs 2021, with further growth for 2023 of 5%. However, when inflationary price increases are stripped out, the market shows a 2% decline vs 2021, according to a report by IGD.

The report revealed that after the lockdowns in 2020, eating-out spend gradually returned as consumer confidence and appetite for going out increased. However, from Q4 2022 and into 2023 there will be a halt to this trend as retail channels start to steal a share of the stomach from food service, reflecting the challenging economic landscape.

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“In real terms, the UK retail market for food and drink will shrink in 2022 and fall slightly in 2023. Consumers are expected to trade down to cheaper products and switch channels to control their spending. Retailers are implementing a variety of initiatives to win and retain shoppers. These are mainly focused on promoting value and loyalty schemes. These look set to continue into 2023 as shoppers continue to be very price sensitive,” IGD said.

IGD predicts that by 2023, the food and drink market will in the UK total £214.6b, with 28% coming from those eating out and 72% from those ordering in.