Top Stories
Top Stories
Europe News

Europe grocery markets grows at slowest rate on record: Report

The sluggish state of Europe's biggest economies is hitting shopping habits, as expenditure on everyday items like food, drink and toiletries rose by the slowest rate on record between April and June, according to a retail report from Nielsen.


Prices paid for fast-moving consumer goods (FMCGs) rose by just 0.7 percent year-on-year, while volumes rose by only 0.1 percent — the lowest level in two years, Nielsen said on Wednesday. As a result, grocery retailers saw an average rise of 0.8 percent in takings at the till, which was the smallest increase since measurement began in the fourth quarter of 2008.

Nielsen's European director of retail insights attributed the slowdown to a slowdown in the region's three biggest economies.

"The historically low performance across Europe is driven by two factors," Jean-Jacques Vandenheede said in a news release on Wednesday.

"(One is) the negative effect of Easter not occurring in Q2 this year but doing so last year, however, more significantly, the very low growth in France and Germany and the noticeable decline in the U.K., which is being driven by fierce price competition among the retailers. Southern Europe was often to blame for Europe's poor performance but it's currently doing quite well, while northern Europe is today's problem child."


The grocery market is fiercely competitive in the U.K. and dominated by the big supermarket chains — Tesco, Sainsbury's, Asda (owned by Walmart) and Morrisons. They are under fire from double-digit growth from discount chains Aldi and Lidl and an ensuing debilitating price war.

U.K. takings at the till declined by 1.6 percent in the second quarter, which was the country's worst performance in two years and the third-lowest increase among the 21 countries tracked by Nielsen. The tracking period covered the 11 weeks prior to the U.K.'s vote to leave the European Union on June 23 and one week after, so was unlikely to be heavily hit by the market turmoil after the referendum.

Takings at the till in Germany and France rose by 0.3 percent and 0.5 percent, which was below average for the region.

The slowdown in the grocery market may reflect waning economic growth in individual countries or a crowded market for FMCGs.

Germany economic growth slowed to 0.4 percent in the second quarter from 0.7 percent in the first quarter, quarter-on-quarter, according to the flash official estimate from Eurostat.

However, U.K. economic growth accelerated to 0.6 percent in the second quarter from 0.4 percent. A slowdown is expected in the third quarter, in part due to the hit to confidence from the Brexit vote, but how this will impact the grocery market is unclear. Official data on Tuesday showed an increase in inflation in July, which might boost taking at the till in nominal terms.

The grocery industry employs 3.8 million people in the U.K. and is the country's largest private-sector employer, according to the Institute of Grocery Distribution.

Follow CNBC International on and Facebook.