Abstract
EXECUTIVE SUMMARY
Packaged Foods Prevail Despite Recession
As the economy faltered over the course of 2008, and fell into recession by the third quarter, many consumer
markets were left shaken, although the packaged food sector continued to see steady growth. The period from
July to September saw a fall of 0.7% in GDP, and numerous spheres of the UK economy saw marked falls, as
manufacturing, the service sector, and the financial and business sectors all recorded declines in a climate of
rising unemployment, unstable commodity prices, collapsing house prices, a devaluing currency and falls in
consumer confidence. However, consumers continued to turn to the packaged food sector for their staples, while
escalating prices also contributed to value growth.
“natural” Trend Remains Key As Consumers Take Holistic Approach
The healthy eating movement showed signs of further development during the review period, as consumers
became increasingly inclined towards better living and eating, although tended to move away from more faddish
health options, such as specific diet products, towards a more healthy and balanced diet generally. They
appeared to be more concerned about the natural credentials of food rather than merely seeking a quick fix to
address some minor aspect of their diet through substitution.
Private Labels A Trusted Option
The competitive environment remained largely stable over 2008, with the leading players maintaining their
positions in the market, often through a presence in multiple sectors. Cadbury's Schweppes Plc held onto its
lead in GBO terms, with a 5% market value share, followed by Mars, Premier and Nestle. However, private
labels are taking an increasing hand in shaping UK food markets, holding a 38% market value share. The three
leading NBOs in the market are supermarket retailers.
Supermarkets Maintain Their Grip
The leading supermarket chains maintain their dominance of distribution, concentrating a large proportion of the
UK packaged food market into the hands of a small number of retailers. Their strong position has been
consolidated by increased expansion, particularly into convenience store formats, as the big four strive to attract
more local consumers. This is bringing increased pricing pressure in a complex environment, as the prices of
commodities and staple crops remain high, but food retailers need to keep their prices low in order to remain
competitive. The launch of Tesco's new discount private label line in 2008, in response to the so-called “credit
crunch” will only increase this pressure.
Packaged Foods Set To See Stable Growth
The packaged food market is predicted to see stable growth over the forecast period, driven by a variety of
trends, such as healthier diets and people opting to eat in more often rather than going out, as the recession hits
their pockets. Alongside this, the market will be driven by continuing trends for convenience and more
experimentation, as people lead more hectic lifestyles and seek quick and nutritious meal solutions, while the
developing British palate will demand more new ethnic flavours. | 
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