Cheese gets a boost in time for Christmas

Dairy market growth has accelerated over the past 12 weeks, now standing at 0.7%, our latest data finds. This puts the sector slightly ahead of the wider grocery market, which grew 0.5% over the same period.

This is a positive sign as we head into the Christmas period, with shoppers spending £21.5 million more on cheese year on year, and the declines in spend on fromage frais and margarine both slowing down compared with last period, down £2.5 million and £2 million respectively.

Cheese still stands as the second largest category, worth £685 million, and has been in year on year growth of more than 3% since October 2019. A combination of shoppers buying more and visiting the shops more often is the predominant cause of the growth.

Within cheese, all sectors are driving growth with ingredients and speciality cheeses growing 8.8% year on year. However, it is snacking cheeses that shoppers are picking up more frequently, with customers picking up branded kids snacks more often than last year and willing to pay 50p extra. Tesco and Aldi lead the way, with the latter outgrowing the market in snacking overall, growing 34.6% compared with 6.7% across all other retailers. The growth in branded kids snacks is not reliant on promotions, temporary price reductions (TPRs) have been pulled back with growth coming through full price sales. As could be expected, young families with children up to 4 years old are spending more in the sector (an additional £2.1 million year on year) and particularly C2 shoppers.

Growth in volume per trip for cheese comes from everyday favourites - mainly through a strong performance from branded block cheddar and sliced private label cheeses. The former is driving the sector’s volume sales through promotional activity which is giving a boost to trip volume. This dynamic is most evident in Tesco, despite the retailer seeing an overall decline in branded block cheddar year on year (down 0.9%). Helen Stone, Category Analyst, comments: “Empty nester and class E shoppers are the ones snapping up these deals, and their spend in this area is growing by 9.6% and 2.2% respectively year on year.”

Key for the performance of the sector will be whether pre-pack cheese sales can be sustained over the festive period, with retailers likely to support Christmas-specific ranges with gondola ends in-store. Looking to the new year, the impact of  Veganuary is also something to watch, the impact on dairy could be noticeable.