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Analysis and effects of the Ukraine crisis

The state of grocery in Europe

The war in Ukraine is having extensive impacts across countries and sectors. The exact implications for grocery retail are as of yet not clear. A first analysis of the impact of the war indicates that it mostly accelerates the trends identified below, particularly that it might increase food and energy inflation even further and, as a result, make the increase in price sensitivity and downtrading more pronounced. We, therefore, believe the trends outlined in this article gained even more relevance through the current crisis.

Looking back on 2021
The European grocery retail market in 2021 was shaped by the ongoing effects of the COVID-19 pandemic, the gradual reopening of the hospitality sector, the emergence of instant-delivery players (also called quick commerce), and price inflation.

Sales decreased in Europe by 0.6 percent in 2021 compared with the previous year, to a level that was still substantially higher than 2019. Volume decreased by 2.1 percent, but this development was partially offset by price inflation of 1.3 percent and slight uptrading of 0.2 percent.

The results varied significantly across countries (see “Food and grocery market KPIs”). The first quarter of 2021 was significantly higher than the pre-pandemic first quarter of 2020, reflecting the effects of market restrictions. From the second quarter of 2021 onward, hospitality activity began to resume and grocery retail sales stayed below the previous year, though they remained substantially above 2019 levels across quarters and countries.

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