Tesco backed to return to growth this year as ‘Farm’ brands drive sales

Tesco’s ‘Farm’ brands are now being bought by over a quarter of its customers and driving overall sales growth.

For the 12 weeks to August 14, Tesco was the best performer of the big four supermarkets as it recorded a sales decline of 0.4%. According to Kantar Worldpanel, this marks its slowest rate of decline in more than six months, with its market share now at 28.1%. And it is tipped to return to sales growth by the end of the year.

“Current trends suggest Tesco may return to growth this year, which would mark the end of a decline stretching back to March 2015,” says Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel.

It is Tesco’s controversial own-label ‘Farm’ brands that are providing the biggest boost. This despite criticism from the National Farmers Union [NFU] over the use of fictional farm names and an ongoing investigation by Trading Standards.

McKevitt adds: “Tesco’s recent product launches have been making a positive impact on its performance, with its ‘Farm brands’ funding their way into over a quarter of the Tesco baskets from this period.”

In comparison, Sainsbury’s recorded a sales decline of 0.6%, while sales at Morrisons fell 1.8% – although its performance was impacted by store closures.

Asda’s recent woes also continued as its sales declined by 5.5%, with market share falling 0.9 points to 15.7%.

Overall supermarket grocery sales rose by 0.3%. Boosted by the warmer weather, sales of frozen confectionary rose 23% and chilled drinks were up 10%.

Lidl, which remains the fastest growing British supermarket, and Aldi recorded sales growth of 12.2% and 10.4% respectively for the summer period. The discounters now have a combined market share of 11%.

Elsewhere, sales at the Co-op were a particular standout. The convenience retailer, which recently rebranded, saw an increase in sales of 2.8% year-on-year, taking its market share to 6.6% – the highest it has achieved since 2012.