Page last updated at 23:02 GMT, Monday, 29 June 2009 00:02 UK

Recession bites into eating habits

By Jacqui Farnham
BBC Money Programme

As the recession bites into our wallets one of the first things we've tried to cut back on is our spending on food.

Sainsbury's basics range kiwi fruit
Shoppers have been turning to supermarkets' cheaper brands

And the downturn is affecting not only how much we fork out on food but also what we are putting into our shopping baskets.

In the last year, food prices have gone up by 8% and we're all feeling the pinch.

As we hunt for ways to cut costs, one activity we're cutting back on is eating out.

We're abandoning restaurants in favour of staying in and cooking for ourselves from scratch.

For most of us that means buying more food from supermarkets, and this extra spending has sparked a turf war amongst the big grocers.

Budget battle

All the supermarkets sell budget lines - cheap food such as meat and fish off-cuts, misshapen fruit and vegetables, and food made with cheaper ingredients.

These budget lines are at the heart of the supermarket wars. The big stores are using them as a tool to try to snatch market share from one another.

Morrisons carrier bag
Morrisons' market share has grown in the last year

"What we're trying to do all the time is to show our customers the way they can save money," says Sainsbury's boss Justin King.

"The reason that's important is that if we can do that for them they will shop with us more often."

And it's working. In this recession Sainsbury's has grabbed extra market share. They currently hold 16.1% of the grocery market compared to 15.8% this time last year, according to figures from TNS Global World Panel.

So how are the other big supermarkets holding up?

Asda is up slightly from last year at 16.8%.

Morrisons is also up and now holds 11.6% of the market.

Tesco has lost a little of its market share and is down 0.1% on last year, but even so they receive a whopping 30.8% of our grocery spend. They may be losing this battle but they are still the overall winners in the supermarket war.

Local shops struggle

One area of food retailing which has dramatically lost market share in this recession is the independent sector.

The butcher, bakers, fishmongers and greengrocers which once graced every High Street are suffering as never before. That's because most of us perceive small shops to be more expensive than the supermarkets.

Organic radishes
Sales of organic products have been hit by the recession

This time last year, independents were receiving £550m of our grocery spend. This year the figure is £50m less.

So can individual independent shops do anything to improve their chances of riding out the downturn?

"Independent stores can survive if they emphasise the service and the product knowledge that people feel they can't find in the big four supermarkets," says analyst Dean Best of just-food.com.

And according to one shopper, Nina McKellar from Twickenham, this can make all the difference.

"You don't get the same kind of personal service if you go to a supermarket. You don't get people asking is that alright or do you want this," she says.

"It's a much nicer experience."

But what about the cost?

In a test, Nina, a mother of two who normally shops at Tesco spent one week shopping at local shops instead. She said she was surprised to find that shopping at local stores worked out to be no more expensive than shopping at the supermarket.

Organics decline

One type of food that is almost always a little more expensive than normal, is organic food.

Tesco shopping trolley
This downturn has had a profound impact on the way we shop. I don't think that will go when the economy recovers
Dean Best, Just-food.com

In this recession organic food sales are down 11% year-on-year.

High profile organics company Duchy Originals, established by Prince Charles, has suffered from this decline. The cost of their ingredients has gone up and their sales have gone down.

Chief executive of the company, Andrew Baker, says that when the recession started supermarkets started removing organic foods from their shelves.

"The big supermarkets decided that they would push basic economy products and cleared a lot of shelf space from organic and premium products."

But that's a claim refuted by Justin King of Sainsbury's.

He says that organic sales are down, but it's not because he is taking them off the shelves.

"It's driven by customers. They are starting to be more challenging about why they are paying the extra for things, but the opportunity is still there for customers to buy organic if they want it."

Whoever is right, consumers and supermarkets both seem to be backing away from organic foods.

According to brand expert Marcel Knobil, that's because people don't know why they are paying extra for organic food.

"Organic is a bit confused. People don't really know what they are getting from organic. What does it represent? Another problem is that organic has been equated with expensive."

The Soil Association, which represents most organic producers in the UK, admit that their message can bit a little confusing and that they are addressing this.

"Our job is to educate people about the benefits whether it's the environmental benefits, climate change, animal welfare, in terms of health," says the Soil Association's Jim Twine. "

We've got to do a better job of getting those messages across."

The future

In this recession we are all trying to keep our food spending as tight as possible, but when the green shoots of recovery break through, will we all return to our old habits?

Dean Best of Just-food.com thinks some of our new cost-cutting habits are here to stay.

"This downturn has had a profound impact on the way we shop. Consumers are realising they can get a kick out of finding a bargain and I don't think that will go when the economy recovers."

But Dr Marylyn Carrigan, Senior Lecturer in Marketing at the Open University, thinks that in time we may start to splurge on food again.

"After the recession ends, many people will feel entitled to reward themselves for the months of value-shopping by splashing out on big brands again," she says.

"It's like rewarding yourself with the cake at the end of the diet. Most people just can't resist the temptation."

The latest Money Programme, Gregg Wallace's Recession Bites, is broadcast on Tuesday 30 June at 2200 BST on BBC 2.



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