Consumer Profile – United Kingdom

Key demographic indicators

The United Kingdom consists of England, Scotland, Wales and Northern Ireland. The UK recorded a population of 66.5 million inhabitants in 2018 and is expected to reach 68.3 million by 2023.

The rural population in the UK has been on a steady decline over the past several years, with a compound annual growth rate (CAGR) of −1.1% from 2014 to 2018, and will continue to decrease by an additional −1.4% into 2023. The urban population, however, is on an opposite trajectory and is projected to reach 57.8 million inhabitants by 2023 with a CAGR of 1.1% during the forecasted period of 2019 to 2023.

In 2014, 82.4% of the UK's population lived in urban areas while the remaining 17.6% resided rurally. Fast forwarding to 2023, 84.6% of the population in the UK is expected to live in urban areas, while the remaining 15.4% will live rurally.

The top ten most populated UK cities accounted for 44.8% of the total 66.5 million inhabitants in 2018 and are predominately located in England; Glasgow, Scotland, is the outlier, and was in 4th place overall that year. The population growth in these cities is expected to remain relatively stable from 2019 to 2023, with a CAGR of 0.6%; the total population of these cities should hover around 30.4 million people by 2023.

The gender ratio in the UK for 2018 was very close to evenly split with 33.1 million males verses 33.4 million females, while the number of residents under the age of 15 was 11.7 million, the number aged 16 to 64 was 42.7 million and the number aged 65 and older was 12.1 million

In the UK, the population within age groups 0-14 and 15-64 remained relatively stable between 2014 and 2018, while the Baby Boomer generation continues to grow, similar to many Western countries. By 2023, it is estimated that 13.0 million of the 68.3 million people living in the UK will be aged 65+, a CAGR of 2.1% over the 2019 forecast, and an increase from 11.3 million in 2014. In comparison, the population between the ages 0-14 and 15-64 is only expected to increase by a CAGR of 0.4% between 2019 and 2023.

The median age for UK residents was 40.5 in 2018, and is forecasted to increase to 40.9 by 2023. It is projected that the median age for males will be 39.9 while that of females will be 42.0 in 2023.

The fertility rate in the UK has remained static at an average of 1.9 children born per female of childbearing age between 2014 and 2018, and is expected to remain the same through to 2023 while the birth rates of both females and males is estimated to drop by a CAGR of −1.2% between 2019 and 2023.

The average life expectancy of a male and a female in the UK was 78.3 and 82.7 years, respectively, in 2014. By 2023, the average life expectancy for someone living in the UK will be an estimated 81.4 years; the death rate in 2023 is projected to be 9.6 deaths per thousand.

Among the 66.5 million UK inhabitants there were 27.5 million households in 2018, and an average household size of 2.4 people. The number of households with children that year was 8.0 million, while that with no children was more than double at 19.5 million. Between 2019 and 2023, the number of households with children is expected to decrease by a CAGR of −0.3%, while the trend for households without children is anticipated to increase to 20.8 million, a CAGR of 1.7% for that period.

In 2018, the number of married individuals remained stable in the UK with a recorded 23.6 million, while 34.4 million people preferred to maintain an unmarried status. That year, 5.4 million people filed for divorce and 3.4 million were widowed.

Key economic indicators

The average annual wage earned in the UK was US$47.6 thousand in 2018, nearly US$7.0 thousand less than the average annual wage in 2014. Average annual wages are projected to increase by a CAGR of 2.7% between 2019 and 2023.

Literacy rates in the UK for all age groups is approximately 99.0% and the total number of students is expected to remain relatively stable, with 13.7 million enrolments projected for 2023. In 2018, 4.85 million students were enrolled at the primary level while 6.1 million were registered at the secondary school level, and 2.4 million were tertiary students.

The UK's per capita nominal gross domestic product (GPD) was US$42,516 in 2018, having decreased by US$4,500 from 2014. By 2023, the GDP per capita is expected to rise by an additional US$5,350 and the country's real GPD growth is expected to remain relatively stable at 1.6%.

The real GDP growth rate in the UK was 1.4% in 2018, having decreased from 2.9% from 2014, a significant drop of 22.1% CAGR for that period. The GDP per household shrank from US$113.5 thousand to US$102.5 thousand between 2014 and 2018, and is expected to continue dropping in 2019. However, it has been predicted that household GDP will return to US$113.0 thousand by 2023 and experience a growth rate of 12.6% for the period of 2019 to 2023.

Food and beverage expenditure

The per capita expenditure (PCE) on food and beverages in the UK decreased to US$2,686.4 in 2018, a decline of 1.3% CAGR for the period beginning 2014; however, it is expected to increase to US$2,731.5 in 2019. This trend is projected to regain momentum by 2023 and earn a CAGR of 1.8% over the five-year period starting 2019.

Expenditure on food in the UK has been declining over the past several years, reaching a US$1,586.4 per capita in 2018, down from US$1,858.3 in 2014. The projected CAGR on per capita food expenditure for the period of 2019 to 2023 is 1.7%, and is expected to increase to US$1,725.0 by 2023.

The PCE on alcoholic drinks in the UK was US$857.5 in 2018, and is anticipated to reach $US947.8 by 2023, a positive CAGR increase of 2.1% over the 2019 to 2023 period, while total per capita expenditure for non-alcoholic drinks was US$242.5 in 2018.

Health and wellness

The health and wellness (H&W) sector continues to gain traction worldwide and the UK is no exception. The subsectors of H&W for this particular analysis include naturally healthy (NH), food minus, free from, functional and fortified (F&F) and food intolerence.

The H&W sector in the UK recorded retail sales of US$35.4 million in 2014; sales increased to US$39.2 million in 2018, with a CAGR of 3.4% during that period. Projections estimate that retail sales of H&W products in the UK will reach US$43.7 million, with a CAGR of 4.3%, during the three years leading up to the end of 2022.

The naturally healthy market

In the UK, the top subsector within health and wellness retail sales for 2018 was the naturally healthy market with a total of US$12.3 billion, up from US$11.1 billion in 2014. Projected sales of naturally healthy products are expected to continue growing with a CAGR of 4.1% for the three-year period beginning 2019 and are estimated to reach US$13.5 billion by the end of 2022.

The combined retails sales of soft drinks, bakery and cereals, and dairy and soy food accounted for 90.6% of all naturally healthy alternatives in 2018 and are anticipated to reach US$12.1 billion by 2022.

The food minus market

The food minus subcategory within the H&W market was the runner-up to naturally healthy (NH) in the UK, having recorded retail sales of US$11.4 billion during 2018; this subcategory is expected to grow by an additional US$1.0 billion in 2022 with a CAGR of 3.2% for the three-year period beginning 2019. The highest performing products were dairy and soy food, soft drinks and meat, with US$9.6 billion and 84.4% of retail sales within the food minus subcategory of H&W.

The free from market

Free from food and beverage retail sales experienced exponential growth between 2014 to 2018 and sales are expected to continue increasing over the next three years.

From 2014 to 2018, the free from market in the UK grew by a CAGR of 6.7%, reaching an all-time high of US$6.3 billion in 2018. By 2022, free from retail sales in the UK are expected to reach a total of US$7.6 billion, which is US$1.0 billion over the US$6.6 billion projected for 2019.

The top two subcategories within the free from market in 2018 were dairy and soy food and soft drinks, within a combined total of US$4.0 billion in retail sales. The soft drinks category recorded a CAGR of 12.6% during the period of 2014 to 2018 and is expected to grow by an additional 11.2% CAGR over 2019 to 2022, surpassing the dairy and soy food market and reaching potential retail sales of US$2.7 billion US.

The fortified and functional market

As a whole, fortified and functional (F&F) food retail sales in the UK increased by a CAGR of 2.3% between 2014 and 2018, and are anticipated to earn a 3.1% CAGR during the three-year period of 2019 to 2022.

Fortified and functional foods accounted for US$6.6 billion of H&W retail sales in 2018. The soft drinks and bakery and cereals subcategories represented 92.7% of all F&F food sales, and are expected to continue a steady growth well into 2022 with US$6.6 billion by year end.

The food intolerence market

The food intolerance (FI) subcategory has historically been the smallest within the market for the UK. That being said, food intolerance has seen a steady growth over the past decade and the UK is no exception.

In 2018, the FI market recorded retail sales of US$2.6 billion and a 4.9% CAGR during the four years beginning in 2014. Further growth in the FI subcategory of H&W is anticipated, with retail sales projected to reach US$3.0 billion by year end 2022 and a further growth of 5.3% CAGR during the three years leading up to the end of 2022.

The subsectors with the most growth between 2014 and 2018 within the FI market were savory snacks with a 12.6% CAGR and seasonings, dressings and sauces with a 21.2% CAGR. These two subsectors combined had total retail sales of US$775.7 million in 2018 and are expected to grow to US$916.8 million by 2022. Other FI subsectors of major significance in 2018 included bakery and cereals as well as dairy and soy food with retail sales amounting to US$743.4 million and US$709.8 million, respectively.

The organic food market

Although technically classified as health and wellness food, organic retail sales are calculated separately. Organic products earn an accreditation or certification that may overlap with product attributes within the H&W market and have therefore been measured independently to avoid being included in multiple subcategories.

The market for organic food has been gaining traction globally over the past several decades, with rising consumer awareness regarding the impact of genetically modified organisms (GMO) and chemically treated produce. Buyers are increasingly demanding transparency, ethically produced and certified food, and the UK is following these trends.

The organic retail sales market in the UK was valued at US$1.9 billion in 2018, up from US$1.7 billion in 2014 with a CAGR of 4.5% over the foyr-year period. By 2022, it is projected that retail sales of organic food in the UK will reach US$2.2 billion, with an anticipated CAGR of 5.8% over 2019 estimates.

The largest subsector in the UK within the organic food market in 2018 was by far dairy and soy food, which was valued at US$1.1 billion, having grown by a CAGR of 2.8% from 2014. Organic dairy and soy food retail sales are expected to climb by a CAGR of 4.6% between 2019 and 2022, and to reach US$1.3 billion by period's end.

The organic retail sales subcategory in second place between 2014 and 2018 was ice cream, with a CAGR of 16.8% for that period, while bakery and cereals earned third place with a value of US$133.8 million in 2018.

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Consumer profile – United Kingdom
Global Analysis Report

Prepared by: André Ajaltouny, Market Analyst

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