Mintel’s British Lifestyles report highlights the legacy of the economic downturn in Britain and finds savvy ways are here to stay

April 26, 2013

With the lifestyles of many consumers in Britain in flux over the past five years, Mintel’s annual British Lifestyles report reveals the legacy of the economic downturn. When asked about how their spending habits have changed over the past five years, some 56% of all Brits (amounting to 23 million adults) claim to now only buy items when absolutely needed and almost four in ten (37%) say they are buying fewer treats for themselves and their families.

While just over a fifth (22%) of consumers agree they have been better off over the past year, more than a third (36%) say things have become more difficult. A further third (36%) of Brits claim to go on fewer holidays and almost a fifth (17%) are working longer hours as a consequence of the downturn. In addition, while in 2008 six in ten Brits (60%) were perfectly happy with their standard of living, this fell to 50% in 2012.

Today, the top three financial priorities for British consumers are 1. Keeping up with bills (82%) 2. Adding to rainy day savings (67%) 3. Saving for big ticket purchases (58%). Just 6% of adults admit they haven’t changed their spending habits in response to the economic downturn.

Ina Mitskavets, Senior Consumer and Lifestyles Analyst at Mintel, said:

“Amidst the rising cost of living and biting austerity measures, British consumers are adjusting to the new economic reality, with financial prudence and savvy shopping already the default for many. Britons are working harder and saving more money for the future, as a direct consequence of the recession. The reduced desire to fritter away hard-earned income on ‘nice-to-haves’ will shape retail offerings and will have far-reaching implications for consumer expectations about quality, price, product variety and customer service.”

Mintel’s research also examines the value of every consumer market covered by their market research and the impact of consumer spend on market sectors to 2017. Valued at £999 billion in 2012, overall, consumer spend is set to grow a further 17% between 2012 and 2017 to reach £1.17 trillion. Key consumer sectors that stand to benefit in the next five years include: non-alcoholic drinks – set to increase 25%, in-home food +20% and beauty and personal care +18%. The slowest areas of growth will be technology and communications +5%, home and garden +7%, foodservice +7%, holidays +9% and leisure and entertainment +11%.

Coffee and energy drinks markets break a billion in 2012

Highlighting consumer demand for functionality in non-alcoholic drinks – and especially energy boosting in difficult economic circumstances, both the coffee and energy drinks markets have broken the billion mark in 2012. The energy drinks market grew 78% over the past five years (2007/2012) to reach £1 billion in 2012 and the coffee market growing 34% over the same period to reach £1 billion in 2012. More than six in ten (62%) consumers claim that their purchasing habits of non-alcoholic drinks did not change in 2013 in comparison to 2012.

Home baking and crisps are star performers, while bread fails to get a slice of the action…

Valued at £76 billion, the majority (52%) of consumers are spending ‘about the same’ on in-home food in the beginning of 2013 as they were in the beginning of 2012. The economic downturn kick-started a renaissance in the home-baking market with some 34% of Brits cooking or baking more from scratch and value sales rocketing by 84% over the past five years to reach £410 million in 2012. Expenditure on crisps, nuts and snacks increased by 29% to £3.3 billion from 2007-12 – but expenditure on bread and baked goods has been unconvincing, growing just 1.5% to £3.6 billion over 2011-12.

Looking good – beauty remains buoyant despite recession

When times are tough, women often use beauty products as an affordable way of lifting their mood. The so-called “lipstick effect” has held true throughout the recession, with the UK beauty and personal care industry estimated at £10.6 billion and showing total growth of around 16% between 2007 and 2012 – the equivalent of an additional £1.3 billion. Notwithstanding the growth of the UK population by some 5.3 million between 2007 and 2012, this still equates to an 11% rise in per capita spend. Furthermore, the beauty and personal care market is expected to grow by 18% between 2012 and 2017, with the highest growth projected for shampoos (25%) and conditioners (26%).

Dishwashing sales bubble up in difficult economic climate

Sales of dishwashing products have outperformed the overall household care market between 2007 and 2012 growing by 16% compared to a 10% growth for the household care market as a whole. While sales of machine dishwashing products have been virtually static over the past two years, it is handwashing products which have been the star performer in the market, sales of washing up liquid increasing 5% alone between 2011 and 2012. Washing up liquid has benefitted from a boost in new product development with new fragrances and packaging. Valued at £5.3 billion, the household care market is projected to achieve further growth of 12% between 2012 and 2017, with household hard surface cleaning and care products (27%) and fabric care (22%) experiencing strongest growth.

Good news for staycations – but sun seeking Brits remain…

The domestic holiday segment has performed well since the crash, growing 19% in value between 2007 and 2012. Some 13% of consumers have taken more holidays in the UK and fewer overseas as a result of the recession. However, while the domestic segment has benefitted from consumer efforts to cut costs, the overseas segment has suffered. The value of the long-haul holiday market fell by 6% between 2007 and 2012, while the short-haul segment saw a 10% drop. Despite contraction in the segment, some 54% of adults agree that it is important to get a sunny break each year, half (51%) prefer overseas holidays to holidays in the UK and a quarter (26%) agree that holidays in the UK aren’t real holidays.

Market sweet for cider – but Champagne loses its sparkle…

The alcoholic drinks market has seen steady growth throughout the recession, driven by the off-trade, reaching a total of £39.5 billion in 2012 and estimated to grow to £45 billion by 2017. The recent value growth seen in the UK cider market of 46% between 2007 and 2012 to stand at £2.7 billion looks set to continue in 2013, benefiting from its accessible flavours and a growing presence of premium brands. Sparkling wine also looks set to continue overshadowing its more illustrious cousin (Champagne) as the reputation of drinks such as Prosecco continues to grow, with over a third (36%) of Champagne and sparkling wine drinkers claiming that there is ‘little difference’ between the two.

How to spend a lottery win…

Mintel’s British Lifestyles report asked consumers how they would spend a lottery win of £1000 and 2013 findings were compared with 2008 when the exact same question was posed to the nation. In 2013, the top five things Brits would use a lottery win for are: 1. Holiday (27%), 2. Put aside for a rainy day or an emergency (23%) 3. Give it to a family friend (12%), 4. Spend on home improvements (11%) and 5. Pay off outstanding bills (11%). Comparing our attitudes with those pre recession, five years on it seems that consumer attitudes of what to spend a lottery win on have remained much the same – with the exception of home improvements. While holidays remain the number one desire for would be lottery winners (27% in 2013 vs 30% in 2008), in contrast, home improvement has seen a vast decline – with those claiming they would spend their lottery windfall on this falling from 20% in 2008 to just 11% in 2013.

“As the economic climate is taking its toll, people are increasingly looking for ways to get away from the doom and gloom, which is a reflection of the popularity of holidays. The decline in likelihood of spending on home improvements reflects an extreme unwillingness to spend on homes. The fact that almost a quarter of Brits would put a lottery win aside for a rainy day, is perhaps the strongest testament to just how frugal today’s Britons have become, and how entrenched their desire for savings is in the current economic climate.” Ina continues.

Looking at the differences between the nation’s men and women, it is women who are more likely to prioritise spending winnings on a holiday (29% of women vs 25% of men), meanwhile, the nation’s men are more likely to put money aside for a rainy day (26% of men vs 21% of women). It is also Britain’s women who are the more generous consumers, indeed, some 15% of British women said they would give their winnings to a family or friend compared to just 11% of men.

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