Mintel British Lifestyles report: UK consumer spending to fall by nearly £200 billion in 2020

Total UK consumer spending is expected to fall by a staggering £183.6 billion (14.9%)  this year due to the COVID-19-induced lockdowns, according to new research from Mintel’s flagship British Lifestyles report*. This equates to a drop in spending of around £6,600 per household – with the biggest decreases occurring in the transport, foodservice, and holiday industries. Consumer spending in these three categories will fall by an astonishing £140.1 billion in total, or just over £5,000 per household – representing around 77% of the overall decline in consumer spending this year. 

Top 3 categories where consumer spending is expected to fall in 2020

Source: Mintel Reports UK, British Lifestyles 2020

But it seems there is light at the end of the tunnel for these three categories as they are expected to bounce back the strongest in 2021: spending on transport will increase by £32.3 billion compared to 2020, foodservice will rise by £17.7 billion, and holidays by £19.2 billion. This represents an increase in spending of just under £2,500 per household; however, this will still only represent a return to pre-pandemic levels.  

2020’s top sectors for increased consumer spend: food and drink consumed at home clear winners

Meanwhile, the three sectors that will experience the biggest increase in consumer spending this year – totaling £11.2 billion, or just over £400 per household – are food, alcoholic, and non-alcoholic drinks purchased at ‘retail channels’ (eg supermarkets) and consumed at home. 

Top 3 categories where consumer spending is expected to increase in 2020

Source: Mintel Reports UK, British Lifestyles 2020

Jack Duckett, Mintel Associate Director of Consumer Lifestyles Research, said: 

“The COVID-19 lockdowns have had a profound impact on consumer spending, decimating the transport industry, and broader travel and leisure sectors. But some sectors have benefited from the lockdown, with retail sales of food and drink boosted as all eating and drinking occasions moved into the home. Although consumer spending will recover from this year’s astonishing £180 billion drop, it will undoubtedly be a long path to recovery: Mintel forecasts suggest that pre-COVID levels will not return until 2023 at the earliest.”    

Key market opportunities: alcohol consumed at home and tea makes a come-back

10-year record high in at-home alcohol sales growth expected this year

“We estimate that retail value sales of alcoholic drinks will grow 16% year-on-year – the fastest growth rate experienced for at least a decade – to reach £25.5 billion in 2020, as people trade nights out for evenings in. In particular, the current recession opens up opportunities for premium own-label drinks to grow in popularity. Learning from previous recessions, consumers know that one way of cutting back is to buy private label. In fact, 18% of premium alcoholic drink buyers would buy premium own-label drinks if their financial position worsened.

“The growth in the size of the older population over the next five years, and the fact that they are most likely to be insulated from the financial impact of the pandemic, makes targeting the ‘grey pound’ particularly timely for all brands including alcoholic drinks. A long heritage (40%), being aged for longer (40%), not being mass-produced (34%), and extra care in production (27%) are all factors that feed into over-55s’ perception of what makes an alcoholic drink premium.” 

Brits’ faith in tea is restored as 2020 sales increase just under 7%**

Jack Duckett, Mintel Associate Director of Consumer Lifestyles Research, said:

“Following five years of lacklustre sales, tea – famed for being the answer to the nation’s woes – will see sales increase by 7% in 2020**. The COVID-19 crisis has reversed the fortunes of the ailing tea and other hot drinks categories. Some of the long-term legacies of the pandemic will also support sales, such as greater remote working and an emphasis on physical and emotional wellbeing. The latter paves the way for more functional innovation, with claims linked to immune health offering particularly ripe opportunities. Meanwhile, the in-home coffee market is set to grow by 13% in value terms this year, as many consumers seek to elevate their coffee drinking experience from the comfort of their home.”

Another recession boost to private label food and drink

Jack Duckett, Mintel Associate Director of Consumer Lifestyles Research, said:

“The change in working patterns has also provided a boost to the in-home food sector, especially as over a third (34%) of adults say that they have done more cooking from scratch as a result of the outbreak as of May. The wider threat to consumers’ finances, however, means that grocery shoppers will once again be heavily focused on value. That said, there are opportunities to cater to a ‘trading up while trading down’ mentality as consumers continue to turn away from foodservice. 

“The last recession created a boom in the private label market, and supermarkets have improved their private-label offerings in the intervening years, with a significant expansion of ranges. In the mid-term, more cautious and value-seeking shoppers will further fuel the pre-existing shift in the food and drink market in favour of private label,” adds Jack Duckett. 

16-34-year-olds to lead the recovery in airline travel

Jack Duckett, Mintel Associate Director of Consumer Lifestyles Research, said:

“Although the number of flights isn’t expected to return to pre-COVID levels in the next five years, an increase in the average cost per trip should see airlines’ market value return to 2019 levels by 2025. It’s the younger generation who’ll lead the recovery of travel by plane as 16-34-year-olds have been the most confident in booking flights since COVID-19 hit: 25% of this age group would feel somewhat or extremely comfortable taking a flight,  compared to only 14% of over-55s.” 

“Airlines and public transport are among the sectors worst affected by COVID-19 and will be among the last to fully recover. Prior to the pandemic, commuting accounted for around a third (30%) of all public transport journeys, and while demand for public transport will return once people feel safe – there’s likely to be a permanent decline in commuting as flexible working becomes the norm.”

*Mintel’s 2020 British Lifestyles Report looks at the road to recovery following the COVID-19 pandemic, identifies key opportunities for growth, and tracks spending across major consumer markets to provide a snapshot of how today’s consumers live, shop, and relax. 

** This figure is sales of tea and other hot drinks – of which tea sales are by far the biggest component.