In the face of ongoing cost of living challenges, UK shoppers are increasingly altering their grocery shopping behaviours, according to new data from Circana’s State of the Nation 2025 report.
The report reveals that 36% of shoppers continue to cut back on grocery spending, while 48% are exploring different store options to save money. This suggests a persistent financial strain influencing consumer habits despite a forecasted 1% growth in the food and drink market for 2024.
Health-conscious products, however, are thriving amidst these cutbacks. The gut health product sector, valued at £367 million, has shown a remarkable annual growth rate of 12%. Alongside this, alcohol-free beverages have seen a 25% increase in popularity, and the use of nicotine pouches has surged by 92%.
The grocery sector faces additional pressures from new regulations. The £3 billion extended producer responsibility scheme and adjustments to workforce practices are imposing further cost burdens on businesses. Additionally, there are restrictions on products high in fat, salt, and sugar (HFSS), and potential government actions could further impact developers and retailers if trends in dietary intakes don’t change.
To capitalise on market opportunities, Circana suggests that manufacturers and retailers should focus on optimising distribution channels, implementing strategic shelf displays, using price elasticity effectively, and favouring round-pound promotions. The exploration of health trends and functional health products is advised for accelerating growth.
Alex Lawrence, a senior strategic insight director at Circana, notes the challenges the FMCG sector will face in 2025. However, he highlights that with efficient investment and adaptation to rising health trends, significant growth remains within reach. He stresses the importance of smarter promotions and improved use of retail channels as key strategies for navigating these challenges.
The UK’s grocery market is at a crossroads, navigating between constraints of the cost of living and emerging health trends. While financial pressures continue to impact consumer behaviour, the growth in health-focused products offers a silver lining, presenting new avenues for manufacturers and retailers willing to adapt.
