Over half of independent retailers state they have not heard of the upcoming HFSS legislation, according to the Lumina Intelligence UK wholesale market report 2021/22.
The report found that 44% of retailers and 54% of independent retailers have not heard of the legislation that is due to come into effect in October. Half of retailers said they expect updates on this legislation from their wholesaler.
47% of foodservice operators stated that they were also unaware of the legislation – 3ppts higher than the retailer figure. Despite HFSS having minimal impact on hospitality, 56% of operators are worried that a similar legislation will be introduced within hospitality.
Insight director at Lumina intelligence, Blonnie Whist, said: ““The lack of awareness around HFSS should be a red flag for wholesalers, who should take this opportunity to show support to its customers and generate loyalty by nurturing them through the process with advice. Whilst many won’t be affected, there is a duty of care on the industry to ensure everyone is aware of what is coming up.”
Wholesale growth slows
The report also found that growth in the wholesales sector slowed from 3.9% in 2019/20 to 3.7% in 2020/21, driven by foodservice wholesalers who experienced significant declines during the pandemic. Brakes saw a decline of -34.3% and BFS Group (Bidfood) -24.8%.
Traditional and hybrid wholesalers reported turnover growth of over +10% in 2020 due to increased demand for grocery services. Costco and Morrisons were the two fastest growing wholesalers, up +15.8% and +15.6% respectively.
In terms of market share, leading traditional wholesalers grew share of combined value by +6.4ppts to 84%. Foodservice wholesalers, Brakes and Bidfood, have seen their combined share of the top 9 leading wholesaler turnovers decline by -6.6ppts to just 7.9%.
When asked, retailers were least satisfied with guaranteed availability of products and category advice from wholesalers. 40% of retailers scored their wholesaler five out of 10 or less for guaranteed product availability and 27% scored five out of ten or less for category advice.
In contrast, accurate invoicing and billing, product quality, friendliness of drivers and ordering process are the areas where retailers were most satisfied with their wholesaler.
Similarly, foodservice operators are also most satisfied with accurate invoicing and billing, product quality, friendliness of drivers and ordering process. In general, they are lot more satisfied than retailers. However, loyalty schemes, category advice and guaranteed availability were the top causes of dissatisfaction.
Whist concluded: “The last 18-24 months have been incredibly turbulent for the wholesale industry. Despite high sales, traditional wholesalers were faced with significantly increased demand that cause huge pressure on the supply chain. In contrast, foodservice wholesalers saw demand fall off a cliff. It is no surprise that guaranteed product availability was one of the issues highlighted by operators and retailers, however there was arguably little more wholesalers could have done. With restrictions easing, we expect to see a further rebalancing between foodservice and retail, which will enable greater normality and more robust demand planning.”