Global grocery markets forecast to create $1.9 trillion opportunity by 2023

Date : 14 December 2018

The leading 20 global grocery markets are set to generate an additional US$1.9tr in sales, growing by 28% between 2018 and 2023, new forecasts from global research organisation IGD predict.

IGD’s forecast anticipates:

  • Nearly half (44%) of the extra sales will be created in Asia, which will add more than Africa, Europe and Latin America combined
  • Asia as a region will contain seven of the world’s largest grocery markets by 2023. These will have a combined market size of US$3.8tr
  • Europe will be the second most important region in terms of additional sales between 2018 and 2023. It is forecast to generate US$322.0bn in new sales in the timeframe

Global market growth 2018 - 2023

Rank Country 2018
Total change
1 China 1,395.7 1,822.9 30.6% 5.5%
2 USA 1,494.4 1,726.4 15.5% 2.9%
3 India 510.5 869.5 70.3% 11.2%
4 Japan 459.0 479.7 4.5% 0.9%
5 Brazil 328.4 469.7 43.0% 7.4%
6 Russia 297.7 362.7 21.8% 4.0%
7 Germany 296.0 341.1 15.2% 2.9%
8 France 275.6 307.6 11.6% 2.2%
9 United Kingdom 264.1 303.3 14.8% 2.8%
10 Mexico 203.1 268.7 32.3% 5.8%
11 Italy 212.6 231.6 9.0% 1.7%
12 Turkey 118.4 223.4 88.7% 13.5%
13 Indonesia 133.3 191.7 43.8% 7.5%
14 Nigeria 104.9 172.2 64.2% 10.4%
15 South Korea 124.3 155.7 25.3% 4.6%
16 Spain 133.2 149.9 12.5% 2.4%
17 Pakistan 91.2 140.3 53.9% 9.0%
18 Canada 102.7 120.2 17.0% 3.2%
19 Australia 96.8 111.8 15.5% 2.9%
20 Bangladesh 63.9 109.3 71.0% 11.3%
  TOTAL  6,705.6 8,557.8 27.6%  

Source: IGD research

IGD predicts Asia will see the strongest real growth – from population growth or consumers spending more on grocery – and is set to account for 47% of the additional spend between 2018 and 2023. After Asia, the growth opportunities provided by Latin America, with the exception of Argentina and Venezuela, and North America are likely to provide a number of opportunities for retailers and manufacturers between now and 2023. Looking at the underlying drivers of growth in each region IGD expects inflation to be the most significant factor driving growth over the next five years.

On growth in Asia, Nick Miles, Head of Asia Pacific at IGD said: “China’s grocery market is expected to continue growing over the next five years, establishing itself as the largest grocery market globally. While growth varies between markets across Asia, countries such as India, Indonesia, Pakistan and Vietnam will continue to grow in importance for retailers and suppliers given the large populations, improving levels of GDP per capita and the development of modern trade. Retail partnerships have also in some cases helped retailers accelerate growth ahead of the market, and we expect more of these relationships to emerge and develop over the next 12 months.

“Grocery growth in Asia continues to benefit from a rapidly growing middle class, the rapid development and adoption of new technology, improved infrastructure and logistics networks, plus improvements to retail standards. Modern trade retailers continue to expand their store networks and improve existing operations. Meanwhile, traditional trade still plays a role, with mom and pop stores modernising their offerings and tailoring services to local communities. In countries like China and India this is being aided by online retailers such as Alibaba and Amazon.

“Across Asia the pace of development and focus of retailing varies by market. However, online is expected to be the fastest growing channel regionally over the next five years. Online grocery retailing is already well established in countries like South Korea, Japan and China and we expect the share of sales accounted for by channel in these markets to increase to over 10% by 2023. While online grocery retailing is growing rapidly across Southeast Asia we expect it to still account for less than 2% of sales in most markets in five years’ time.”

Commenting on growth in Europe, Head of Retail Insight EMEA Jon Wright said: “Five key countries will stand out in the next five years – France, Germany, Russia, Turkey and the UK – and these are set to account for nearly two-thirds of all additional sales generated between 2018 and 2023. The continued strength of these markets will, therefore, dictate the growth outlook for Europe as a whole.

“Online and discount are set to gain the most share to 2023, with discount set to be the strongest gainer between them both. Several factors are set to help maintain the channel’s growth, including expansion from regional leaders such as Aldi and local operators like Biedronka, and improvements in retailer offers as we’ve seen with Salling Group-owned Netto. We’re also seeing growth through more targeting of missions, as with Dia’s to Go format, and an expansion of ranges to include more organic and niche products.

“Despite growing slower than the market, the expansion and embedding of omnichannel strategies from hypermarket and supermarket operators is set to help them compete against discounters and pure play ecommerce retailers. These initiatives are set to be enabled by alliances at a regional level, as between Carrefour and Tesco, and globally, as with US-based Target and Germany-based Metro collaborating.”

On North America, IGD Canada Programme Director Stewart Samuel said: “The US market heavily influences the region’s performance given its size. The outlook is for a fairly low growth scenario, meaning that retailers and manufacturers need to focus on the growth opportunities provided by the online channel and discount retail, as these will be the fastest growing channels over the period.

“The North American market is seeing significant investment in online grocery retail, particularly in terms of supply chain and fulfilment. There is a big focus on making the channel more efficient which involves lots of testing of different solutions. Albertsons and Ahold Delhaize have partnered with Takeoff Technologies for hyperlocal fulfilment, Kroger partnered with Ocado. These investments suggest that retailers view the channel as being materially more important in the future.”

Looking at Latin America, IGD’s Head of Latin America Gavin Rothwell said: “The size and strength of the economies in Brazil and Mexico mean that their outlook dominates the future performance of Latin America to 2023. Together these two countries will account for over 68% of all additional sales generated in the region. We see these two markets, alongside Colombia and Chile, as leading the grocery market agenda across the region. Yet while much of the growth in Latin America looks set to be driven by inflation, we continue to see great potential in markets such as Peru.

“Businesses with strong atacarejo* formats will remain well placed. Both Casino-owned GPA and Carrefour Brasil are targeting financial services, linked to their Assai and atacarejo formats respectively, to deepen the engagement with their existing customers, while continuing to open new stores. Meanwhile, online is an area of growing focus, through a variety of models, but typically remains peripheral.”

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Notes to editors:

Source: IGD research, using IMF, World Bank, UN and OANDA base data

IGD defines a grocery retail market as all food, drink and non-food grocery products (e.g. health & beauty, pet care, clothing, DIY), sold through predominantly food-led retail outlets, in a given country. This definition includes modern retail formats, such as supermarkets and hypermarkets, and traditional retail formats, such as open-air markets and small specialists. The grocery retail market excludes wholesale, foodservice and drugstores/pharmacies. IGD market sizes are 'top down', calculated using data from statistical bodies wherever possible. In all other cases, our market sizes represent IGD estimates and are based on a consistent methodology and knowledge of local markets.

CAGR is calculated using nominal values in US $ at 2018 exchange rates. Data excludes Greenland, Cuba, Liechtenstein, Somalia, South Sudan, Syria, Venezuela and Yemen.

IGD is a not for profit research and training organisation. It has a trading subsidiary that provides commercial insight services for the consumer goods industry. The profits from these commercial services fund our not for profit activities.

*An atacarejo is a type of store found almost exclusively in Latin America that mixes elements of a hypermarket and a cash and carry

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For more information contact:
Alexandra Crisp on [email protected] or +44 7590 183295