COVID-19 Weekly Insight Update

W/E 10th July 2020

#AlwaysOpenForYou

Key Take Outs1) Large spending announced by the Chancellor to bolster the economy, with aim to keep millions of people

from losing jobs.

2) UK GDP forecasted to be ~5% below its pre-Covid-19 level at the end of the year and the deficit ~16%

of pre-Covid-19 GDP. More expansionary policies are expected in the autumn fiscal statement.

3) Following the reopening of pubs, bars and restaurants on 4th July, the government announced that lleisure

facilities (pools and gyms) and beauty services such as nail bars and tattooists in England will be

allowed to reopen. Team sports are also allowed to resume as the data continues to move in the right

direction.

4) With consumers working from home more and concerned about public spaces, footfall remains

significantly down hitting Food to Go hard.

5) Online grocery remains the fastest growing channel, with double-digit growth of +68% in the latest 12

weeks. The growth continues to be driven by increased penetration across all consumer life stage groups.

6) As Foodservice continues to reopen and adapt to the post Covid-19 reality, some chains like Pret-a-

Manger and Burger King have announced or are contemplating the closure of ~10% of their estate whilst

others (JD Wetherspoons, Samuel Smiths and Mitchells & Butlers) are introducing price increases to cover

the costs of the new safety measures.

UK Government Unveils Coronavirus Recovery Plan

289,603 lab confirmed

cases

650 lab confirmed

cases per day

44,819 deaths*

Source: Gov.uk 12/6/2020; Worldometer 13/7/2020; BBC News 13/7/2020* Covid-19 associated deaths, not just in hospitals

The infection in the UK

Worldwide >13M confirmed cases>571,500 deaths

Sources: The Economist,11/7/2020; House of Commons Library 3/7/2020

Government £30bn plan to save jobs

Announced support and incentives to help the recovery phase:

• £2bn KickStart Scheme provides 6 months placements for 16-24s

• New Job Retention Bonus will pay any firm £1,000 for each furloughed employee who returns to work and is continuously employed until Jan 2021

• VAT on leisure & hospitality to be cut from 20% to 5% until Jan

• ‘Eat out to help out’ scheme will give a 50% discount up to £10 a head on restaurant spending between Mondays and Wednesdays during Aug

A flash estimate on 3/7

shows the GfK

consumer confidence

index at -27, up by

three points from two

weeks before..

Face covering in shops

and supermarkets in

England to become

mandatory from 24/7.

Failure to comply risks a

fine of up to £100.

Masks on public

transport in England

were introduced on 15/6. GDP forecasted to be ~5% below pre-Covid-19 level by end of year

More expansionary policies expected in the autumn fiscal statement.

The deficit could hit £350bn, ~16% of pre-Covid-19 GDP this year.

• More than 230,000 cases were recorded on Sunday according to WHO

• Most new cases in the Americas, followed by South East Asia• Mexico now has the fourth highest virus deaths, surpassing

Italy

OOH Sectors Starting to Re-open

Source: BBC News 9/7/2020

• Outdoor pools and outdoor theatres able to reopen from 11/7• Grassroots sport from this past weekend, beginning with

cricket• Beauticians, tattooists, spas, tanning salons and other close-

contact services can reopen subject to some restrictions on high-risk services from 13/7

• Indoor gyms, swimming pools and sports facilities from 25/7• Singing and the playing of brass and wind instruments will be

allowed in professional environments • Small pilots of indoor performances, with socially distanced

audiences, will also take place to help work out the best way for them to restart

Not all forms of beauty treatment will be able to go ahead. Those deemed too high-risk include face waxing, sugaring or threading services, facial treatments, make-up application and eyebrow treatments.

Leisure facilities & beauty services in England

to reopen.

Measures are conditional and reversible. The government

will impose local lockdowns if cases start to spike.

• Pubs & bars reached only 27% of their share of footfall over re-opening weekend vs their footfall before lockdown.

• Footfall was driven by younger consumers.

• With many pubs waiting and probably better weather (a big factor in driving footfall), the expectation is for higher levels of footfall over the next few weeks.

Pubs, bars & restaurant footfall during reopening

weekend

Source: Kantar Worldpanel Plus data to 6/7/2020

Food to Go likely to suffer in the short term, but delivery likely to

continue growth driven by the extra in-home occasions

Footfall significantly down Rise of the lunchbox Increased digital & delivery solutions as

consumers dine in-home

Delivery providers expanded to include

Just Eat and Uber Eats, as well as

Deliveroo. Pret sales across digital

channels grew 480% YOY, now

accounting for over 8% of total UK sales.

Click & Collect and delivery available

Focus on takeaway, delivery and

ordering through their mobile app

Recent change in Food To Go average spend

Pret is reliant on sales from commuters

and lunchtime office workers, sources of

volume acutely affected by Covid-19.

They announced the closure of 30 stores

and 1,000 job losses due to sales

expected to reach lower levels than

pre-lockdown.

Upper Crust owner SSP Group said that

up to 5,000 jobs could be cut across its

UK outlets and head office as it

struggles with the reduction in

passenger travel.

Use of delivery increased since lockdown, with average frequency in 12 weeks up to 6 Trips

(12 w/e 14/6)

Source: IDG, July 2020

Source: Kantar consumption trends usage June 2020 Source: Marketing Week, MCA Sources: IGD, Food to Go report 2020; Kantar OOH Channel

Updates P6 2020

A New Office Working EnvironmentStrong decrease of work social

occasionsBritons told to work from home

whenever possible

Deliveroo for Business has reported a

2,500% uptick in new business, as

employers turn to food delivery to boost

staff morale while working from home

6% of pub on-trade drinking

occasions were with work colleagues

Increased in-home lunches & snacking

32.6million working population in the

UK. Nearly 55% of these worked at home at least once during 2019.

If 70% of the working population work from home 1 day a week, 20% of their out of home

or carried out breakfasts, lunches and day snacking occasions move to in home.

This equates to +34m in-home occasions per week and £45m spend. If WFH 2 days a week, this doubles.

60% of businesses' think that in a year’s time more employees will work from home (75% for large business)

As employees are having to social distance while working the proportion of solo food and drink occasions has increased this year compared to last year (vs 68% YA).

➢ Lunches will return to healthier, more convenient meals than we’ve seen in Lockdown.

➢ Practical meals that are simple to prepare such as sandwiches, toast meals and soups should see an uplift. The increased consumption of hot food during lockdown is likely to continue.

➢ Snacking is more likely to be driven by hot drinks. Source: Kantar COVID-19 webinar 3.7.2020

Foodservice reopening; Kantar OOH Channel Updates P6 2020Sources: Kantar, What could the impact be of working from home more frequently? June 2020; MCA news

Online Remains the Fastest Growing Grocery Channel

1 2 3 4 5 6 7Pre-school Junior High School

Families (School Age Children)

Pre-Family RetiredAt Home Left Home

Older Dependents

Penetration (%)

Under 30 Over 60

12 weeks March to May2020

12 weeks March to May2019

UK eCommerce

Penetration by

Lifestage

Source: Kantar, 12 weeks March to May 2020 vs YA

+68.0%

Growth-3.6%

Frequency

+22.2%

Trip Size

+39.2%

Penetration+19.6%

Spend per Buyer

+40.5%

Number of Shoppers

Source: Kantar 12 w/e 14th June 2020 vs YA

Growth in penetration across all life-stages but the most vulnerable have doubled usage since lockdown.

Penetration continues to be the key driver of short-term online grocery channel growth.

Retailer News w/e 10th July

Supermarkets & Discounters: Online:

Sources: The Grocer; Kantar Retail IQ; HIM/MCA Trade Response; M&S

Aldi is planning to trial upgrades to its traffic light system at store entrances with audio and visual prompts aimed at helping shoppers with hearing or sight impairments.

Ocado is relaunching its shopping app after pulling it offline in March due to high

demand. The app is initially being made available to a small cohort of customers,

ahead of a wider rollout.

Asda is partnering with Uber Eats to offer a rapid service delivering groceries in as little as 30 minutes. It is currently a trial from stores in Leeds and Birmingham, and could be extended to more stores later this year if successful.

M&S is relaunching Sparks as a digital-first loyalty scheme, offering a more personalized experience with instant rewards, a wider selection of charities to support, and more tailored personal offers. According to M&S over 365,000 existing customers shopped M&S.com for the first time during lockdown, and there were over 700k new downloads of its app since March.

ConvenienceNisa retailers have donated almost £80,000 to good causes since the start of the COVID-19 pandemic in the UK. A majority of the money has gone to food and health charities in response to current needs of local communities.

Tesco is removing one-way systems across its store estate, in response to customer feedback and an appraisal of the measure’s effectiveness. The supermarket is also increasing the number of customers allowed into a store while ensuring 2 metre distancing can be maintained.

Supermarket price inflation fell back in June with the return of promotions and a price war looming, according to the

Grocer Price Index, which contracted to 0.9% YoY price inflation in June compared with 1.6% in May.

Foodservice Update

Source: Trade response coronavirus, MCA HIM w/e 10/7/2020

• Could close up to one in ten of

its ~ 400 UK estate as it deals

with the dramatic drop-off in

city centre footfall caused by

office workers continuing to

work from home

• Sales are expected to creep

up in the coming months but

to no more than 60% of

normal levels

• Unveiled a new digital app to

order and pay for food

completely contactless.

• Food will then be freshly

prepared and delivered directly

to consumer tables.

• After announcing an increase in

drinks prices by around 10p and in

some food items of 20p, in the

wake of the VAT reduction it said

that of 20/7 a number of products

including real ale, breakfasts,

burgers, coffee and soft drinks will

have their prices reduced.

• Samuel Smiths, which operates

around 200 pubs, mostly in the North

of England, will increase the cost of a

pint of lager and bitter by as much as

a £1.

• Owner of O'Neill’s and All Bar

One is making small price

increases on limited items to

cover the costs of the new

safety measures.

• Veeno wine bars has unveiled

a new digital app to order and

pay.

• Rolled out breakfast to a further

1,250 restaurants.

• Following its trial breakfast relaunch

last month, McDonalds will now offer

the morning menu in 1,301 locations

across the UK&I (only 28 reopened

restaurants will not offer breakfast).

• UK CEO said the chain could shut

10% of its restaurants with the loss of

up to 1,600 jobs as a result of the

coronavirus.

• So far it has reopened 370 of its 530

estate.

Our food, beverage and nutrition experts and the entire Nestlé Professional team are available to

help and support you during this extraordinarily difficult time.

Please get in touch by phone: UK: 0800 745 845, ROI: 00800 6378 5385

(9am - 5pm Mon-Fri) or email us at: learn.more@uk.nestle.com