Hot summer boosts UK grocery sales as sector awaits new Tesco format

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LONDON (Reuters) - Grocery sales grew 3.8 percent in the latest 12-week period, boosted by demand for alcohol, soft drinks and ice cream in a record-breaking hot summer, as supermarkets brace for a push into the discount sector by market leader Tesco.

While the country’s four biggest supermarkets benefited from the warm weather spending spree, they all lost market share to discounters Aldi and Lidl, whose sales growth was 13.9 percent and 8.3 percent respectively, industry data showed.

After a decade of losing market share to the fast-growing discounters, Britain’s no.1 supermarket Tesco will on Wednesday take the fight directly to them with the opening of its own discount format, reported to be called “Jack’s”.

“As speculation mounts over the launch of Tesco’s discount retailer Jack’s, it’s worth remembering how quickly rivals Aldi and Lidl have grown their market share,” Kantar Worldpanel head of retail and consumer insight Fraser McKevitt said.

Aldi and Lidl have a combined 13.1 percent market share, after doubling it over the period 2013-2018.

Tesco posted sales growth of 1.9 percent in the 12 weeks ended Sept. 9, Kantar said, noting that Tesco’s cheaper own-label product lines Eastman’s and Creamfields launched earlier this year, were proving popular.

Asda was the best performer of Britain’s big four supermarkets, with sales up 3.1 percent, ahead of Morrisons, up 3.0 percent.

Sainsbury’s, which has agreed to take over Asda to become the no.1 player, potentially putting pressure on Tesco, was the laggard again, with sales up 1.6 percent over the 12-week period.

Market researcher Kantar Worldpanel said sales growth was ahead of grocery inflation of 2 percent. It said prices were rising fastest in markets such as butter, cola and canned fish.

Reporting by Sarah Young and James Davey, Editing by Paul Sandle and David Evans