Sainsbury’s ‘struggling with demand’ as beer sales soar during Euro 2020

Sainsbury’s ‘struggling with demand’ as beer sales soar during Euro 2020

Sainsbury’s has enjoyed a boost in sales of beer and other home socialising staples during the Euro 2020 football tournament, but said it was struggling to keep up with the extra demand.

The supermarket chain was selling 17 packs of beer a second on Saturday as England fans stocked up for the quarter-final match against Ukraine.

Beer sales have surged 60% above normal levels during the tournament as a whole, the company said, and families have continued to eat more at home over the past few months, despite Covid-19 lockdown easing.

As a result, Sainsbury’s said there had been gaps on shelves and it was finding it challenging to keep up with higher than expected demand, amid a shortage of HGV drivers and a rise in staff absences as workers were forced to self-isolate.

The company added that supplies of some items had also been hit by global supply chain challenges caused by shortages of shipping containers, interruptions at factories and shortages of items such as computer chips caused by surging demand for electronic equipment.

Simon Roberts, the Sainsbury’s chief executive, said demand for soft drinks, beer and barbecue foods had been stronger than expected.

“As customers are spending more time together for the big events we have seen demand respond as a result,” he said.

Roberts said there had been problems with shortages of items such as salad packs and the company was “not getting every product through” because of driver shortages. But he said Sainsbury’s was managing to bring in a range of different items so that “in areas that customers want to buy we have got availability”.

The UK’s second biggest supermarket said it expected to make annual profits of £660m, £40m more than previously forecast, as sales at established stores rose 1.6% year on year, excluding fuel, in the four months to 26 June.

That growth was underpinned by a 0.8% year-on-year rise in grocery sales, despite trading against a very strong period a year before when the nation was stockpiling food in the early days of the pandemic. Sales were 11.3% more than two years ago.

Online grocery sales rose 29% as many families who switched to ordering from home during the pandemic continued to do so. Sainsbury’s said it had gained market share from its big rivals as it cut prices on key items and promised to match the prices of discounter Aldi on certain lines.

Clothing sales soared almost 58% as a return to socialising and work as well as warm weather led demand for new outfits.

“Sainsbury’s faced an extremely hard act to follow in the past three months compared with a year ago when many people were panic buying in the early stages of the pandemic,” said Russ Mould, the investment director at AJ Bell.

“This makes it all the more impressive that the company has managed to chalk up growth for the period and confirms the attractions of a UK groceries space which was recently reflected in the multibillion-pound bid for Morrisons.”

Sales at the group’s Argos chain were down 3.7% as demand for consumer electronics and gym equipment fell compared with a year ago when households were adjusting to lockdown living.

Sainsbury’s share price rose less than 1% despite the profits upgrade after a strong run in recent days prompted by hopes that the supermarket could be next in line for a private equity-led takeover bid after the £6.8bn buyout of Asda and a £6.3bn agreed offer for Morrisons at the weekend.

Roberts said the Sainsbury’s management team was “absolutely committed to driving through the value we see in the business” and indicated there were no firm offers on the table for the group.

“If we had anything to update on we would be updating on it,” he said when asked if Sainsbury’s was in talks with potential suitors.