Supermarket suppliers expect solid sales growth

Supermarket suppliers still expect solid sales growth in spite of generally gloomy business prospects after the Woolworths takeover.

The latest "Retail Barometer" survey, a study of 66 suppliers of fast-moving consumer goods by research company ACNielsen, found that more than half expected sales growth above 4 per cent this year in the $16 billion market.

One-quarter forecast the figure to be above 5 per cent.

However, the threat of private labels or supermarket house brands and concerns over changes in the retail scene had created general pessimism about business prospects.

More than half of the suppliers - 53 per cent - thought business conditions were worse than a year ago; one-third felt they remained the same.

The majority - 61 per cent - expected the Woolworths takeover of Progressive to hurt their businesses as competition from Australian brands intensified on local supermarket shelves.

The survey follows a Westpac McDermott Miller consumer sentiment survey this week that found the outlook for consumer spending was bleaker than at any time during the past 15 years.

And as the big grocery chains moved to expand their private-label products, most thought private-label share would reach up to 15 per cent from 11 per cent of all supermarket sales. Forty per cent of suppliers expected that growth to be higher.

"It's not business as usual and I think that's the key message," said ACNielsen New Zealand managing director Steve Mitchell.

Across the Tasman, the story was brighter, fewer than half of the FMCG suppliers in the A$60 billion ($70 billion) grocery industry expressing pessimism over business prospects.