Report: Holiday food and drink sales to shine

Santa Monica, Calif. A research report released Thursday by IBISWorld has found that while analysts are anticipating a difficult holiday season, the forecast for sales of food and drink is looking merry.

The category is expected to see the most growth this year compared with other categories researched.

The report said that consumers aren’t expected to change their spending patterns drastically from last year. However, Christmas sales are estimated to grow 0.19% to $128.1 billion across four traditional categories: food and drink, gifts, decorations and other (flowers, postage, etc.).

IBISWorld predicts food and drink sales will increase 11.65% this year to $27.23 million, from $24.84 million last year. The gift channel isn’t facing as much cheer, with a continued decline of 2.61% finishing the season at $81.91 million, according to IBISWorld.

“The recession has caused people to go back to family values as opposed to simply buying presents,” explained Toon van Beeck, senior analyst with IBISWorld. “Consumers just don’t have the money to fork out on unnecessary gifts and luxuries such as traveling. Instead, they’ll cherish time spent with close family and friends.”

He continued: “Inventory is going to be one of the key factors for retailers. If retailers manage their inventory, they won’t need to discount like they did last year. Last year, consumers were focused on the problems facing them, and retailers [were] heavily discounting their products from clothes to food to kitchenware. But this year, consumers and retailers are more prepared and they know … there is a light at the end of the tunnel.”

Consumer focus on entertaining at home, home cooking and celebrating family values will be central to growth of food and beverage sales, IBISWorld’s research found.

While specialty stores will gain some traction this year, with consumers focused on shopping locally, van Beeck said large chains and discounters will also reap the benefit of food and beverage sales.

“Big supermarket chains and big-box retailers continue to increase their shelf space of luxury foods and goods, so a lot of consumers will be looking in those areas as well as in]specialty channels,” he explained. “There will be growth in both areas.”

This year’s Thanksgiving sales are expected to grow 3% from 2008, reaching $29.9 billion. Although this is positive for the retail industry, sales are still below the robust $30.69 billion logged in 2007.

Of total 2009 Thanksgiving sales, 92.5%, or $27.64 billion, will be spent on food and drink alone. Turkey is the single biggest purchase, with 47.1 million birds expected to be consumed this holiday -- up from last year’s level of 45.3 million birds.

Total retail sales during the traditional Black Friday weekend are expected to increase 2.8% from last year, totaling $42.9 billion.

IBISWorld estimates that overall, Christmas sales will rise 6.7% to $136.7 billion in 2010 as the U.S. economy slowly climbs out of a deep two-year recession, the worst in more than four decades. Gift sales are expected to increase a substantial 9.0%, but will still be $17 billion shy of 2007’s solid levels, while decorations will increase 14% as people make up for the lack of spending in the past couple of years.