It is widely accepted the weather has a significant effect on the US economy with weather variability accounting for as much as 3.4% of the GDP with a third of economic activity impacted in some way. To support this, The Weather Channel is analysing the effect the British weather has on UK businesses in a new report called ‘Weathernomics’.
Having investigated the impact of weather on the retail industry earlier this year, this new report is aimed at addressing the impact on the FMCG sector.
‘Weathernomics’ has identified a number of fundamental truths including:
6p in every £1 spent in the grocery sector is dependent on the weather
- During abnormal or extreme weather, it’s not that people stop buying food & drink, it’s just that the variation in purchase patterns can be extreme.
- UK food & drink sales fluctuate more than many other countries because of the unpredictable nature of our maritime weather conditions.
- Cold & wet weather can often lead to 20-25% fluctuations in demand for soup, ready meals and hot drinks
An Indian Summer is a more profitable opportunity for the FMCG market, than a cold wet autumn – bringing a £1.5 billion opportunity ‘Weathernomics’ goes deeper, for example:
- Once of the biggest challenges for both retailers and brand owners is anticipating demand for weather-impacted categories, particularly fresh products with short shelf lives.
- In the UK, almost 40% of barbecues are planned the day before or on the day itself and almost two-thirds of the food is bough the day before or on the day of the barbeque.
- Sales of still drinks increase more than carbonated drinks during periods of hot weather.
- The impact between product categories and within product categories can be huge: sparkling wine in hot weather, red wine in cold; Indian ready meals in cold weather, BBQ meats in hot.
- For marketers to manage demand for these fluctuations, very specific understanding of local temperatures and the ability to market at very local levels is crucial not just to sales but also to growing a brand.