Demand for ethical goods helps lift Co-op sales

THE Co-operative Group, the UK's fifth-biggest food retailer, reported a strong increase in underlying sales over Christmas helped by demand for ethical goods, but it joined rivals in warning of a tough 2010.

Britain's largest mutual retailer, which bought rival grocer Somerfield in 2008, said like-for-like sales rose five per cent in the three weeks to January 2.

Sales of higher animal welfare fresh and frozen turkeys rose 21 per cent, while sales of Fairtrade wines and confectionery jumped 36 per cent and 26 per cent respectively.

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The Co-op launched a number of price cuts to compete with supermarket rivals over Christmas.

The group, which now has 3,000 stores, unveiled a 200m package of cuts and promotions over the festive period, including its first triple dividend.

The Co-op added that the recent overhaul of its brand and a significant increase in seasonal advertising helped it to attract more customers to both convenience and larger store formats.

Like-for-like sales increased by 4.8 per cent in the 12 weeks to January 2, with growth rising to five per cent in the final three weeks. Total sales were up by 66 per cent due to the acquisition of Somerfield.

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Chief executive Peter Marks described trading conditions as competitive, but said the presence of Co-op stores within local communities gave the chain an edge at a time of rising fuel prices and extreme weather conditions.

Mr Marks said the chain expected the current economic pressures to continue until the end of 2010 or the first half of 2011.

Despite the recession, the Co-op said its customers were determined to make the most of Christmas. Sales of champagne rose by 83 per cent, with demand strongest for its Veuve Monnier Brut Champagne, priced at 12.

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