toasting with ciderThe cost of austerity Britain has been laid bare. More than half (56%) of us now only buy items when absolutely needed. Almost four in ten (37%) are buying fewer treats.

That's the stark evidence presented by Mintel's annual British Lifestyles report that asked how people's spending habits have changed over the past five years.

In 2008 six in ten Brits (60%) were happy with their standard of living, but this fell to 50% in 2012. Today, the top three financial priorities for British consumers are:
  • Keeping up with bills (82%)
  • Adding to rainy day savings (67%)
  • Saving for big-ticket purchases (58%)

Only just over a fifth (22%) of consumers agree they have been better off over the past year. Just 6% of adults say they haven't changed their spending habits in response to the economic downturn.

More than a third (36%) say things have become more difficult. A further third (36%) claim to go on fewer holidays and almost a fifth (17%) are working longer hours as a consequence of the downturn.

Markets by segment

Mintel's research also examines the value of every consumer market covered by their research and the impact of consumer spend on sectors to 2017. Valued at £999bn in 2012, overall, consumer spend is set to grow a further 17% between 2012 and 2017 to reach £1.17 trillion. Mintel has predicted which sectors will do better than others.

On the up are:
  • Non-alcoholic drinks - set to increase 25%
  • In-home food +20%
  • Beauty and personal care +18%.
Not doing so well:
  • Technology and communications +5%
  • Home and garden +7%
  • Foodservice +7%
  • Holidays +9%
  • Leisure and entertainment +11%.

Drink to that

The energy drinks market grew 78% over the past five years (2007/2012) to reach £1bn in 2012 and the coffee market growing 34% over the same period to reach £1bn in 2012. More than six in ten (62%) consumers claim that their purchasing habits of non-alcoholic drinks did not change in 2013 in comparison to 2012.

Home baking rising

A majority (52%) of consumers are spending "about the same" on in-home food – a total of £76bn – in the beginning of 2013 as they were in the beginning of 2012. But the economic downturn kick-started a renaissance in the home-baking market with some 34% of Brits cooking or baking more from scratch and value sales rocketing by 84% over the past five years to reach £410m in 2012.

Spending on crisps, nuts and snacks increased by 29% to £3.3bn from 2007-12 - but outlay on bread and baked goods grew just 1.5% to £3.6bn over 2011-12.

Hair today, conditioner tomorrow

Beauty remains buoyant despite the recession. MIntel claims: "When times are tough, women often use beauty products as an affordable way of lifting their mood." It describes this spending as the "lipstick effect". UK beauty and personal care industry spending was estimated at £10.6bn and showing total growth of around 16% between 2007 and 2012 – the equivalent of an additional £1.3bn.

Taking out the fact that the UK population grew by 5.3 million between 2007 and 2012, this still equates to an 11% rise in per capita spend. And the beauty and personal care market is expected to grow by 18% between 2012 and 2017, with the highest growth projected for shampoos (25%) and conditioners (26%).

Washing its face

Sales of dishwashing products have outperformed the overall household care market between 2007 and 2012, growing by 16% compared to a 10% growth for the sector overall. That's not dishwashing machine but handwashing products. Sales of washing up liquid increasing 5% alone between 2011 and 2012. Washing up liquid has benefited from a boost in new product development with new fragrances and packaging.

Valued at £5.3bn, Mintel says the household care market will grow 12% between 2012 and 2017, with household hard surface cleaning and care products (27%) and fabric care (22%) experiencing strongest growth.

We're all going on a summer holiday

Staying in the UK for your holiday grew 19% in value between 2007 and 2012, with 13% of consumers taking more holidays in the UK and fewer overseas as a result of the recession. However, while the domestic segment has benefited from consumer efforts to cut costs, the overseas segment has suffered.

The value of the long-haul holiday market fell by 6% between 2007 and 2012, while the short-haul segment saw a 10% drop. We cannot afford to do what we want to do because 54% of adults agree that it is important to get a sunny break each year, half (51%) prefer overseas holidays to holidays in the UK and a quarter (26%) agree that holidays in the UK aren't real holidays.

Cider proves the poor man's Champagne

The alcoholic drinks market grew throughout the recession, but driven by the off-trade (take home), reaching a total of £39.5bn in 2012 and estimated to grow to £45bn by 2017.
The recent value growth seen in the UK cider market of 46% between 2007 and 2012 to stand at £2.7bn looks set to continue in 2013, benefiting from its accessible flavours and a growing presence of premium brands.

Sparkling wine also looks set to continue overshadowing its more illustrious cousin (Champagne) as the reputation of drinks such as Prosecco continues to grow, with over a third (36%) of Champagne and sparkling wine drinkers claiming that there is "little difference" between the two.

How to spend a lottery win

Mintel's British Lifestyles report asked consumers how they would spend a lottery win of £1,000. In 2013, the top five things Brits would use a lottery win for are:
  • Holiday (27%)
  • Put aside for a rainy day or an emergency (23%)
  • Give it to a family friend (12%)
  • Spend on home improvements (11%)
  • Pay off outstanding bills (11%).

While holidays remain the number one desire for would-be lottery winners (27% in 2013 vs 30% in 2008), home improvement has seen a vast decline - with those claiming they would spend their lottery windfall on this falling from 20% in 2008 to just 11% in 2013.??

Women are more likely to prioritise spending winnings on a holiday (29% of women vs 25% of men. Meanwhile, the nation's men are more likely to put money aside for a rainy day (26% of men vs 21% of women). It is also Britain's women who are the more generous consumers. Indeed, some 15% of British women said they would give their winnings to a family or friend compared to just 11% of men.

No desire to fritter away cash

Ina Mitskavets, senior consumer and lifestyles analyst at Mintel, says: "Britons are working harder and saving more money for the future, as a direct consequence of the recession. The reduced desire to fritter away hard-earned income on 'nice-to-haves' will shape retail offerings and will have far-reaching implications for consumer expectations about quality, price, product variety and customer service.

"As the economic climate is taking its toll, people are increasingly looking for ways to get away from the doom and gloom, which is a reflection of the popularity of holidays. The decline in likelihood of spending on home improvements reflects an extreme unwillingness to spend on homes.

"The fact that almost a quarter of Brits would put a lottery win aside for a rainy day is perhaps the strongest testament to just how frugal today's Britons have become, and how entrenched their desire for savings is in the current economic climate."