Aldi overtakes Co-op to be UK's fifth biggest supermarket - Kantar Worldpanel

LONDON (Reuters) - German-owned Aldi has overtaken the Co-operative to become Britain's fifth biggest supermarket group, industry data showed on Tuesday, highlighting the rapid growth of the discount chain.

Aldi's sales rose 12.4 percent year-on-year in the 12 weeks to Jan. 29, taking its market share to 6.2 percent, ahead of the Co-op's 6.0 percent, market researcher Kantar Worldpanel said.

Aldi and German budget rival Lidl have in recent years won share from Britain's traditional "big four" grocers, putting increased pressure on them to lower prices and raise their game.

"Underpinned by an extensive programme of store openings, the past quarter has seen Aldi attract 826,000 more shoppers than during the same period last year," said Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel.

Sales at Lidl rose 9.4 percent, taking its market share to 4.5 percent.

A decade ago Aldi was only Britain's 10th largest food retailer, accounting for less than 2 percent of the grocery market.

Tesco remains the clear leader with more than 28 percent of the market. Its sales rose 0.3 percent over the 12 week period that included the busy Christmas season.

Morrisons, the smallest of the "big four" increased sales by 1.9 percent, gaining market share for the first time since June 2015.

Sales were flat at second-ranked Sainsbury's but fell 1.9 percent at Asda, the British arm of Wal-Mart.

Overall supermarket sales were up 1.7 percent year on year, Kantar Worldpanel said.

The market researcher noted that well-publicised supply issues due to poor weather in southern Europe affected sales in fresh produce, with sales of courgettes down 31 percent in January compared with last year and spinach down 12 percent.

Kantar Worldpanel said rising prices continued into the new year, with like-for-like inflation on a basket of everyday groceries climbing to 0.7 percent.

"If prices continue to rise at the same rate for the rest of 2017, shoppers will find themselves around 27 pounds ($33.39)worse off," McKevitt said.

(Reporting by James Davey, Editing by Paul Sandle/Keith Weir)