Ocado delivers success as shoppers cook at home

The capital's biggest online supermarket has seen its sales soar despite the cash squeeze.

Ocado, which delivers some £170 million of groceries to London front doors each year, said sales were up about 20 per cent on last year "and accelerating".

The growth appears to scotch predictions that stretched customers would abandon the more expensive supermarkets to save money in the credit crunch.

Ocado delivers Waitrose food and drink and counts Madonna, Jonathan Ross and Downing Street among its customers. Last month Liberal Democrat leader Nick Clegg declared he had dropped it and gone over to Sainsbury's to cut food bills. But Ocado finance chief and co-founder Jason Gissing told the Evening Standard that Londoners were opting to fill their fridges and cupboards with food for "scratch cooking", rather than going out to restaurants.

He said: "People still want to eat well but they are cutting down on their discretionary spending. If I was running Pizza Express I would be more worried."

The only major category that has seen a big drop is bottled water, with sales down about 14 per cent on last year, Mr Gissing said. The fall follows the Standard's successful campaign calling for restaurants to offer tap water, which now appears to be changingattitudes at home as well. Wine sales are also slightly down, with consumers buying fewer bottles but trading up to better quality.

Overall, the average "shop" with Ocado has stayed solid at about £115, Mr Gissing said, but it has attracted many more customers. There was no sign of Londoners cutting back on organic and fair trade products.

The firm, founded by Mr Gissing and two fellow Goldman Sachs traders in 2002, also unveiled its latest financial accounts. They show sales grew 25 per cent to £288.1 million from 2006 to 2007, but the business still made a loss of £39.7 million. It is expected to break even at the operating level this year and make its first pre-tax profit next year.

Yesterday a CBI survey showed supermarkets have been the most successful retailers in the high-street downturn.