UK shoppers cut Christmas costs by buying early and dining in, says Aldi

By James Davey

LONDON, Dec 8 (Reuters) - Britons feeling the pinch are spreading the cost of Christmas by shopping earlier and swapping festive meals out for dining in, the boss of the UK arm of German discounter Aldi said on Monday.

UK consumer confidence remains fragile following the government's tax-raising budget last month, and with household bills continuing to rise their spending has been waning.

"In terms of what we're seeing in customer trends particularly in the festive season, there's no doubt customers are spreading their spend," Aldi UK CEO Giles Hurley told Reuters in an interview.

He said the grocer, Britain's fourth largest after Tesco, Sainsbury's and Asda, has sold more seasonal products at this point in the year than it had last year.

"Discretionary spending is being affected in terms of non-food and I think the hospitality sector is having a challenging time as well as customers are looking to celebrate at home," he said.

Aldi UK, owned by Germany's Aldi Sud, and rival discounter Lidl GB have expanded rapidly over the past two decades, transforming Britain's supermarket scene and forcing the traditional grocers to compete more aggressively on price and up their game.

Despite the tough macro backdrop, Hurley said Aldi was anticipating its "biggest ever Christmas", which partly reflects new store openings and inflation. It expected to sell about 49 million mince pies, 46 million 'pigs in blankets' and enough prosecco to fill 17 million glasses.

Echoing recent comments from Tesco and Sainsbury's he said the competitive environment was intense.

"The fact that we're selling fruit and vegetables at 8 pence during Christmas week, and the fact you can buy our Nicolas de Montbart champagne for 9.99 pounds tells you that it's competitive," he said, also highlighting that Aldi was selling a turkey dinner with all the trimmings for eight people for 12 pounds ($15.98).

With a current UK grocery market share of 10.6%, Aldi has Asda's number three ranking in its sights. Asda, which has been struggling, has an 11.6% share.

Aldi will end the year with 1,081 stores. It plans to open 80 over the following two years and has a long-term target of 1,500.

($1 = 0.7511 pounds)

(Reporting by James Davey; Editing by Susan Fenton)