Convenience has always been one of the major drivers of the frozen foods market. Consumer demand for products which can be cooked or heated up with the minimum of preparation is likely to stay high for the foreseeable future, especially since many appear less inclined to spend long amounts of time in the kitchen.
By Jonathan Thomas, analyst.
As the market has developed, convenience foods have increasingly come to embrace a wider range of occasions, as consumer eating habits change. In recent years, hot-eating convenience foods have been launched which target the snacking and breakfast markets, as well as the evening meal. According to Iglo, frozen foods occupy a role in just 1% of UK breakfast occasions at present, so the potential offered by this time of the day remains vast.
Time Pressed Consumers
One of the main drivers in the convenience foods market is the fact that many people feel pressed for time and, as a result, are less likely to prepare meals from scratch. Although this trend is most apparent amongst people of working age, consumer groups such as teenagers, students and mothers with children are also regarded as a key audience for convenience foods.
Although the average number of hours worked in the EU during a typical week has decreased in the period since 2000, employees in many European countries still put in an average of just under eight hours per day. The average working week is particularly lengthy in Poland, at almost 40 hours according to latest OECD data.
This figure drops to almost 39 hours for workers in Greece, and stands at 36.5 hours for the UK and Spain. At the other end of the scale, the average working week is lowest in the Netherlands, at just under 29 hours in 2014. Compared with the rest of the world, European workers do not do too badly – in Turkey, for example, the average working week is more than 49 hours long, whilst a typical Mexican works a weekly average of almost 45 hours.
These figures, however, only tell part of the story. Despite the existence of the Working Time Directive across the EU, many of the region’s employees work more than 48 hours during a typical week. In the UK, for example, data from the TUC claims that over 3.4 million employees regularly did so in 2015, a figure which has risen by 15% compared with 2010. Almost 11% of the UK workforce therefore exceeds 48 hours per week on a regular basis, with men accounting for the majority.
Another work-related factor which leads many people to believe they are ‘time poor’ is the daily commute. Again, this varies across the EU region – in Belgium, Spain and Italy, for instance, the average daily commute is quite high, at more than 50 minutes. In the UK, the average worker is now thought to spend 400 days of their lives commuting. Concerns are also rising that wage stagnation and soaring housing costs are leading to longer commutes – in 2015, approximately 3.7 million UK workers had to endure a daily commute of two hours or more, a figure which has increased by a third since 2010.
It is for reasons such as this that consumers are turning towards convenience foods in ever greater numbers. In the UK, the average time taken to prepare the evening meal has halved from an hour in 1980 to 30 minutes in 2015, a trend which the country’s sizeable ready meals market reflects. In 1980, 64% of evening meals prepared in the UK were cooked from scratch, a figure which has since shrunk to just over half (51%) in 2015.
As has been stated, breakfast is viewed as a potential opportunity for convenience foods in markets such as the UK. On the positive side, consumers appear to be seeking out alternatives to traditional breakfast options such as cereal and toast, and convenience is a main market driver for this time of the day. Against this, however, should be weighed the fact that a sizeable percentage of people regularly skip breakfast altogether, whilst many often eat a rushed breakfast (for reasons such as getting ready for work or the school run), and therefore may not consider they have sufficient time to heat up frozen foods.
Product Overview
The European market for frozen convenience foods is wide and far-ranging. Mainstays of the category include products such as ready meals, pizza, value-added meat and fish products and snacks. All can be heated up (either in conventional ovens or microwaves) with the minimum of time and fuss, thereby providing convenient meals or meal centers in minutes. As consumer requirements have become more sophisticated, however, the number of product sectors has broadened.
Ready meals are widely sold throughout Europe, in both western and eastern countries. Sales have traditionally been skewed towards northerly nations, such as the UK, Germany and the Benelux and Scandinavian regions – in contrast, the tradition of cooking meals from scratch tends to be stronger in Mediterranean nations such as France, Italy and Spain. Markets tend to be more developed in Western Europe, where disposable income levels and penetration of convenience foods are higher.
The UK has one of Western Europe’s largest and most well-developed markets for ready meals, with almost 1.6 billion served every year. In 2015, sales were worth an estimated GBP3.15bn, having increased by more than 6% compared with the previous year. Much of this growth in market value has been driven by the increasing premiumization of ready meals, with more consumers now willing to pay for higher-quality products.
The UK market can be segmented into frozen and chilled products. The frozen sector is the smaller and slightly less dynamic of the two, having increased by around 4.5% to GBP700m during 2015, equating to 22.2% of the overall category. The UK also has a growing market for so-called ready-to-cook foods – as their name suggests, these also offer convenient meal solutions, since all the ingredients are ready prepared. This sector grew by 8.1% to GBP427m in 2015.
Elsewhere in Western Europe, Germany has the region’s other large market for ready meals. In 2015, the category was worth an estimated EUR3.95bn, of which frozen varieties accounted for the majority. Sales of ready meals decrease to EUR1.76bn in France, of which the frozen sector accounted for EUR625m within the last year. Together, the UK, Germany and France account for the bulk of the ready meals market in Western Europe. Smaller markets exist in countries such as Italy, Spain and the Benelux and Scandinavian nations.
Europe has a sizeable retail market for pizza, although competition from the restaurant and takeaway sectors remains very strong. In the UK, for example, pizza is the second most popular item purchased for evening meals within supermarkets. Not only is it convenient and versatile, but manufacturers and retailers are responding to growing consumer demands for higher-quality products. Delicatessen varieties now account for over a fifth of the UK chilled pizza market, with sales experiencing a double-digit yearly increase.
Coated (i.e. breaded and battered) foods are widespread throughout most of Western Europe. These are viewed as convenient, low-cost meal centers by many consumers (especially families with children), and are also finding favor at parties and buffets. As is the case with ready meals, sales are skewed towards northerly countries such as the UK, Germany, France, Ireland and the Benelux and Scandinavian regions. Although the bulk of the market is made up of meat and seafood-based products, coated foods such as breaded vegetables are making inroads.
Sales of frozen snacks and appetizers are also on the increase, having benefited from the recent trend towards in-home socializing. This category includes hot-eating microwaveable snacks, as well as meat-based and potato products which have traditionally been viewed as either meal centers or accompaniments. However, the European market remains small compared with its US counterpart, where household penetration is more than 80%. The considerable size of the US market can be attributed to the widespread presence of brands such as Hot Pockets from Nestlé, which encompasses products like hot-eating rolls and sandwiches.
Major Suppliers
The leader of the European frozen ready meals market is Nomad Foods, which operates in 17 countries. It accounts for 13% of the frozen ready meals category for the markets in which it competes – at nearly 40%, its share is highest in Austria. Its largest markets by revenue are the UK, Germany, Italy and Sweden. Ready meals account for approximately 10% of the company’s overall sales, worth just under EUR200m according to latest data.
The company’s range comprises major frozen foods brands such as Birds Eye, Iglo, Findus, Lutosa and La Cocinera. It produces a wide variety of frozen convenience foods – examples include ready meals, coated poultry and fish products, burgers and potato products. In recent months, Nomad has extended the Birds Eye range in the UK with new steam-cooked ready meals under the Steamfresh banner (e.g. Vegetable Pasta and Creamy Cheese Penne Pasta), as well as new Inspirations-branded lightly dusted breaded cod fillets. Elsewhere, it has improved the recipe for its Birds Eye and Iglo fish fingers.
An interesting development early in 2016 was the extension of the Birds Eye brand in the UK with Hello Morning!, a new range of frozen breakfast options. The range includes products such as pancakes, waffles and croissants, which can be cooked from frozen in just five minutes and therefore provides a novel alternative to the toast and cereal combination which accounts for 87% of UK breakfast occasions.
One of the UK’s leading suppliers of own-label convenience foods is 2 Sisters Food Group. Its Added Value & Chilled business unit competes within sectors such as ready meals and value-added poultry and fish products – for example, its 5 Star Fish site in Grimsby coats around 8,000 tonnes of fish per year. Customers include many of the UK’s leading food retailers, one of which is Marks & Spencer. During the autumn of 2016, the company strengthened its position within the poultry meat market, by acquiring Bernard Matthews from Rutland Partners. Bernard Matthews’ portfolio includes turkey-based convenience foods such as Golden Drummers and Turkey Dinosaurs.
Leading multinationals present in the market include Nestlé and McCain. Nestlé owns the Buitoni brand, which is sold in many parts of Europe. Inspired by Italian cuisine, Buitoni is used for convenience foods such as ready meals and pizza. Although McCain Foods is best known for its frozen potato products, it also supplies frozen appetizers and snack-style products to customers within the foodservice industry. In recent years, potato products such as oven chips and wedges have found increasing favor, both as convenient meal accompaniments and foods suited to informal dining occasions.
Two German-based companies which command a strong presence in this sector include Frosta and Oetker. Frosta leads the German market for frozen ready meals, and also competes in countries such as Austria, Switzerland and Poland. Besides ready meals, its range includes coated fish and frozen vegetables – one recent innovation was the launch of smaller meals in 375g portions. Meanwhile, Oetker leads the frozen pizza market in many European countries, on the strength of brands such as Ristorante and Chicago Town. More of the company’s pizzas are now geared towards the snacking market, highlighting the trend away from the evening meal – examples include The Sub and The Toastie, both of which appear under the Chicago Town label.
