There is evidence that frozen potato products are tapping into the growing trend for in-home entertaining.
The appeal of frozen potato products shows no sign of diminishing, despite lackluster consumer spending levels in manya parts of Europe. Not only are frozen potato products believed to have benefited from the recession and the subsequent growth in demand for lower-priced meal centers, but there is evidence that the sector is reaching out to new occasions. One such example is the trend towards in-home dining. Frozen potato products such as chips and wedges are now being positioned as suitable foods for sharing with friends and family, e.g. as part of a buffet. Recent innovations from manufacturers such as McCain also appear to be reinforcing the appeal of frozen potato products amongst children and younger audiences. The fact that many manufacturers have taken steps to improve the nutritional qualities of their products has, in many instances, formed part of this strategy.
Market overview
Global potato output is currently worth some 315 million tons a year, of which China accounts for 20%. Some of Europe’s leading growers include Poland, Germany, France and the Benelux nations, which together produced almost 23 million tons during 2012. The region’s largest producers of frozen pre-fried potatoes in this time included the Netherlands (1.45 million tons, Belgium (1.05 million tons) and Germany (900,000 tons). During 2012, exports of frozen potato products from the EU-27 countries amounted to 2.88 million tons, down by 2.7% from the previous year’s figure of 2.96 million tons. Within the last three years, exports to countries outside the EU have doubled, indicating the potential for growth which exists in the rest of the world. Major export markets include Saudi Arabia, Brazil and Russia.
The UK
With sales worth GBP635m in 2012, the UK has one of Europe’s largest markets for frozen potato products. The market has continued to grow in value terms, although some of this has been due to rising prices at the retail level, which have resulted from the escalating raw material and processing costs. The sector accounted for almost 20% of the country’s total frozen foods market in value terms during 2012, trailing only ready meals and pizza. Volume sales during this time were worth an estimated 490,000 tons or 7.8 kg per capita. Although the UK market is still dominated by frozen chips, consumer demand for other more novel varieties continues to increase. Some of the growth areas at present include frozen potato wedges and hash browns, the latter of which is largely targeted at breakfast occasions. In keeping with the trend towards sharing products, bite-sized products remain popular, as do varieties with novel tastes and flavors.
Germany
In 2012, the German market for frozen potato products was worth EUR341m at the retail level. Volume sales were worth around 224,000 tons, or 2.6 kg per capita. Oven chips account for over half (55%) of the German market, ahead of croquettes (12%), potato puffs (6%) and wedges (6%). As is the case in the UK, manufacturers in Germany have been experimenting with novel formats, flavors and shapes – one notable example was the launch of wavy-shaped, moderately-spiced frozen chips by Agrarfrost in the spring of 2013.
France
Sales of frozen potato products fall slightly to EUR320m in France, equivalent to 11% of the country’s total market for frozen foods. Volume sales in 2012 were worth an estimated 185,000 tons, or 2.8 kg per capita. Although they account for just 6% of the total category, microwaveable products are currently growing by up to 13% per year, reflecting the growing consumer desire for added convenience.
Italy
Italy has a sizeable market for frozen potato products, since 70% of consumers are thought to buy into the category on a regular basis. Volume sales are worth in the region of 135,000 tons per annum, of which the retail sector accounts for between 55% and 60%. In nearby Spain, sales of frozen potato products amounted to 55,000 tons in 2012, equivalent to a market value worth in the region of EUR65m. Oven chips account for over 90% of the Spanish market in volume terms (compared with 85% by value), ahead of varieties such as potato shapes and cubes.
Benelux and Scandinavia
Sizeable markets for frozen potato products are also believed to exist within the Benelux and Scandinavian regions, due to factors such as the widespread popularity of both potatoes and frozen foods. Retail sales of frozen potato products in the Netherlands are worth over EUR200m per annum, a figure which compares with around EUR100m in neighboring Belgium. A somewhat smaller market exists in Ireland, where retail sales are worth in the region of EUR75m, with a market volume of around 28,000 tons.
Industry Suppliers: McCain on top
Many of the world’s leading suppliers of frozen potato products are present throughout Europe. These include the likes of McCain, Lamb Weston and Aviko, which tend to manufacture for customers in the foodservice, as well as retail sector. These companies operate substantial manufacturing networks, and process sizeable quantities of potatoes. McCain leads the European market for frozen potato products, with a 27% share. During the second half of 2012, McCain further strengthened its position in Europe by acquiring the Lutosa business from Pinguin, a move which increased its turnover to EUR4.7bn. The deal, worth EUR225m, included Lutosa’s frozen, chilled and dehydrated potato products. However, it has only recently been cleared by EU authorities, on the proviso that McCain divests the Lutosa brand. At the time, the EC expressed fears that competition within the frozen potato products market would be significantly reduced, especially within Belgium. Prior to the Pinguin deal, McCain’s European operations comprised manufacturing facilities in the UK, France, Belgium, Poland and the Netherlands, processing up to 5 million tons of potatoes per year. With annual sales approaching GBP300m, McCain is one of the largest brands within the UK frozen foods market, where it accounts for around 45% of the frozen chips sector. Elsewhere, the company accounts for 25% of the German frozen potato products market, a figure which rises to 38% in France. In Ireland, the company accounts for a leading 44% of sales of frozen potato products, and 68% of sales of frozen chips. Much of the company’s recent strategy has focused upon improving the health of its products – for example, levels of saturated fats have dropped by 70% during the last six years. McCain also places a strong emphasis on the provenance of its raw materials, sourcing its potatoes locally. During February 2013, the company launched Jacket Smiles, frozen ready-baked jacket potatoes in smaller sizes for children. This was followed soon after with the introduction of limited edition Caribbean Wedges.
Birds Eye and Lamb Weston
One of Western Europe’s leading suppliers of frozen potato waffles is Birds Eye, which is also present in many other sectors of the frozen foods industry. The company’s potato waffles have been sold in the UK since the early 1980s, while the Birds Eye brand now accounts for over 80% of the Irish market. During the summer of 2012, the company extended its UK range with new Hash Brown Waffles, which feature shredded potato and onion as ingredients. Another leading producer is Lamb Weston, which is owned by the US-based ConAgra Foods claims to be one of the world’s top three suppliers of frozen potato products. Its products are sold in more than 110 countries worldwide, while the company claims to process some 3.1 million tons of potatoes per day. In Europe, Lamb Weston operates manufacturing units based at Wisbech in the UK and Kruiningen in the Netherlands. Its products are sold to customers in the retail, foodservice and industrial sectors, while its range includes frozen chips, hash browns, croquettes and potato wedges. One of Lamb Weston’s most recent launches has been Potato Dippers – as their name suggests, they are suitable for dipping occasions.
Aviko and Farm Frites
Aviko is also one of the world’s leading producers of frozen potato products, and has an extensive presence in Europe. With a heritage stretching back more than 50 years, the company is headquartered in the Netherlands and also has operations further afield in the Americas and the Asia-Pacific region. Aviko’s range includes frozen, chilled and dried potato products, which appear in formats such as chips, hash browns, rostis, wedges, croquettes and noisettes. A recent innovation was frozen Sweet Potato Fries, which was targeted at the UK foodservice industry. Like some of its rivals, the company’s UK unit has been addressing health concerns, having removed 16 tons of salt from its range to meet Food Standards Agency (FSA) targets. Another Dutch-based company is Farm Frites International, which has operations in both Western and Eastern Europe. The company claims to be the world’s third largest processor of potato products, handling more than 1.3 million tons per annum. The company’s range includes frozen chips, wedges, waffles and hash browns.
Meanwhile, Germany is home to Agrarfrost, which accounts for up to half of the local market for frozen potato products if industrial and foodservice channels are included. Besides oven chips, the company’s range also includes potato-based products such as croquettes, hash browns, wedges and rostis. Other brands present in the large UK market include Aunt Bessie’s, whose range includes varieties such as Rustic Chips and Chunky Croquettes. The range has recently been extended with new Garlic & Herb flavor Mini Roasties. One interesting innovation took place during the middle of 2012, when the Goodfella’s frozen pizza range was extended with new Takeaway varieties accompanied by potato wedges. This provides an illustration of how frozen potato products are attempting to tap into the trend for consumers staying in with friends and family, rather than going out.