A recent survey showed that more than 50% of Irish consumers purchase ready meals as a convenient alternative when they are too busy or tired to cook. However, there is some evidence of increasing interest in home cooking because of the economic downturn and that this is impacting on the growth in the ready meals market.
A BBC News Magazine article tracing the history of the frozen ready meal referred to the first Swansons ‘TV dinners’ in America in 1953. Their aluminum containers acted as both baking tray to cook the frozen meal and a plate off which to eat it. Although the product has evolved over the decades since, one selling point remains the same – convenience.
Innovations and preferences in Ireland
Sales of ready meals (frozen, ambient and chilled and including pizza) grew by 6% to EUR272m in 2012 in Ireland, according to Bord Bia (Irish Food Board) based on trade estimates. Within this figure, frozen ready meals were valued at just under EUR40m, with volume of just over 5000 tons. Value growth between 2011 and 2012 was 5% and volume growth was 4%. One of the drivers of growth is the poor economic conditions, and with that the perception that frozen ready meals offer quality and value for money. The unit price of ready meals declined by 2% in 2012 to EUR7.77/kg Ready meals purchased include traditional ready meals, and to a lesser extent ethnic meals. Rice/noodle pouches are increasing in popularity. Western, Italian and Indian food remain the most popular choices in ready meals, although Chinese, Mexican food continue to grow in popularity. Meanwhile, demand for other food types, such as African and Moroccan, are also gaining value share, as consumers look for a wider range of choices. The own-label meal has gone through a period of greater product innovation than its branded counterpart, however there are indications that the latter has begun to fight back. The economic downturn has contributed to the rise of own-label as value for money high on the consumers list of preferences. ‘No additives/preservatives’ was the most important claim for own label product launches. Within the branded sector ‘microwaveable’ was a top claim for product launches.
Diverse demands
The range of vegetarian foods has increased to meet demand. Another aspect of healthy eating is foods which meet the ‘5-a-day’ required in children’s (and indeed adult’s) diets. There have been more protein-based meal pots products. Likewise there has been strong demand for products that meet the ‘eating out at home’ trend. Mintel’s Entertaining in the Home – Ireland, June 2012 report found that that 17% of RoI and 13% of NI consumers agreed with the statement that the economic climate saw them host more in-home events/gatherings (Toluna June 2012). Another consumer demand is sustainability and many retailers and manufacturers are now measuring their ‘carbon footprint’. This can be seen in product launches for example Young’s released a frozen seafood range in partnership with Jamie Oliver in 2011, consisting of 12 seafood products to cater for the growing demand for sustainably sourced fish. Reducing packaging is also part of this trend in favor of the environment. Likewise frozen foods are promoted as contributing to the push to reduce food wastage on ecological and economic grounds.
Sales downturn
Retail sales of frozen foods continued to grow in Irish and UK markets recent months however sales of frozen ready meals declined in the last two quarters and especially in the quarter to the yearend 17th March 2013. TNS Retail Data for the UK showed that in the quarter ended 2/9/12 sales were GBP690m (YOY growth of 5.6%) and volume 180 million units (YOY growth of 0.1%). The next quarter to 25/11/12 had sales of GBP708m (YOY growth of 8.2%) and volume of 186 million units (YOY growth of 2.7%). However when the effects of the horse meat scandal were being felt in the last recorded quarter to 17/3/13 sales were GBP692m (down GBP16m on previous quarter) and volume of 182 million units (down 4 million units) YOY growth in the quarter was 1.7% in value and 1.5% in volume. Market experts attribute this decline to the ‘horsemeat scandal’. Brian Young, Director-General, British Frozen Food Federation (BFFF) told Frozen Food Europe that the decline in the UK market is linked but that consumers did not exit the ready meals market altogether. Instead many switched from beef to other meats such as chicken, fish and even vegetables. “Clearly the impact of ‘Horsegate’ was that some products were not available for sale and because of that some sectors saw sales go down. We’ve seen sales drop in ready meals and in processed products, but the consumer still wants to find affordable foods within their budget and they have switched to fish and to vegetable based foods. So it is not as bad as some of the commentators would have you believe,” he said. He expects recovery of the burger market as the barbeque season gets underway and in the next quarter or two, growth of frozen ready meals will accelerate. Both frozen and chilled ready meals were affected by the horsemeat scandal and especially dishes with minced meats such as lasagne, cottage pie, and shepherd’s pie. In Ireland, where the horse meat issue was first discovered originated, the worst is over according to Frank Hayes, Director of Corporate Affairs Kerry Group plc “It was indirect for us in that we weren’t implicated at all in the issue,” he told FFE. “But it did influence the entire frozen food category and in particular the frozen prepared meals category was impacted initially when it (sales) came down by 20% and that tumbled to 40% at one stage and then it began to recover and it has been recovering ever since. It has slowly but surely been on a recovery course but we are still showing a decline vs. a year earlier. We have invested a lot in NPD.”
Ready meals company news
Headland Foods, one of the UK’s largest ready meal producers, which Kerry acquired in 2011, was still in the news last year for rationalizing production of frozen ready meals and closing the Grimsby plant. “Last year we conducted a review of the frozen meal category and because of competitiveness and consolidation in the industry we decided to streamline our production from the Grimsby site and consolidate all our production into the Carrickmacross (Ireland) site which had capacity,” said Frank Hayes. “We now have one frozen meals plant which is obviously a market leader. It is a state of the art plant and very well invested large site.” Earlier this year Heinz was acquired by an investment consortium comprised of Berkshire Hathaway and an investment fund affiliated with 3G Capital. Heinz had been more active in the frozen food category and launched its BIG frozen ready meals and its ‘Even More’ range. The meals feature larger 380g portions, including a side portion of vegetable to aid the consumer in getting their five-a-day. “Some companies are coming back into the market, we see Heinz have launched some products,” said Brian Young BFFF. “I think that because of the consolidation in the market about a year ago. We are seeing higher prices, which seems to be encouraging some companies and brands.” He expects the change will bring new impetus to the company as in the past when food companies such as Birds Eye were taken over there was a very positive impact because the new owners want growth and invest in the brands and products.
European market value and volume
The frozen food market in Western Europe was valued at almost USD54,000m in 2009. By the end of 2014, the frozen food market in Western Europe will be worth USD63,583.7m, with an expected annual growth rate of 3.5% between 2009 and 2014. This market is forecast to increase by USD10,000m over the 2009-14 period. Frozen meat products are expected to be the leading category, accounting for a 32% share of the frozen food market in 2014. In volume terms the frozen food market in Western Europe totaled over 8,000 million kg in 2009. By the end of 2014, the frozen food market in Western Europe will total 9,123.4 million kg, with an expected annual growth of 2%, between 2009 and 2014. The frozen food market in Western Europe was led by frozen meat products (representing 34% of the total value) followed by frozen ready meals with an 18% share. Bord Bia forecasts the frozen ready meals market in Western Europe to grow at a CAGR of 4% between 2009 and 2014, to reach a value of USD11,719.2m in 2014. This market is estimated to increase by USD2,219.8m in sales over the 2009-14 period. Meat/poultry-based ready meals are expected to be the leading segment, accounting for a 33.4% share of the frozen ready meals market in 2014. In volume terms the frozen ready meals market in Western Europe is forecast to grow at a CAGR of 2.8% between 2009 and 2014, to total 1,361.8 million kg in 2014. This market is estimated to increase by 173.3 million kg over the 2009-14 period. Meat/poultry-based ready meals are expected to be the leading segment, accounting for a 29.9% share of the frozen ready meals market in 2014.
The frozen food market in Eastern Europe was valued at over USD25,000m in 2009, representing a compound annual growth rate (CAGR) of nearly 3% since 2004. By the end of 2014, the frozen food market in Eastern Europe will be worth in excess of USD29,000m, with an expected CAGR of 2% between 2009 and 2014. The frozen food market in Eastern Europe totaled 4,500 million kg in 2009, representing a CAGR of 1.9% since 2004. By the end of 2014, the frozen food market in Eastern Europe will total 5,062.7 million kg, with an expected CAGR of 1.9% between 2009 and 2014. Bord Bia forecasts the frozen food market in Eastern Europe to be worth USD28,691.3m in 2014, with an expected CAGR of 2.2% between 2009 and 2014. This market is forecast to increase by USD3,004.1m over the 2009-14 period. The frozen food market in Eastern Europe was led by frozen meat products (representing 70.5% of the total value) followed by frozen ready meals with a 14.9% market share. The frozen ready meals category was valued at USD3,815.1m in 2009, representing a CAGR of 7.6% since 2004. By the end of 2014, the frozen ready meals category will be worth USD4,844.4m, with an expected CAGR of 4.9% between 2009 and 2014. The frozen ready meals market volume totalled 601.1 million kg in 2009, representing a CAGR of 6.6% since 2004. By the end of 2014, the frozen ready meals market will total 728.5 million kg, with an expected annual growth rate of 3.9% between 2009 and 2014. The frozen ready meals market was led by noodle/pasta-based ready meals (representing 31.1% of the total value) followed by meat/poultry-based ready meals and vegetable-based ready meals. Fish-based ready meals and other frozen ready meals constitute the remaining segments, with a 15% and 6% market share.