The frozen processed food packaging landscape in Europe may seem rather stagnant at first, when it comes to pack types and sizes, but there is much more to this product area. In the run up to 2016, frozen food packaging is expected to reveal interesting prospects for alternative solutions to the dominant flexible plastic pack, in particular for folding cartons. The European frozen food packaging marketplace is also expected to benefit from rising demand in Eastern Europe while seeing pockets of dynamic growth in some Western European countries too.
A boon to frozen food packaging in Europe
The volume consumption of frozen food proved resilient in Europe during the economic crisis, enabling retail packaging unit sales to post steady growth throughout 2006-2011. In a bid to get their expenditure under control and obtain better value for money, many consumers traded down from chilled food to canned/preserved and to frozen food. In addition, sales benefited from lower competition from metal food cans. Metal food cans further suffered from consumers’ perception of this packaging format as lacking quality, which further played in favor of frozen goods.
In 2011, frozen food packaging remained an established product area representing over 26.1 billion units. Low cost flexible plastic is the most commonly used packaging solution. Folding cartons rank second, with usage strongest in Western European countries. The bulk of total packaging sales come from Western Europe, where Germany leads the way as a consumer country and the UK, France, Italy and Spain also contribute additional important volumes. However, Eastern Europe is also significant with Russia ranking second in unit sales terms in 2011. In addition to benefiting from the economic crisis, demand for frozen food has also benefited from an increasing need for convenience in Eastern Europe as lifestyles become busier.
Look to the East for highest future gains
Western Europe led packaging volume consumption in 2011 but Eastern Europe is expected to show the best growth rates for frozen food over the 2011-2016 forecast period. During 2010 and 2011, consumers across leading Western European countries such as France have shown a renewed interest in chilled foods. Many consumers seek to increase their use of home cooking and fresh ingredients in order to reduce their spend on food and to improve their personal wellbeing. The so-called “PIGS” countries (Portugal, Ireland, Greece and Spain) stand as an exception to the rule and are anticipated to offer good growth for frozen food packaging in the forecast period. Frozen food will continue to benefit from being viewed as offering good value for money in Spain, for instance. The prospects of further economic difficulties in Spain, as well as high consumer acceptance for frozen foods, are expected to result in a forecast CAGR of almost 3% for frozen food packaging consumption in this country.
Russia and Poland are meanwhile expected to see the fastest packaging growth rates in Europe to 2016 with CAGRs of above 4%. Given the large size of these countries’ sales in 2011, in particular Russia, these potential unit volume gains are strong. Russia is set to almost equal Germany’s demand for frozen food packaging in unit volume terms by 2016, at 5.5 billion units and 5.6 billion units respectively. The expansion of modern retail outlets and the increasing penetration of freezers among households will add to the growing demand in these countries. Eastern European consumers are expected to increasingly shop at supermarkets and hypermarkets, which will result in many seeking to generally reduce the number of shopping trips. These consumers will therefore increasingly have the ability to buy products such as frozen foods, which can be preserved over a longer period of time than chilled items.
Eastern Europe is also expected to see an overall increase in disposable incomes during the forecast period, coupled with a shift towards more hectic lifestyles. Both of these trends will provide opportunities for higher end food products and added-value packaging solutions. The choice of pack types in Eastern Europe however generally remains narrow compared to Western Europe. This is particularly apparent in frozen vegetables, where Eastern Europe only offers two significant packaging types, namely the dominant flexible plastic and folding cartons. In contrast, Western Europe offers a much broader spectrum of packaging formats. The pack mix in Eastern Europe is expected to follow in the footsteps of its Western European neighbors in its expanded range of packaging options for consumers.
Folding cartons – the big winner
An important means of increasing a product’s quality perception in Eastern Europe is through the use of an alternative packaging to the standard expected format and often low end flexible plastic option. Although folding cartons are not new in the region, the use of this pack type can enable players to position products as slightly higher quality in comparison to their competitors and thereby stand out in the frozen food cabinets. In addition, this packaging format enables producers to better justify higher unit prices. Many brand owners notably increased their retail unit sales prices in 2011, as evident in frozen ready meals in Poland and frozen vegetables in Russia. Folding cartons are expected to grow sales faster in comparison to flexible plastic packaging in Eastern Europe in a number of categories, including red meat, poultry, pizza and ready meals. This demand for higher quality packaging in Eastern Europe will result in folding cartons yielding the highest gains over 2011-2016, with volumes increasing by more than 1 billion units, thereby outperforming the largest pack type, flexible plastic.
Folding cartons should also benefit from the bright growth prospects offered by the frozen pizza category. In a time characterized by difficult economic conditions and the cocooning trend, this product area offers a good combination of value for money, convenience and what we could define as the quality of experience. This category is expected to post one of the most dynamic growth rates to 2016 in Eastern Europe but is also expected to see the strongest volume increase over the forecast period in Western Europe. A continual rise in sales through discounters in Germany will be an important driver for rising frozen pizza consumption in this country and thus also for growing sales of folding cartons. Frozen red meat and “other” frozen food products, mainly herbs and fruit, will also noticeably contribute to this growth. Meanwhile, product categories with smaller volume sales such as frozen soup and frozen meat substitutes are expected to perform particularly strongly at CAGRs above 8% for folding cartons, as European consumers start combining their focus on value for money with growing health concerns.
Not so frozen after all…
A general demand for convenience in foods and for more packaging diversity in the East will not only boost folding carton volumes, but will result in the availability of a wider variety of pack types, in particular plastic, paper-based and aluminum trays. However, the forecast period will also offer challenges to frozen food packaging. Brand owners will not only need to continue to differentiate in store within the frozen food offering; chilled food, canned/preserved food and dried food alternatives will also stand as fierce competitors. Frozen food brand owners have the possibility to respond to these challenges through the use of effective packaging. Many are thus likely to invest in packaging solutions that answer the need for better visibility in frozen cabinets as well as offering added convenience for end consumers.