Compared to the fresh potato varieties available on the market, the frozen category continued its strong growth in sales last year in the UK, mainly due to investments in new product developments, as well as in marketing strategies meant to attract new consumers.
The UK already has one of the largest per capita consumptions of potato products in Europe, however, in the summer of 2013, consumer demand for potatoes was dampened by the warm weather, according to the Potato Council, while potato main crop prices again fell year on year from August 2013 as more favorable growing conditions for potatoes and tomatoes in the UK and Europe saw supply improve, suggesting scope for relief also in retail prices, as was concluded in a report by Mintel. The same report suggests that a growing focus among brands and own-label on how freezing can ‘lock in’ the nutrients of vegetables, as seen in the Birds Eye Field Fresh range, is also likely to have driven growth last year, on the frozen potato category. In other parts of Europe, the German retail market for frozen potato products was EUR350m in 2013, and is dominated by own-labels (sales via hard discounters, for example, are worth EUR100m), while the French retail market was worth EUR325m in 2012, with volume sales of 189,000 tonnes, according to data from Leatherhead Food Research. The company states that one growing sector of the French market is microwaveable chips – in 2012, sales were worth 2,500 tonnes, but growing by 26% per year, while Dutch production of frozen potato products fell from 1.49 million tonnes to 1.45 million tonnes in 2011.
UK foodservice market
The UK foodservice market is valued at GBP49.6 bn, being considered a large one, with diverse routes that can reach it. According to information from the UK Potato Council, foodservice in the UK consists of a number of different sub sectors: from pubs, quick service restaurants (QSR) and full service restaurants in the commercial or ‘profit’ sector, to work place, college and universities, all of which include potatoes on their menus, in one form or another. According to the latest market report on the consumption of potatoes in foodservice in the UK, updated in January 2014, in the 52 weeks to 8 December, expenditure on fresh potatoes increased 21.5% when compared to the previous year. This was driven by the rise in the average retail price, while volumes sold fell 7.9%. The Potato Council bases this information on the NPD Crest Data it received. In the latest 52 weeks, volume sales of chilled potatoes were 4.1% below last year and a similar trend has been seen in the latest 12 weeks. The fall in both cases has been due to fewer households purchasing. In an attempt to manage budgets and minimize the impact of price rises when eating out, consumers bought fewer items and they also ate out slightly less often than last year. The average individual spend increased just 0.9% as a result and traffic dipped by 0.7% compared to last year, despite some growth over the summer. Side dish items, such as potatoes, are particularly susceptible to being dropped from food orders. Chips, which account for the majority of potato servings, have recorded a 7.5% fall in servings over the year and this decline has accelerated in the latest quarter.
The UK Retail Market
According to the same source mentioned above, total potato sales are worth GBP2.3bn at retail (excluding crisps and snacks), with the fresh sector accounting for GBP1.4bn. The retail market is dominated by the major multiples, with the top 5 accounting for over 77% of sales. Fresh potatoes account for 1.4% of sales and by volume are the largest category in fresh produce. According to the latest market report – Potato Retail Report January 2014, which uses data provided by Kantar World Panel, in the 52 weeks to 8 December, expenditure on fresh potatoes increased 21.5% when compared to the previous year. This was driven by the rise in the average retail price, while volumes sold fell 7.9%. Volume sales of frozen potatoes dipped slightly over the year. Despite this, value sales remained positive due to price rises, although these were smaller than those seen for fresh. Other frozen potato products continue to outperform chips in terms of volume growth, although chips have the larger market share. In the latest 12 weeks, chips have continued to see decline due to fewer shoppers purchasing, while frozen potato products also posted a slight dip in volumes which was due to shoppers buying less per trip.