Chilled food sector shows strong growth potential
market to build on strong value-added sales, according to a new
report.
Leatherhead Food International's new analysis of the sector suggests that chilled prepared foods are ideally situated to take advantage of trends such as healthy eating.
Products such as prepared salads and fresh pasta are frequently marketed on a health platform, whilst healthy varieties are a mainstay within sectors such as ready meals, prepared sandwiches and chilled soups.
"Consumer dietary concerns have also led to the emergence of more products made with fewer artificial additives, as well as reduced levels of fat, salt or calories," said the report.
"The main driver of the market remains convenience, coupled with the perception that chilled foods are often of a higher quality than their frozen equivalents."
The Leatherhead report attempts to identify the market size for chilled foods by sub-sector and country, and compares and contrasts the market for chilled foods with the equivalent markets for frozen and/or ambient foods.
It puts the total western European market for chilled prepared foods - which includes the UK, France, Germany, Italy, Spain, Ireland, Belgium and Netherlands - at over €14.62bn in 2005. This figure compares with the estimate of €90bn for the frozen foods market in western Europe as a whole.
"Value sales of chilled foods are particularly high compared with many frozen or ambient equivalents, reflecting the much higher prices that these products typically command," said the report.
Leatherhead Food InternationalAnd by country, the UK still represents Europes largest market for chilled prepared foods, with value sales worth over €7.95bn in 2005. The report highlights high household penetration of both microwave ovens and refrigerators, along with the trend towards convenience foods and the decline of formal mealtimes, as major factors for this.
"The high value of the UK market in comparison with its European neighbours is also a reflection of the success of major retail groups such as Tesco, Marks & Spencer and Sainsbury, all of which place a high degree of emphasis on their chilled ranges,"said the report.
Indeed, the majority of chilled prepared foods sold in the UK is own-label. France represents western Europes other major market for chilled prepared foods, with value sales worth around €2.7bn in 2005.
Leatherhead claims that many French consumers prefer to buy main foodstuffs fresh, from more traditional outlets as well as supermarkets, which is a main factor behind the sizeable market value.
In contrast, chilled prepared foods trail their frozen equivalents in many sectors of the German market. As a result, sales of chilled pizza, ready meals, soups and bakery items are very small in Germany, a situation due in part to the strong position enjoyed by discount retailers such as Aldi.
Italys relatively high market value of more than €1.29bn can be attributed to the popularity of chilled pasta products, a sector that accounts for over 40 per cent of sales. In Mediterranean countries such as Italy and Spain, sales of chilled prepared foods have traditionally been hampered by the low penetration of convenience foods, and the consumer perception that freshly prepared alternatives are both healthier and of a higher quality.
Another point to note is that the total European market for chilled prepared foods is very fragmented, encompassing both a wide variety of products and a large number of suppliers. Leatherhead claims that chilled prepared foods have become more widespread in recent years, as the technology for manufacture, storage and distribution has improved.
"The key market driver has been the consumer desire for convenient products that require a minimum of preparation and cooking time," said the report.
"Value growth has also been boosted by the fact that many chilled prepared foods command high prices, especially in comparison with frozen or ambient alternatives. The fact that some chilled foods can be eaten immediately has also taken the category into the snacking arena, especially within sectors such as coated foods and savoury bakery items."
Coupled with the continued trend towards healthier food, the short-term future of the sector therefore looks positive.
This is the third edition of Leatherhead's European chilled prepared foods report. The previous edition was published in July 2003.
