2. EXECUTIVE SUMMARY
2.
EXECUTIVE SUMMARY
2.1
KEY MARKET TRENDS
•
The consumer base for chilled food continues to expand, underpinned by rising levels of disposable income and a burgeoning desire for convenience. Chilled food represents an increasingly attractive option for dual-income families and single people, who have less time to cook and do the weekly shopping..
•
The development of packaging that meets the needs of changing consumer lifestyles is a constant theme in this market. In the dominant sector of chilled processed meats, innovations such as waferthin slices, resealable “zipper” packets and microwaveable comminuted meat products address a growing consumer desire for convenience. Smaller packaging sizes also grew in prominence, reflecting an increase in the number of single- and dual-person households.
•
The development of ethnic-influenced chilled foods is another important theme in the chilled food market, as manufacturers attempt to satisfy a growing consumer demand for more exotic and luxurious taste experiences. In the US, for example, ethnic chilled ready meals, such as sushi and burritos, offer variety to consumers who are looking to diversify their diets.
•
Another underlying trend in the chilled food market is the development of low-fat, low-salt or organic varieties as manufacturers continue to target health-conscious consumers. In Westerm Europe, a greater desire for healthiness is encouraging consumers to turn to healthier sources of protein, such as poultry, fish/seafood and vegetable analogues, at the expense of red meat.
•
Consumers are increasingly responsive to the “freshness’” positioning of chilled foods. Chilled soups and chilled ready meals, for example, are both perceived as being fresher and more flavoursome than their frozen, canned or dehydrated counterparts.
•
Consumer concerns over food safety are playing an increasingly important role in the development of the chilled food market. In Western Europe, for example, continuing consumer unease about the safety of beef (arising from the BSE crisis) has resulted in a shift away from red meat in favour of ham and poultry.
•
In the dominant US market, many consumers have increased their meat consumption, including chilled processed meats, due to their desire to lose weight via the popular, high protein Atkins diet. The Atkins Diet claims to promote weight loss if one eats a high-protein, low-carbohydrate diet.
•
The major distribution trend in the chilled food market is growth in sales through multiple grocers and convenience stores, and the converse decline of sales through independent food stores and “others”. The increasing trend towards supermarkets is attributable to a number of factors, including one-stop shopping convenience, lower prices and a wider choice of branded and private label products.
•
In emerging regional markets such as China, packaged chilled meats are becoming more affordable, as intensified competition and increased production results in a fall in unit prices. Rising income levels and the growing penetration of multiple grocers have also contributed to this trend.
2.2
SOURCES OF GROWTH
2.2.1
Major Markets
•
Chilled food sales totalled US$128.2 billion in 2002, an increase of 1.3% over the previous year. Growth was restricted by difficult economic conditions in Japan, price pressure from private label products and inflation and exchange rate factors. The top 15 markets accounted for 88% of value sales in 2002.
•
The dominant Japanese market suffered a 2.6% decline in local currency, constant value terms over the review period, largely due to the ongoing internal recession and substantial reductions in unit prices. The most significant impact of declining sales came from the large chilled fish/seafood sector, as consumers facing tight shopping budgets increasingly abandoned seafood in favour of cheaper, Western-style cuisine.
•
Russia was the most dynamic major market in 2002, with sales increasing by almost 14% in local currency, constant value terms on 2001. Growth derived mainly from rising real wages, which encouraged consumers to buy higher value goods such as salami in greater quantities. Sales were further boosted by an increase in imports and improvements to product quality from local manufacturers.
•
Other major markets registering a high rate of increase (>5%) in 2001/2002 included France, Spain, the UK and China. In the former three countries, growth was driven mainly by an increased desire for convenience, as busier lifestyles left less time for the household chores. In China meanwhile, the most significant drivers of growth were the increased penetration of refrigerators in households and retail outlets, and new product development by the major manufacturers.
Chart 2.1
Volume Sales of Chilled Food by Major Market 1998/2002
’000 tonnes
Japan US Russia UK Ukraine Italy France Netherlands Spain China Canada Germany Denmark 0
Source:
50
Euromonitor
0,0
00
1, 0
00 ,0
1, 5 00
00 ,0
2, 0 00
00 ,0
2, 5 00
00 ,0
3, 0 00
00 ,0
3, 5 00
00 ,0
4, 0 00
00 ,0
4, 5 00
00 ,0
00
Chart 2.2
Value Sales of Chilled Food by Major Market 1998/2002
US$ million
Japan US Russia UK Italy France Ukraine Netherlands Germany Denmark Canada Sweden Norway Spain China 0
Source:
2.2.2
5,000
10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000
Euromonitor
Product Sectors
•
Chilled processed meat represented by far the largest sector of the chilled food market, and the main driver of growth in 2001/2002. Growth was aided by an improvement in economic conditions in the important Russian market, recovery from the BSE crisis and a consumer shift away from traditional deli counters.
•
Value sales of chilled fish/seafood experienced a sharp decline of nearly 6% in 2002, as Japanese consumers reduced expenditure on chilled fish. Competition from Western-style dishes, such as pasta, pizza and fried chicken, further constricted sales. However, chilled fish/seafood increased in popularity in Western Europe, North America and Australasia in 2002, underpinned by a growing health consciousness among consumers, and the proven health benefits of fish/seafood in comparison to meat.
•
Chilled soup was the most dynamic sector of the chilled food market in 2002, with an almost 11% increase in US dollar terms. In addition to factors such as freshness and taste, growth was driven by a growing consumer desire for convenience.
C hi lle C d hi pr lle oc d fis es h/ se se d af m oo ea d ts p ro C hi d uc lle C ts d hi lu lle nc d h re ki ad t y m ea C hi ls lle d p iz C za hi C lle hi d lle s d/ ou fre p sh C pa hi lle st a d no od C le hi s lle d fo od
Volume sales % growth 2001/2002 7
Source:
4
3
2 4
1
Euromonitor
2
0
-1
-2
2001/2002 1998-2002 CAGR 0
-2
1998/2002 CAGR
Chart 2.3 Chilled Food: Volume Sales by Sector: % Growth 1998/2002
% volume growth 10
6
5 8
6
Chart 2.4
Chilled Food: Value Sales by Sector: % Growth 1998/2002
% value growth 15
10
8
C C hille hi lle d p Value % growth 2001/2002 d r fis oce h/ s se se d af oo me d pr ats C hi od C hi lled uc ts lle d lun ch re ad ki t y m C ea hi lle l d s C Ch piz hi lle illed za d/ fre sou s p C hi h p lle as d no ta o C hi dle lle s d fo od
10
6
4
0
2
1998/2002 CAGR
5
-5
-10
-15
2.3
-2
-4 2001/2002
Source:
0
1998-2002 CAGR
Euromonitor
STIMULI TO GROWTH
•
During the review period, growth in the chilled food market was driven primarily by an increased desire for convenience, as busier work schedules, an increase in the number of working women and growth in single-person households all stimulated consumer demand for meals requiring minimum preparation and cooking time.
•
The trend towards eating away from home, whether at work, in the car, or on the move, also impacted significantly on the chilled market in the survey period. Chilled lunch kits were one of the fastest growing sectors during the 1998-2002 period, owing to the format’s ability to be eaten, any time, anywhere.
•
Another important factor driving growth in chilled food over the review period was the increasing refrigeration space allocated to these products in multiple grocers. As more women joined the workforce, and consequently had less time to do the weekly shopping, packaged chilled food eliminated the need to queue at the delicatessen, meat or fish counter.
•
In emerging national markets, such as Russia and China, growth in chilled food resulted mainly from rising real wages and the increasing availability of good-quality, affordable products. Household penetration of refrigerators and microwave ovens also rose over the review period, helping the development of chilled food.
•
A key factor affecting demand for chilled food in most major markets over the review period was international influences on consumer tastes. Increased foreign travel and a growing incidence of
eating out were the key drivers of a greater consumer willingness to experiment with a wide range of ethnic dishes. •
One further influence on chilled food sales was an increased consumer awareness of health and dietary issues. This was supported by the development of healthier variants containing less fat, as well as a wider range of organic products. In the US, the arrival of the Atkins diet (which claims to promote weight loss if one eats a high-protein, low-carbohydrate diet) provided a rationale for consumers to increase their (already substantial) meat consumption.
•
Packaging improvements also played a vital role in boosting the popularity of chilled food over the review period. Within the dominant sector of chilled processed meats, wafer-thin slices, resealable packets and microwaveable comminuted meat products were just a few innovations that served to maintain consumer interest.
2.4
CONSTRAINTS ON GROWTH
•
Sales of chilled food were highly sensitive to fluctuations in income and consumer confidence throughout the review period, particularly within the developing regions of Asia-Pacific, Eastern Europe, Latin America and Africa and the Middle East. In 2002, growth in the chilled food market was constrained by the ongoing internal recession in Japan and in depressed economic conditions in Argentina and South Africa.
•
Chilled food is particularly susceptible to health scares. In 2001/2002, ongoing consumer concern over the safety of beef negatively affected chilled processed meat sales in a number of major markets, notably, Japan, Germany, the Netherlands, Denmark, Portugal and Switzerland.
•
In addition to the BSE issue, one further factor limiting value growth in a number of countries – Denmark, the Netherlands, Norway, Finland and Sweden and the UK - in 2001/2002 was market maturity, particularly within the dominant sector of chilled processed meat. Health consciousness is increasing, and as a result, many consumers wish to reduce their meat intake.
•
In developing countries such as Vietnam and Morocco, low consumer purchasing power, an abundance of local, fresh food, and an absence of proper refrigeration facilities in households and retail outlets were the main factors hindering market growth in 2001/2002.
•
In relatively mature regional markets such as Australasia, North America and Western Europe, value growth was dampened by the increasing importance of grocery multiples in food distribution, which exploited economies of scale to offer consumers lower prices on a wide range of goods. The growing penetration of private label products, which are increasingly perceived by consumers as rivalling their branded competitors in terms of quality, also had a negative impact on value sales.
2.5
KEY ISSUES FOR MARKET DEVELOPMENT
Manufacturers and retailers seeking to develop the chilled food business will have to take account of the following factors, which may determine future success: •
During the forecast period, it is expected that consumers will continue to face time pressures that prevent them from cooking meals from scratch. Consequently, there will be a strong demand for convenience foods such as chilled ready meals and chilled lunch kits.
•
As lifestyles become more hectic, manufacturers will need to pay more attention to the packaging of their products, in order to offer consumers greater convenience.
•
During the forecast period, manufacturers will need to take account of consumers’ increasing health concerns. Consistent with trends across the entire food market, it seems likely that many chilled foods will be positioned as “functional” products with beneficial health properties.
•
The increasingly multicultural aspect of many Western societies is stimulating consumer interest in various types of ethnic food. Manufacturers will need to extend their product ranges to include
“ethnic” flavours, in order to capitalise on the increasingly cosmopolitan nature of consumer tastes. •
Followng the BSE and foot-and-mouth crises, consumers will increasingly demand better and safer chilled food products. Increasing product standards will benefit larger manufacturers at the expense of small regional companies, which do not have the funds to invest in plant improvements.
•
A crucial factor helping to deliver growth in chilled food will be the ability of supermarkets to offer more space for these products.Manufacturers of chilled foods are likely to be increasingly challenged by the expanding range of frozen, canned and dehydrated alternatives available.
•
Chilled processed meat has reached a certain level of maturity, especially in the case of products such as cooked ham, comminuted beef meat and beefburgers. Consequently, the major players will need to segment their ranges, for example, with products targeted at children, in order to win new consumers as well as to generate more added-value sales.
•
As competition within the global chilled food market intensifies, manufacturers will find it necessary to invest heavily in advertising and promotion in order to retain and build upon market share.
•
Owing to the increasing consolidation of the multiple grocery format, private label products are expected to gain penetration over the forecast period. Consequently, manufacturers of branded goods will find it necessary to continually reinvent their products – in terms of packaging, flavour and texture - in order to differentiate them from their less expensive competitors.
2.6
MARKET PROSPECTS
2.6.1
Regional Opportunities
•
Eastern Europe is projected to be the fastest growing region in the chilled food market, experiencing value growth of 47% over the 2002-2007 period. Growth will derive mainly from rising real wages, which will encourage consumers to buy more expensive, premium goods.
•
The developed regional markets of Australasia, Western Europe and North America will continue to see solid growth over the forecast period, as manufacturers continue to satisfy the increasingly prevalent desire amongst consumers for convenience. Low-fat and ethnic-influenced products will also play an important role in boosting sales, particularly in chilled processed meat and ready meals.
•
Asia-Pacific is predicted to be the slowest growing region over the forecast period, with sales increasing by a value CAGR of just 1.2%, Growth will be restricted by unfavourable market conditions in Japan, largely due to the ongoing internal recession and substantial reductions in unit prices.
Chart 2.5
Chilled Food: Forecast Value Sales Growth by Region 2002/2007
50
9
45
8
40
7
35
6
30 5 25 4 20 3
15
5
1
0
0
W es t
er n
W or ld
2
Eu Ea ro st pe er n Eu N ro or pe th Am er La ic tin a Am er ic As a ia -P ac Af ifi Au ric c a st ra an la d si M a id dl e Ea st
10
2002/2007 CAGR
Value % growth 2002/2007
% US$ value growth
2002/2007
Source:
2.6.2
2002-2007 CAGR
Euromonitor
Product Sectors
•
Chilled processed meat will remain the largest sector of the market and the main driver of growth over the forecast period. Much of this growth will stem from the increased availability and convenience of packaged sliced meats, as consumers move away from the traditional deli counter.
•
Chilled soup will be the most dynamic sector of the chilled food market over the 2002-2007 period, with a near 46% increase in value sales. Growth will be consistent with the sector’s emergence from a low base, although factors such as convenience, freshness and consumer interest in ethnic food will also contribute to increased sales.
•
The chilled fish/seafood sector is expected to experience static growth over the forecast period, despite the product’s growing perception as a healthy alternative to red meat. The main factor behind this discrepancy is a continued decline in consumption in Japan, where consumers are increasingly abandoning seafood in favour of Western-style dishes, such as pasta, pizza and fried chicken.
C C hille hi lle d p d r fis oce h/ se sse d af oo me d at pr s C hi od C l hi led uct lle s d lunc re h ad ki t y m C ea hi lle l d s p C C hi hill izza e lle d/ d s fre ou s p C hi h p lle as d no ta o C hi dle lle s d fo od
Volume % sales growth 2002/2007
Source:
45 8
40 7
35 6
30
25
20 4
15 3
10 2
5
Euromonitor
1
0 0
-5
-1
-10
-2
2002/2007 2002-2007 CAGR
2002/2007 CAGR
Chart 2.6 Chilled Food: Forecast Volume Sales Growth by Sector 2002/2007
% volume growth
5
Chart 2.7
Chilled Food: Forecast Value Sales Growth by Sector 2002/2007
% value growth 50
9 8 7 6
30
5 4
20 3 2
10
1 0
C C hille hi lle d p d r fis oce h/ s se se d af oo me d at pr s C od hi l C hi led uct lle s d lunc re h ad ki t y m C e hi lle als d C Ch pizz hi lle illed a d/ fre sou p s C hi h p lle as d no ta o C hi dle s lle d fo od
0
-10
2002/2007
Source:
2.7
2002/2007 CAGR
Value % sales growth 2002/2007
40
-1 -2
2002-2007 CAGR
Euromonitor
FUTURE MARKET CHARACTERISTICS
By the year 2007, the market for chilled food will be characterised by the following key trends: •
Development of packaging that meets the needs of changing consumer lifestyles will be a constant theme throughout the forecast period, as manufacturers continue to produce new, convenient formats for their products.
•
The development of ethnic flavours and ingredients will be an important theme, as manufacturers attempt to capitalise upon a growing consumer demand for more exotic taste experiences.
•
Following recent food crises affecting chilled processed meat, manufacturers are expected to develop higher quality products with labels guaranteeing their country of origin.
•
In developed markets, the major players are likely to increasingly segment their product ranges, for example, with products targeted at children, in an attempt to win new customers and generate more added-value sales.
•
In the emerging regional markets of Eastern Europe, Asia-Pacific, Africa and the Middle East and Latin America, intensified price competition between manufacturers and retailers will make chilled food more affordable to all income groups.
•
Manufacturers will continue to package their products in smaller portions, as demographic trends towards smaller households and informal eating habits prevail.
•
Another underlying trend in the chilled food market over the forecast period will be the development of healthier variants, such as those containing less fat or less salt. Fortified products (with calcium and vitamins) are also expected to consolidate a niche segment of the market.
•
Organic chilled food will benefit from an increase in consumer demand for organic food in general, in the light of growing concerns over artificial ingredients and genetically-modified foods.
•
In developed markets and sectors, manufacturers will continue to compensate for high levels of penetration by encouraging consumers to trade up to increasingly sophisticated “restaurant quality” products offering greater quality and convenience.
•
An increase in the number of consumers over the age of 60 will also present an opportunity for senior-targeted chilled food (eg calcium-rich formulations for osteoporosis sufferers).
EXECUTIVE SUMMARY
2.1
KEY MARKET TRENDS
•
The consumer base for chilled food continues to expand, underpinned by rising levels of disposable income and a burgeoning desire for convenience. Chilled food represents an increasingly attractive option for dual-income families and single people, who have less time to cook and do the weekly shopping..
•
The development of packaging that meets the needs of changing consumer lifestyles is a constant theme in this market. In the dominant sector of chilled processed meats, innovations such as waferthin slices, resealable “zipper” packets and microwaveable comminuted meat products address a growing consumer desire for convenience. Smaller packaging sizes also grew in prominence, reflecting an increase in the number of single- and dual-person households.
•
The development of ethnic-influenced chilled foods is another important theme in the chilled food market, as manufacturers attempt to satisfy a growing consumer demand for more exotic and luxurious taste experiences. In the US, for example, ethnic chilled ready meals, such as sushi and burritos, offer variety to consumers who are looking to diversify their diets.
•
Another underlying trend in the chilled food market is the development of low-fat, low-salt or organic varieties as manufacturers continue to target health-conscious consumers. In Westerm Europe, a greater desire for healthiness is encouraging consumers to turn to healthier sources of protein, such as poultry, fish/seafood and vegetable analogues, at the expense of red meat.
•
Consumers are increasingly responsive to the “freshness’” positioning of chilled foods. Chilled soups and chilled ready meals, for example, are both perceived as being fresher and more flavoursome than their frozen, canned or dehydrated counterparts.
•
Consumer concerns over food safety are playing an increasingly important role in the development of the chilled food market. In Western Europe, for example, continuing consumer unease about the safety of beef (arising from the BSE crisis) has resulted in a shift away from red meat in favour of ham and poultry.
•
In the dominant US market, many consumers have increased their meat consumption, including chilled processed meats, due to their desire to lose weight via the popular, high protein Atkins diet. The Atkins Diet claims to promote weight loss if one eats a high-protein, low-carbohydrate diet.
•
The major distribution trend in the chilled food market is growth in sales through multiple grocers and convenience stores, and the converse decline of sales through independent food stores and “others”. The increasing trend towards supermarkets is attributable to a number of factors, including one-stop shopping convenience, lower prices and a wider choice of branded and private label products.
•
In emerging regional markets such as China, packaged chilled meats are becoming more affordable, as intensified competition and increased production results in a fall in unit prices. Rising income levels and the growing penetration of multiple grocers have also contributed to this trend.
2.2
SOURCES OF GROWTH
2.2.1
Major Markets
•
Chilled food sales totalled US$128.2 billion in 2002, an increase of 1.3% over the previous year. Growth was restricted by difficult economic conditions in Japan, price pressure from private label products and inflation and exchange rate factors. The top 15 markets accounted for 88% of value sales in 2002.
•
The dominant Japanese market suffered a 2.6% decline in local currency, constant value terms over the review period, largely due to the ongoing internal recession and substantial reductions in unit prices. The most significant impact of declining sales came from the large chilled fish/seafood sector, as consumers facing tight shopping budgets increasingly abandoned seafood in favour of cheaper, Western-style cuisine.
•
Russia was the most dynamic major market in 2002, with sales increasing by almost 14% in local currency, constant value terms on 2001. Growth derived mainly from rising real wages, which encouraged consumers to buy higher value goods such as salami in greater quantities. Sales were further boosted by an increase in imports and improvements to product quality from local manufacturers.
•
Other major markets registering a high rate of increase (>5%) in 2001/2002 included France, Spain, the UK and China. In the former three countries, growth was driven mainly by an increased desire for convenience, as busier lifestyles left less time for the household chores. In China meanwhile, the most significant drivers of growth were the increased penetration of refrigerators in households and retail outlets, and new product development by the major manufacturers.
Chart 2.1
Volume Sales of Chilled Food by Major Market 1998/2002
’000 tonnes
Japan US Russia UK Ukraine Italy France Netherlands Spain China Canada Germany Denmark 0
Source:
50
Euromonitor
0,0
00
1, 0
00 ,0
1, 5 00
00 ,0
2, 0 00
00 ,0
2, 5 00
00 ,0
3, 0 00
00 ,0
3, 5 00
00 ,0
4, 0 00
00 ,0
4, 5 00
00 ,0
00
Chart 2.2
Value Sales of Chilled Food by Major Market 1998/2002
US$ million
Japan US Russia UK Italy France Ukraine Netherlands Germany Denmark Canada Sweden Norway Spain China 0
Source:
2.2.2
5,000
10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000
Euromonitor
Product Sectors
•
Chilled processed meat represented by far the largest sector of the chilled food market, and the main driver of growth in 2001/2002. Growth was aided by an improvement in economic conditions in the important Russian market, recovery from the BSE crisis and a consumer shift away from traditional deli counters.
•
Value sales of chilled fish/seafood experienced a sharp decline of nearly 6% in 2002, as Japanese consumers reduced expenditure on chilled fish. Competition from Western-style dishes, such as pasta, pizza and fried chicken, further constricted sales. However, chilled fish/seafood increased in popularity in Western Europe, North America and Australasia in 2002, underpinned by a growing health consciousness among consumers, and the proven health benefits of fish/seafood in comparison to meat.
•
Chilled soup was the most dynamic sector of the chilled food market in 2002, with an almost 11% increase in US dollar terms. In addition to factors such as freshness and taste, growth was driven by a growing consumer desire for convenience.
C hi lle C d hi pr lle oc d fis es h/ se se d af m oo ea d ts p ro C hi d uc lle C ts d hi lu lle nc d h re ki ad t y m ea C hi ls lle d p iz C za hi C lle hi d lle s d/ ou fre p sh C pa hi lle st a d no od C le hi s lle d fo od
Volume sales % growth 2001/2002 7
Source:
4
3
2 4
1
Euromonitor
2
0
-1
-2
2001/2002 1998-2002 CAGR 0
-2
1998/2002 CAGR
Chart 2.3 Chilled Food: Volume Sales by Sector: % Growth 1998/2002
% volume growth 10
6
5 8
6
Chart 2.4
Chilled Food: Value Sales by Sector: % Growth 1998/2002
% value growth 15
10
8
C C hille hi lle d p Value % growth 2001/2002 d r fis oce h/ s se se d af oo me d pr ats C hi od C hi lled uc ts lle d lun ch re ad ki t y m C ea hi lle l d s C Ch piz hi lle illed za d/ fre sou s p C hi h p lle as d no ta o C hi dle lle s d fo od
10
6
4
0
2
1998/2002 CAGR
5
-5
-10
-15
2.3
-2
-4 2001/2002
Source:
0
1998-2002 CAGR
Euromonitor
STIMULI TO GROWTH
•
During the review period, growth in the chilled food market was driven primarily by an increased desire for convenience, as busier work schedules, an increase in the number of working women and growth in single-person households all stimulated consumer demand for meals requiring minimum preparation and cooking time.
•
The trend towards eating away from home, whether at work, in the car, or on the move, also impacted significantly on the chilled market in the survey period. Chilled lunch kits were one of the fastest growing sectors during the 1998-2002 period, owing to the format’s ability to be eaten, any time, anywhere.
•
Another important factor driving growth in chilled food over the review period was the increasing refrigeration space allocated to these products in multiple grocers. As more women joined the workforce, and consequently had less time to do the weekly shopping, packaged chilled food eliminated the need to queue at the delicatessen, meat or fish counter.
•
In emerging national markets, such as Russia and China, growth in chilled food resulted mainly from rising real wages and the increasing availability of good-quality, affordable products. Household penetration of refrigerators and microwave ovens also rose over the review period, helping the development of chilled food.
•
A key factor affecting demand for chilled food in most major markets over the review period was international influences on consumer tastes. Increased foreign travel and a growing incidence of
eating out were the key drivers of a greater consumer willingness to experiment with a wide range of ethnic dishes. •
One further influence on chilled food sales was an increased consumer awareness of health and dietary issues. This was supported by the development of healthier variants containing less fat, as well as a wider range of organic products. In the US, the arrival of the Atkins diet (which claims to promote weight loss if one eats a high-protein, low-carbohydrate diet) provided a rationale for consumers to increase their (already substantial) meat consumption.
•
Packaging improvements also played a vital role in boosting the popularity of chilled food over the review period. Within the dominant sector of chilled processed meats, wafer-thin slices, resealable packets and microwaveable comminuted meat products were just a few innovations that served to maintain consumer interest.
2.4
CONSTRAINTS ON GROWTH
•
Sales of chilled food were highly sensitive to fluctuations in income and consumer confidence throughout the review period, particularly within the developing regions of Asia-Pacific, Eastern Europe, Latin America and Africa and the Middle East. In 2002, growth in the chilled food market was constrained by the ongoing internal recession in Japan and in depressed economic conditions in Argentina and South Africa.
•
Chilled food is particularly susceptible to health scares. In 2001/2002, ongoing consumer concern over the safety of beef negatively affected chilled processed meat sales in a number of major markets, notably, Japan, Germany, the Netherlands, Denmark, Portugal and Switzerland.
•
In addition to the BSE issue, one further factor limiting value growth in a number of countries – Denmark, the Netherlands, Norway, Finland and Sweden and the UK - in 2001/2002 was market maturity, particularly within the dominant sector of chilled processed meat. Health consciousness is increasing, and as a result, many consumers wish to reduce their meat intake.
•
In developing countries such as Vietnam and Morocco, low consumer purchasing power, an abundance of local, fresh food, and an absence of proper refrigeration facilities in households and retail outlets were the main factors hindering market growth in 2001/2002.
•
In relatively mature regional markets such as Australasia, North America and Western Europe, value growth was dampened by the increasing importance of grocery multiples in food distribution, which exploited economies of scale to offer consumers lower prices on a wide range of goods. The growing penetration of private label products, which are increasingly perceived by consumers as rivalling their branded competitors in terms of quality, also had a negative impact on value sales.
2.5
KEY ISSUES FOR MARKET DEVELOPMENT
Manufacturers and retailers seeking to develop the chilled food business will have to take account of the following factors, which may determine future success: •
During the forecast period, it is expected that consumers will continue to face time pressures that prevent them from cooking meals from scratch. Consequently, there will be a strong demand for convenience foods such as chilled ready meals and chilled lunch kits.
•
As lifestyles become more hectic, manufacturers will need to pay more attention to the packaging of their products, in order to offer consumers greater convenience.
•
During the forecast period, manufacturers will need to take account of consumers’ increasing health concerns. Consistent with trends across the entire food market, it seems likely that many chilled foods will be positioned as “functional” products with beneficial health properties.
•
The increasingly multicultural aspect of many Western societies is stimulating consumer interest in various types of ethnic food. Manufacturers will need to extend their product ranges to include
“ethnic” flavours, in order to capitalise on the increasingly cosmopolitan nature of consumer tastes. •
Followng the BSE and foot-and-mouth crises, consumers will increasingly demand better and safer chilled food products. Increasing product standards will benefit larger manufacturers at the expense of small regional companies, which do not have the funds to invest in plant improvements.
•
A crucial factor helping to deliver growth in chilled food will be the ability of supermarkets to offer more space for these products.Manufacturers of chilled foods are likely to be increasingly challenged by the expanding range of frozen, canned and dehydrated alternatives available.
•
Chilled processed meat has reached a certain level of maturity, especially in the case of products such as cooked ham, comminuted beef meat and beefburgers. Consequently, the major players will need to segment their ranges, for example, with products targeted at children, in order to win new consumers as well as to generate more added-value sales.
•
As competition within the global chilled food market intensifies, manufacturers will find it necessary to invest heavily in advertising and promotion in order to retain and build upon market share.
•
Owing to the increasing consolidation of the multiple grocery format, private label products are expected to gain penetration over the forecast period. Consequently, manufacturers of branded goods will find it necessary to continually reinvent their products – in terms of packaging, flavour and texture - in order to differentiate them from their less expensive competitors.
2.6
MARKET PROSPECTS
2.6.1
Regional Opportunities
•
Eastern Europe is projected to be the fastest growing region in the chilled food market, experiencing value growth of 47% over the 2002-2007 period. Growth will derive mainly from rising real wages, which will encourage consumers to buy more expensive, premium goods.
•
The developed regional markets of Australasia, Western Europe and North America will continue to see solid growth over the forecast period, as manufacturers continue to satisfy the increasingly prevalent desire amongst consumers for convenience. Low-fat and ethnic-influenced products will also play an important role in boosting sales, particularly in chilled processed meat and ready meals.
•
Asia-Pacific is predicted to be the slowest growing region over the forecast period, with sales increasing by a value CAGR of just 1.2%, Growth will be restricted by unfavourable market conditions in Japan, largely due to the ongoing internal recession and substantial reductions in unit prices.
Chart 2.5
Chilled Food: Forecast Value Sales Growth by Region 2002/2007
50
9
45
8
40
7
35
6
30 5 25 4 20 3
15
5
1
0
0
W es t
er n
W or ld
2
Eu Ea ro st pe er n Eu N ro or pe th Am er La ic tin a Am er ic As a ia -P ac Af ifi Au ric c a st ra an la d si M a id dl e Ea st
10
2002/2007 CAGR
Value % growth 2002/2007
% US$ value growth
2002/2007
Source:
2.6.2
2002-2007 CAGR
Euromonitor
Product Sectors
•
Chilled processed meat will remain the largest sector of the market and the main driver of growth over the forecast period. Much of this growth will stem from the increased availability and convenience of packaged sliced meats, as consumers move away from the traditional deli counter.
•
Chilled soup will be the most dynamic sector of the chilled food market over the 2002-2007 period, with a near 46% increase in value sales. Growth will be consistent with the sector’s emergence from a low base, although factors such as convenience, freshness and consumer interest in ethnic food will also contribute to increased sales.
•
The chilled fish/seafood sector is expected to experience static growth over the forecast period, despite the product’s growing perception as a healthy alternative to red meat. The main factor behind this discrepancy is a continued decline in consumption in Japan, where consumers are increasingly abandoning seafood in favour of Western-style dishes, such as pasta, pizza and fried chicken.
C C hille hi lle d p d r fis oce h/ se sse d af oo me d at pr s C hi od C l hi led uct lle s d lunc re h ad ki t y m C ea hi lle l d s p C C hi hill izza e lle d/ d s fre ou s p C hi h p lle as d no ta o C hi dle lle s d fo od
Volume % sales growth 2002/2007
Source:
45 8
40 7
35 6
30
25
20 4
15 3
10 2
5
Euromonitor
1
0 0
-5
-1
-10
-2
2002/2007 2002-2007 CAGR
2002/2007 CAGR
Chart 2.6 Chilled Food: Forecast Volume Sales Growth by Sector 2002/2007
% volume growth
5
Chart 2.7
Chilled Food: Forecast Value Sales Growth by Sector 2002/2007
% value growth 50
9 8 7 6
30
5 4
20 3 2
10
1 0
C C hille hi lle d p d r fis oce h/ s se se d af oo me d at pr s C od hi l C hi led uct lle s d lunc re h ad ki t y m C e hi lle als d C Ch pizz hi lle illed a d/ fre sou p s C hi h p lle as d no ta o C hi dle s lle d fo od
0
-10
2002/2007
Source:
2.7
2002/2007 CAGR
Value % sales growth 2002/2007
40
-1 -2
2002-2007 CAGR
Euromonitor
FUTURE MARKET CHARACTERISTICS
By the year 2007, the market for chilled food will be characterised by the following key trends: •
Development of packaging that meets the needs of changing consumer lifestyles will be a constant theme throughout the forecast period, as manufacturers continue to produce new, convenient formats for their products.
•
The development of ethnic flavours and ingredients will be an important theme, as manufacturers attempt to capitalise upon a growing consumer demand for more exotic taste experiences.
•
Following recent food crises affecting chilled processed meat, manufacturers are expected to develop higher quality products with labels guaranteeing their country of origin.
•
In developed markets, the major players are likely to increasingly segment their product ranges, for example, with products targeted at children, in an attempt to win new customers and generate more added-value sales.
•
In the emerging regional markets of Eastern Europe, Asia-Pacific, Africa and the Middle East and Latin America, intensified price competition between manufacturers and retailers will make chilled food more affordable to all income groups.
•
Manufacturers will continue to package their products in smaller portions, as demographic trends towards smaller households and informal eating habits prevail.
•
Another underlying trend in the chilled food market over the forecast period will be the development of healthier variants, such as those containing less fat or less salt. Fortified products (with calcium and vitamins) are also expected to consolidate a niche segment of the market.
•
Organic chilled food will benefit from an increase in consumer demand for organic food in general, in the light of growing concerns over artificial ingredients and genetically-modified foods.
•
In developed markets and sectors, manufacturers will continue to compensate for high levels of penetration by encouraging consumers to trade up to increasingly sophisticated “restaurant quality” products offering greater quality and convenience.
•
An increase in the number of consumers over the age of 60 will also present an opportunity for senior-targeted chilled food (eg calcium-rich formulations for osteoporosis sufferers).
