Following Hot Year for Frozen Foods,
Germany Braces for Cold Sticker Shock
By JOHN M. SAULNIER QFFI Chief Editor & Publisher

Felix Ahlers, director of brand products and foreign markets for FRoSTA AG, shows a new ready meal taken from a retail display cabinet at the FRoSTA Bistro outlet on Grosse Johannisstrasse in Hamburg. The restaurant prepares and serves a wide assortment of products from the company’s range.

The German retail market was up in 2008, with A-brand ready meals sales products posting gain of 20%. That was well ahead of private label’s +8%. But with prices rising, what’s next?

Higher prices coupled with tighter supplies for numerous raw materials, plus rising costs of production make for challenging times ahead for food producers and consumers alike in 2008. One thing that is certain in today’s marketplace is that end users in Europe and around the world will continue to pay more at the store for all kinds of products.

By now, the drumbeat of unsettling news about rising commodity prices for everything from wheat and corn to fish and fowl has prepared shoppers for sticker shock in the shop. What remains to be seen is to what extent consumers will change their buying patterns to cope with inflation.

The chief executive officer of a Tenglemann Group-owned food retailing chain in the USA, Eric Clas of A&P, has pegged food price inflation in that country at 8% since just the beginning of this year – that on top of a cumulative 4% rise in 2007. Nonetheless, he waved a cautionary yellow flag rather than a red flag of danger during an interview on March 30.

Noting that people tend to shift buying decisions to adjust to rising prices, Clas commented: “The trend is for food prices to continue to rise. But consumers are savvy. If the price of chicken goes through the roof, they will buy pork.”

On the other side of the Atlantic, that may not exactly be music to the ears of Dietmar Vosskötter, even though his Ostbevern, Germany-headquartered company sells mini-pork schnitzels in addition to a much wider menu of value-added frozen chicken products.

“The problem is that chicken, pigs and cattle all feed on corn, which like wheat and soybeans, has become more than twice as expensive to purchase in the last 18 months,” said the managing director of Vossko-Tiefkühlkost GmbH. “But while our costs are rising, some buyers at retail chains still resist reality and decline to pay producers enough to keep up with costs. This can’t last indefinitely, though.”

Unlike the frozen potato, vegetable and fishery sectors, which have had greater success passing on escalating costs to retailers, intense competition in the international poultry segment has resulted in less flexibility on the buyer’s side of the table.

Still, the launch of interesting new products ranging from microwaveable Skewered Chicken containing just 1% fat, to Hawaii-style Medallions has kept customers coming back to Vossko for more. Volume sales last year rose by 10%, while value advanced at a 15% clip. So far this year (as of early March), volume was up 6% compared to 18% for value.

Why was volume growth trending down, Quick Frozen Foods International wanted to know. “Because competitors are offering unrealistically lower prices to buy business,” replied Mr. Vosskötter.

Generally speaking, 2007 was a good year for most players in the German frozen food industry despite rising commodity costs.

Bremerhaven-headquartered FRoSTA AG, which is engaged in the production and marketing of ready meals, fish dishes, vegetable and fruit products, reported a 13.5% increase in sales over the previous year, at 349 million euros. Pre-tax profits rose by 2 million euros to 16.6 million. Post-tax profits, meanwhile, advanced by 1.8 million euros to 12.2 million, according to the corporate annual report released on March 28.

A worker carefully inspects breaded squid rings moving down the line at the Costa Meeresspezialitäten GmbH & Co. KG plant in Emden, Germany.

Private label product turnover advanced to 219 million euros, while catering, home delivery and industrial sales rose by six million euros to 64 million.

This writer met up with Felix Ahlers, who runs the company’s branded products operation and oversees foreign markets, earlier last month at the FRoSTA Bistro in Hamburg, where the menu features everything from Thai Green Curry and India Tandoori to Wild Salmon Fillets with Spinach and Paella. All items are from FRoSTA’s retail product range, and are microwave oven-prepared for customers on the premises.

“We are quite happy with ready meal sales, which grew by almost 15% last year,” said Mr. Ahlers, noting that many new products are first consumer tested at the FRoSTA Bistro before being launched.
Among product segments, the annual report spelled out that ready meals ranked “the strongest with a growth of 30%, and is clearly more dynamic than the whole market.” Fish products came in second with a 12% increase in sales, followed by a 4% growth rate for frozen vegetables.

One-third of the company’s turnover was generated abroad, where sales climbed by 24% to 123 million euros. FRoSTA’s presence outside of Germany extends from the UK and France to the Netherlands, Italy and Central Europe. Recent television advertising campaigns have further enhanced its profile in Poland, Hungary and the Czech Republic. In fact, it is the market leader for frozen fish products in Poland.

On the home front, brand turnover increased by 6.5% to 49 million euros. “In Germany,” noted the annual report, “five years after its introduction, FRoSTA’s ‘Reinheitsgebot’ (the German term for ‘Purity Ordinance’) continues to prevail with an increasing recognition for the unique concept of consequently relinquishing the use of any taste enhancers, aromas or food coloring.”

Following the acquisition of Costa by apetito, executives from both German frozen food companies recently welcomed Quick Frozen Foods International to the Costa seafood processing factory in Emden. Seen from left to right are: Matthias Mertens, marketing director of apetito convenience GmbH & Co. KG; Manfred Rinderer, managing director of apetito convenience; and Conrad Bless, managing director of Costa.

With a share of 23% in December of 2007 and 26.5% in February of this year, as calculated by A.C. Nielsen, FRoSTA retains market leadership in the frozen ready meals category. Four of its dishes – Bami Goreng, Nasi Goreng, Paella and Tagliatelle Wildlachs – are rated among the top five best sellers of frozen food products in Germany, according to Nielsen.

But with the perennial presence of Iglo and the introduction of apetito products into retail cabinets several years ago, QFFI wanted to know Mr. Ahler’s thinking about rising competition among A-brand producers in the frozen food aisle.

“There may be a place for more than one brand,” he replied, rather diplomatically. At the moment, a rising tide of demand for convenience frozen food products seems to be lifting a number of ships.
What has the FRoSTA executive most concerned at the moment is maintaining growth during a time when rising raw material costs show no sign of retreating.

“Prices for our ingredients are going up all the time,” he stated. “Alaska pollock alone was up by 30% last year, and this is something that can’t be negotiated away. For this reason, further price increases for consumers are unfortunately inevitable.”

Costa and apetito Join Forces

Vion Food Group executives meet with Quick Frozen Foods International editors. Dusseldorf-headquartered Frank Stratmann (right), is managing director for the convenience division’s pre-packed fresh and frozen retail business unit, while Wunstorf-based Günter Bahlmann is export manager for the frozen retail business unit of Vion Convenience GmbH.

Workers at the renovated Vion GmbH factory in Germany top off frozen hamburgers with buns at the fast-moving production line. Capacity is 80,000 units per day!

Another company all too aware of the climbing cost of fishery products is Costa Meeresspezialitäten GmbH & Co. KG (Phone: +49 21/96 13-16), which was acquired by Rheine-headquartered apetito (www.apetito.info) from Dr. Oetker last Nov. 1. The frozen fish and seafood specialist imports raw materials from around the world – ranging from pollock blocks and squid to shrimp and salmon – for further processing into value-added products at its factory in Emden.

Managing Director Conrad Bless, when giving QFFI a guided tour of the state-of-the-art plant on March 8, pointed that it produces upwards of 50 different products. Among the myriad of retail offerings are Salmon with Dill and Lemon in 250-gram boxes, Tuna Fillets in 265-gram packages, Pacific Prawns in 500-gram bags, and Shrimp Rings in 210-gram boxes.

Joining the tour were Manfred Rinderer and Matthias Mertens, who respectively are directors of apetito convenience GmbH & Co. KG. Marketing and public relations specialist Ruth Fislage was also on hand.
No doubt apetito made the investment in buying Costa to move more deeply into a sector with expanding demand for frozen ready-made fishery products, as the market in Germany grew by 8.7% last year to 761 million euros. The segment is second to pizza’s overall sales of 861 million euros, and Costa is involved there too as a producer and marketer of seafood-topped pizzas. Only the bakery sector had a higher percentage increase in 2007, +8.1%, with 496 million euros in turnover. The overall frozen food category’s gain – excluding Aldi retail sales, ice cream, wild game and poultry – was 4.9% on sales of 297,345 million euros, according to A.C. Nielsen.

Mr. Rinderer, who is in charge of sales and marketing, said that quality branded products such as Costa and apetito are steadily gaining ground. This is partly at the expense of private labels or store brands, which claim a large share of the market.

“We had a good year in 2007, enjoying a 40% increase in retail product sales,” he was pleased to report. “And prospects for 2008 remain bright, with continued healthy growth during the first two months.”

Reinhold Hischke is managing director of Vion Convenience GmbH, in charge of a state-of-the-art plant in Wunstorf.

Sales of frozen food A-brands were up a solid 20% in Germany last year, compared to just 8% for private labels and a negative -9% performance for B- and C-brands,which don’t generally invest in advertising and promotion, pointed our Mr. Mertens.

The apetito marketing team, which spent a double-digit budget in the millions of euros last year on national television and radio commercials and print advertising to burnish it brand image and support new rollouts such as the Pasta e Basta range of prepared dishes, will continue the push this year. Another double-digit budget has been approved for ongoing efforts.

“We are working hard to build on last year’s achievements, which included a 63% gain in turnover, a 56% improvement in market share, a 30% advance in customer satisfaction, and a 24% increase in weighted distribution, said Mr. Mertens, quoting statistics from A.C. Nielsen.

The TV advertising blitz began in earnest during March, with the airing of a spot focusing on the apetito Schlemmerpfannen line. In May another commercial, this one prompting the Pasta e Basta assortment of items including Cappelletti Tomate Mozzarella Spaghetti with Wild Salmon in 400-gram boxes, will run. Both will continue the “We Love it Fresh” theme unveiled last year, which depicts professional chefs discussing the wholesome flavor of ingredients used in apetito recipes.

Other strategies and tactics employed to stimulate retail sales will include: tasting promotions; discount coupon drops; value packs offering 100 extra grams of product. Last but not least, the company has redesigned its graphic look.

Meeting with Vion’s Meat Meisters

QFFI editors met with executives of the Vion Food Group at the company’s Vion Convenience GmbH frozen food plant in Wunstorf (a company of the Vion frozen retail business unit within the Convenience division). The plant specializes in producing microwaveable hamburgers, hot dogs, cevapcici (small, seasoned rolls of grilled meat) and gyros, as well as snacks such as Pommes Frites and Curry Wurst, and numerous kinds of ready meals featuring meat and fish, plus vegetarian main dishes. It is one of Best, Holland-headquartered Vion Convenience Division’s five business units in Germany, which include Frozen Retail, Pre-packed Fresh, Processed Meat, Chilled Food and Food Service) Other companies are:

• Artland and Keba, which packs ready-to-serve pork schnitzels and hamburgers in Badberger and Karben.
• FVZ Westfood in Holzwickede, which makes partially precooked frozen convenience items for the catering sector.
• Vion Hilden GmbH, which produces specialties and imports beef, ostrich, lamb and bison. It also offers an assortment of vegetarian lasagne and meatless hamburgers.

Vion Convenience contributed 1.2 billion euros to the Vion Food Group’s 7.1 billion euros in international sales last year. It employs 3,884 people out of the the company-wide labor pool of 16, 214.

“We are pioneers in the area of deep frozen products, and were the first in the German market to recognize the future need for easy-to-prepare frozen minced meat,” said Frank Stratmann, managing director of the company’s pre-packed fresh and frozen retail business unit in Düsseldorf. “Our latest generation of top-quality microwave-ready convenience products is Vion’s answer to the trend toward healthy and convenient eating.”

Products under Vion’s proprietary Quisit brand name run the gamut from Rib Burger snacks and Mini Skewers in Singara sauce with wild rice, to Express-Menu Pork Medallions in cranberry sauce with farfalle. Among an increasing number of non red-meat dishes offered are Sea Salmon in herb sauce with mixed vegetables and potato puree, and Red Thai Curry with mango and pineapple.

The Vion units are also engaged in co-packing for major frozen food brand names, as well as packing private labels for major international retail discount chains. Other sales channels are non-discount retail operators, the foodservice sector, industrial accounts and home-service providers.

“We work very closely with most of the major A- brands and own label buyers, as approximately 80% of our output here is retail-linked. Fortunately this business continued intact even after one production wing of the Wunsdorf factory burned down in November of 2006, which temporarily resulted in a 30% loss of capacity. We had to temporarily outsource some production to meet demand,” said Reinhold Hischke, managing director.

The company has since invested 15 million euros to add a tray line to an existing hall, rather than rebuild the razed structure. It came on line in January of this year, providing additional capacity of 15,000 tons per year.

“We now have three production halls under one roof, which are turning out about 35,000 tons of finished product a year,” said Mr. Hischke. “No slaughtering or deboning is done here. Most of the meat raw materials are supplied by other members of the Vion Group.”

The plant produces its own sauce as well as some 1,000 tons of soup per year. It is outfitted with top shelf gear to get the job done, including Key Technology vibratory lines, Scanvaegt and Mettler Toledo weighing systems, Sprinter packaging equipment, and a CPS CP 201 case packing system.

When this writer toured the plant it was in full swing, with workers packing hamburgers on one line, Turkish-style kebabs on another, and gyros on the third line. It was early during the night shift at the highly efficient factory which typically operates from early in the morning until 11 PM to satisfy the growing appetite in Germany and throughout the EU for frozen convenience foods.

“Frozen ready meals represent the strongest segment within the total ready meal sector, where the tray market in Western Europe plays a fast growing role within this market,” said Günter Bahlmann, export manager. ‘Modern, compartmental tray products are gradually replacing traditional ready meals.”

Salomon FoodWorld

Salomon FoodWorld Managing Director Bernd Stark and Conny Schomburg, area sales manager, have on the job promoting finger foods and other products produced and marketed by the innovative foodservice-oriented company.

At the heart of Vion’s foodservice business strongly beats Salomon FoodWorld and the talents of Philip Dean Kruk-De la Cruz. That’s because in addition to being co-managing director of the Grossostheim-Ringheim-based company with Bernd Stark, he is also managing director of the Europe foodservice business unit of Vion’s convenience division. As such, all foodservice-oriented operations in the organization report to Mr. Kruk-De la Cruz. He in turn reports to Ton Christiaanse, executive board member of the Vion Food Group and chief operating officer of its Convenience division, based at headquarters in the Netherlands.

As an innovator in frozen finger foods as well as a major supplier of meat products and other items to Burger King in Germany and beyond, Salomon can rightfully take credit for first introducing Poppers to Germany and other markets in Europe during the mid-1990s. A number of years ago, the popular breaded jalapeño pepper and cheese cream appetizer of the same name became the exclusive property of McCain Foods, which acquired it from Appleton, Wisconsin, USA-based Anchor Foods.

“I remember meeting Scott Follet of Anchor at the SIAL Exhibition in Paris 13 years ago and tasting the product,” recalled the Salomon FoodWorld managing director. “Right away I asked him for exclusivity to sell it in Europe. He suggested that I first order a container load, and then we would talk about marketing possibilities. I ordered two containers, and five or six months later we had exclusivity.”

After the acquisition of Poppers by McCain Foods, Salomon continued distributing them in Germany in cooperation with the company until the beginning of this year, when the arrangement expired. Shortly thereafter, certainly not surprisingly, Europe’s frozen finger food pioneer launched its own range of Peppers Cream Cheese, Peppers Red & Hot, PRIMO and Breaded Mozzarella Sticks as well as Thin- and Thick-cut Beer Battered Onion Rings. Each jalapeño pepper snack is now available to gastronomy sector buyers throughout the EU, Middle East and beyond.

Also on the fast track at Salomon FoodWorld are two new Italian-style specialties [See related story on this page.] Diavola Mozzarella Stick and Spinaci Stuffed Pepper, plus Olive Cheese Bites and Tomato Cheese Bites.

“These newly launched impulse Italian appetizers are loaded with flavor and exemplify the increasingly popular Mediterranean way of living,” said Managing Director Stark.

“On another level,” he continued, “our World of India product line is doing well. After being highly profiled last October during the Anuga in Cologne, we are getting repeat orders for the five different small products of the Indian range (chicken, vegetarian and sweet) as well as for the Chik’n® Stick Tandoori. And during recent India Week celebrations in Germany, there were major promotions at 400 or more restaurants throughout the country.”

Salomon FoodWorld is also highlighting traditional German cuisine under its finger food range with the introduction of fully-baked Mini-Schnitzel in bulk packs for foodservice clients.

“Mini Schnitzels are enjoyed by children and adults, as the product is not only fun to eat but sophisticated in taste,” said Mr. Stark. “It offers a price-value benefit for foodservice operators.”

With the economic good times apparently still rolling in Germany as well as other European countries encompassing the world of Salomon FoodWorld, Quick Frozen Foods International asked the managing director for his macro economic assessment for things to come in the near- and mid-term.

“The economy remains positive in Germany, but consumers are careful in their spending,” he replied. “People are speaking positively, but deep down emotions are being reflected in cautious behavior.”
“The bottom line is all about value for money, and that’s what we deliver,” continued Mr. Stark. “Four mini schnitzels with a salad can be menued for four euros with a decent profit margin. The result is that everybody is happy – the producer, the restaurateur and the consumer.”

Eichkamp Expanding Big-time

Reinhard Vossmann, managing director of Eichkamp, walks down the long, 365-meter hall that runs the length of his sprawling meat processing plant in Germany.

Beef Roulades, which are hand-made by Eichkamp, are traditional German rolls of sliced beef stuffed with a sophisticated filling. The are also available as chicken or pork rolls.

Frozen corn tortilla chips made from yellow or white corn have been introduced by Mex-Al. Offered as triangular and rectangular strips, and seasoned according to customer specifications, they are distributed in seven-kilogram cases.

Build it, and they will come. The visionary theme of the baseball film Field of Dreams is very much a driving force behind Reinhard Vossmann, the managing director of Eichkamp Fleisch- und Wurstwaren (www.eichkamp.de). The Garrel-based meat processing company, which doubled its factory floor space last year to 18,000 square meters, is expanding capacity again.

Showing editors of Quick Frozen Foods International through the halls of the sprawling facility, which is 365 meters in length – “One meter for every day of the year” quipped Mr. Vossmann – it was clear that the managing director has big plans for the future at this site in the agribusiness region of Oldenburger-Münsterland.

“We hope to triple current current annual turnover of 50 million euros to 150 million in the not too distant future, and are getting ready to do so by increasing production of foodservice and retail frozen and chilled products.”

Eichkamp started out in 1996, primarily as a packer of poultry items – ranging from wing and drumstick snack specialties, to complete meal solutions including whole birds, value-added breaded fillets and burgers. A second leg of the Vossmann Group of Companies is engaged in agriculture, with turkey breeding and farming in the forefront of its activities.

“We raise approximately 600,000 turkeys per year,” pointed out the managing director, who then added, “I am really a farmer at heart.”

Right. The modestly-spoken farmer-food processor is also a cutting-edge energy technology entrepreneur active in wind park development, photovoltaic solar cell sales, biofuel formulation, and green power plant projects.

State-of-the-art technology is also the hallmark of his food processing factory, which has production capacity of 35,000 tons per annum. The dual-chamber plant – one is dedicated to frozen production and the other to making chilled and smoked product – is outfitted with a CFS Auto Grind 280 column loader, Formcook frying line, Viesman freezing system, plus kit from Handtmann, Fessman, Vemag and Sprematic Ondermaschinn.

Eichkamp does a lot of work for name brand and private label frozen ready meal processors. It supplies them with center-of-the-plate, value-added meal components ranging from beef roulade and chicken spareribs to bratwurst on sticks, meatballs and minced mini meat bites filled with cream cheese. It also makes vegetable-based snacks and side dishes such as spinach medallions, broccoli nuggets and Texas bean burgers.

Mex-Al Corn Tortilla Chips and Mucho Mas

Richard Wolharn is managing director of Aachen-based Mex-Al El Sombrero Import Export GmbH.

Speaking of Texas, the leading German supplier of authentic Tex-Mex as well as Mexican food and drink specialties in Germany, and perhaps in all of northern Europe, is Aachen-headquartered Mex-Al El Sombrero Import Export GmbH. QFFI caught up with the managing director of the company, Richard Wolharn, at his stand during the recently held Internorga in Hamburg.

Mex-Al, a pioneer in introducing imported Mexican and Texican cuisine to the German foodservice sector, is also a producer of frozen Mexican-style products. Its product portfolio, which spans the regional dish pallet of Mexico, the Southwestern United States and Central America, is distributed from regional depots in Forchheim and Merseburg in addition to Aachen.

Finger foods as well as main dishes and desserts are offered, ranging from Tacos Chorizo con Papa (rolled corn tortilla filled with spicy chorizo sausage and potatoes) and Quesadillas (flour tortilla featuring a chili and cheese filling) to Chili-con-Carne, Burritos (with various meat, vegetable and bean fillings), Tamales Pavo Pico (corn dough filled with turkey, presented in a corn husk), to Banana Bites and Burritos Dulces (a flour tortilla filled with a fruity filling of mango and banana).

At Internorga, the company was spotlighting frozen corn tortilla chips, which are custom-seasoned and available in a number of shapes. They are ideal for dipping into salsa casera, jalapeño cheese sauce, or guacamole seasoned with red chili, which the company also carries.

Mex-Al (Phone: +45 241-918 540) is currently boosting its export activities, with markets developing nicely in Yugoslavia and Slovenia, Mr. Wolharn told Quick Frozen Foods International.