Every day low prices offered by dueling discounters translates to great bargains for consumers, and greater steps by manufacturers toward more efficient production - including outsourcing.

As children, many of us were told by our parents, "Don't cry before you're hurt," or words to that effect, as we complained about some impending doom. The Danish retail industry has been behaving in a similar fashion.

One year ago, it was reported that the German chain Lidl was planning to open as many as 100 stores in Denmark. While the hard discounter has yet to open a single outlet, the retail sector has responded by lowering prices even further in anticipation.

With prices already at rock bottom levels, this can't possibly be good for the profitability of the suppliers or the stores. Indeed, nearly all the processors interviewed for this year's annual industry survey complained about the difficulties in maintaining any sort of profit in Denmark.

With a population of less than five and a half million, it is hard to understand why any retailer would want to enter the Danish market. To the casual observer, the country appears to be over-stored as it is. In addition to Lidl, French giant Carrefour is rumored to be considering entering the market. Sooner or later something will have to give as the country can only support so many stores.

By most estimates, discounters control 25-30% of the market for fast moving goods. According to Erling Petersen, head of retail trade organization DLF (Fax: 45-3333-9505), this number is expected to increase to 40% by 2010. Furthermore, the discounters' main emphasis is on private labels, making it even more difficult for processors to promote their brands.

A visit to an Aldi store in the city of Aarhus confirmed the exceptionally low prices on offer in Denmark. Ardo peas in a 750g polybag were available for DKK 11.95, or about $1.93, while the same quantity of Crop's pasta mix could be had for $3.21. One kilogram of pommes frites from Germany cost $1.05, 750 grams of broccoli mix went for $1.60, and the meal could be rounded out with four 95g hamburgers for $2.57. A 350g ham pizza from Roncadin was priced at $1.93, and two 150g chicken spring rolls from Quality Food Products in Belgium cost $1.44.

For one to get the full idea of how pathetically low these prices are, it must be understood that they include a 25% value added tax. Besides drinks, the frozen food category took up the biggest amount of floor space - so hopefully Aldi is making some money on this sector.

Bodil Jensen (left) and Erling Petersen of DLF have plans to spark interest in frozen foods. This summer, the first of a number of events will be launched, geared to increase consumer awareness and gain press coverage.

Whatever they make, the store wasn't creating much in the way of profits the day of Quick Frozen Foods International magazine's visit, as the level of traffic was very light. Aldi's share of the Danish market is only about 2%, so presumably consumers have found even lower prices elsewhere.

Some discounters have resorted to promoting certain items below cost to retain market share and show they have the lowest prices. One processor interviewed was troubled because a chain had sold a product of his well below their cost basis. The following week a competing chain sold the same item at an even lower price. The manufacturer was afraid the first retailer would think the second was paying less when they were both paying the same price for the item!

In an attempt to remain competitive in both the home and export markets, more processors are shifting production east - either to Asia or Eastern Europe - where the combination of lower labor costs and EU grants has proved to be an irresistible lure. Everything from ready meals to spring rolls is coming from outside Denmark. Reportedly, 50% of all bacon and 100% of all the private label bacon now comes from Poland, which is astonishing considering that Denmark is Europe's biggest exporter of pork products.

This is not to say that local production has not remained strong. It's just that if a processor is near capacity, it makes more sense to manufacture in lower cost countries than to add more factory space in Denmark.

Reduced prices in supermarkets should be a boon to the Danish consumer, but there are indications that he, or she, may not really care. The economy has done well in recent years, with growth increasing to 2.4% in 2004 - up from the normal 2%. This was due entirely to domestic demand, spurred by higher disposable incomes.

Still feeling the effects of the dollar's depreciation, exports are not expected to have a net effect on growth until at least 2006. Danes have been on a spending spree with sellers of housing, clothing, holiday packages and cars being the biggest beneficiaries. Unfortunately, the only consumable goods segments that saw growth last year were alcohol and tobacco, which rose 4.8%, thanks to cuts in duties that took effect in 2003.

DLF's Petersen confirmed that price pressure has eroded the quality of many frozen products. While per-capita consumption of frozens has kept Denmark ranked among the top three or four countries globally, there doesn't seem to be much growth. To counter this trend, the trade association president is launching a campaign to change consumer attitudes. Backed by the 18 members of the Danish Frozen Food Association, a number of other companies in the equipment, storage and logistics sectors as well as retailers will take part in the three-year promotion.

Under the guidance of Bodil Jensen, a company has been hired to survey 500 consumers via the Internet. Current attitudes about frozen foods will be recorded and one year later, the same people will be questioned to see if perceptions have changed.

In the meantime, working with a limited budget, a series of events is planned in order to get consumers involved and obtain press coverage. This summer, a Frozen Food Festival is planned in a Copenhagen park. Processors will have stands for showing their product ranges and giving away samples. Pamphlets are being designed featuring recipes and explaining the nutritional benefits of frozens.

In another promotion, a competition will challenge five cooking schools to come up with recipes using frozen food. With a number of well known chefs involved, it is expected to generate strong press coverage.

Another effort will include a guide for single households and families, pointing out the benefits of frozen foods to these distinct sectors. Apparently some Danes still feel guilty about using frozens, so this effort will attempt to dispel these attitudes.

For many years there has been talk in the industry about putting together a consumer campaign, but nothing has ever happened. DLF and the Danish Frozen Food Association must be applauded for finally making it a reality.

Easyfood

By purposely avoiding the retail sector, Kolding-based Easyfood (www.easyfood.as) continues to enjoy strong growth levels. Currently running three shifts five days a week, plus several shifts on weekends, the maker of bread-based products is at full capacity. Managing Director Flemming Paasch explained that while there were some anxious moments in the early days, the company grew by 50% last year. Similar growth rates are forecast for 2005, and a turnover of DKK 100 million is expected to be achieved by the end of the year. Seventy percent of the results are generated in Denmark, where the majority of products are sold in the foodservice and bake-off sectors.

Four ranges are produced: sandwich bread, coffee bread, convenience products and gourmet bread. Within these ranges there are three sectors: Easy for you (foodservice), Easy on the go (products sold warm to be eaten immediately) and Easy takeaway (products eaten at home).

Products represented include a wide assortment of focaccia and savory-based offerings as well as a group of sweet items. Everything is available for bake-off, which has seen considerable growth in Europe.

Product development is a strong point, and an amazing array of over 100 new items was introduced in 2004. Nearly as many will be developed this year, but Easyfood does not take a "shot in the dark" approach. The company works with customers to adapt products to their needs and local tastes.

On the export front, Sweden and Norway are strong, and Iceland where "we are shipping one container after another," has been of particular interest. France and Germany, where Easyfood supplies the Quick and Mike's sandwich chains respectively, are the biggest markets. Salad bread is sold to McDonald's in Sweden and Denmark, where the fast food giant takes thaw-and-serve cinnamon rolls as well.

Flemming Paasch has a lot to be happy about. Backed by a strong program of product development, Easyfood increased sales by 50% last year.

Gram Equipment's Morten Lund Thomsen stands proudly with part of a large processing line being built in the company's factory. The flexible line can be used for ice cream sandwiches, stick products or candy bars.

Leaving no stone unturned, Easyfood is supplying heat cabins and a range of products to vendors for summertime events. The program has been a bigger success than anticipated, and 70 to one 100 cabins are in use at any given time.

With the factory at capacity, the company has turned to outsourcing and currently has production partners in France, Poland and Denmark. Outside facilities are constantly audited to maintain quality.

Gram Equipment

It has been a tough couple of years in the ice cream industry, but things are turning around for machinery maker Gram Equipment (www.gram-equipment.com).

In recent years the company has concentrated on a range of smaller machines for medium size producers to counter a drop in demand from the big boys. However, the Vojens-based firm is now seeing an uptick for the larger capacity equipment it is known for.

Morten Lund Thomsen, export manager, told QFFI that Gram recently installed a third line with a capacity of 36,000 stick products per hour for a European producer. The USA, where traditionally most of the big lines have been sold, has been slow. However, given the low dollar situation, business has been picking up. Still, Europe remains the strongest market.

Recently, stick inserter companies Stormax and Norwood were purchased. Previously, there were four such manufacturers including Gram, but these buyouts have narrowed the playing field considerably. Stormax equipment is largely high capacity, so clearly Gram has faith in the future of the upper end of the market.

This is not to say the small and medium end has been ignored. To the contrary, Gram has expanded its presence in this sector with new products for South America, Asia, South Africa and the Middle East. The latest development is new wrapper, aimed at the medium end of the market. Incorporating most of the features of Gram's higher capacity wrappers, the new machine is offered at a considerably lower cost.

Commenting on market conditions, Managing Director Ove Dalum said that demand in South America and Asia had been strong and that 2004 had been a very good year. "This year is a bit slower," he added, "but we have lots of quotes in the pipeline. The market is difficult, but we will still be here in 10 years."

Cabinplant

Cabinplant has solved the problem of sticky items and multihead weighers. A new patent pending screw conveyor easily handles difficult products like raw chicken fillets.

While the big news at Cabinplant (www.cabinplant.com) may be the change in ownership, new developments at the equipment manufacturer have continued at a steady pace.

Designing a multihead weigher that can handle sticky products has been sort of a holy grail in the industry. Ralf Astrup, production manager, informed QFFI that the Haarby company has come up with a solution after much testing.

Utilizing a new, patent pending screw feeding system, Cabinplant weighers can successfully handle very difficult products, many of which could not previously be subjected to multihead weighing. Items such as marinated chicken breasts, cooked pasta, herring fillets and shredded cheese, among others, have been accurately weighed and portioned. Extensive trials showed that with the new technology, products are not damaged during conveyance and do not cluster.

What this means for a processor is an end to the manual weighing of products that often resulted in costly giveaways. Staff can be reduced and hygiene is increased as fewer hands are involved.

Launched at the recent Interpack Exhibition in Germany, the new multihead weigher attracted much attention. A number of machines have been out on field tests, where the response has been positive. One is already being used for eels in Vietnam.

In other developments, Jan Helskov Hansen, financial manager, mentioned that in April a shrimp processing line was completed for Global Foods in the UAE. In Egypt, a plant for processing vegetables is under way for Farm Frites, and a large shrimp processing line is being built in Greece.

Lars Kops stated that other new equipment has been designed. To meet the more stringent traceability requirements, a machine for taking condensation off packs for ink jetting has been built and a new pizza topping doser is on test in Germany. Reportedly, the machine delivers completely even distribution of a variety of toppings at a rate of 60 pizzas per minute.

Daloon

In an effort to better compete with goods from low labor countries, cost reduction was an ongoing theme at Daloon (www.daloon.com) during the past year. A fully automated packaging line is operational at the Nyborg-based producer of spring rolls, and it is currently in use 21 hours a day. Managing Director Hemming Van explained that he encountered some teething problems with the machinery when first installed, but now that things are up and running, he's saving a lot on labor. Better food safety is a side benefit as no hands touch the product.

With the German market still flat, efforts are being made to increase activities elsewhere. A new foodservice platform has been adopted for Europe in an effort to increase market share in that sector. Spain was cited as "very promising" and the company has listings with a major retailer there. Two more are expected to come on board this year.

Daloon's range of microwaveable spring rolls has been re-launched with new recipes and packaging. Reportedly, the product now comes out crispy, which has been a big help in increasing sales in both the domestic and export markets. Interest has been shown from further afield, mainly the USA.

Daloon also produces a significant range of Indian products, primarily for the UK market. However, as the cuisine has now spread to Europe, opportunities are seen on the continent.

Tulip Food Company

As part of the giant Danish Crown group, Tulip Food Company (www.tulipfood.dk) is responsible for developing and marketing frozen convenience products. The company has made further inroads this year by launching the Livretter ("Favorite Dishes") sub-brand in the home market. At the Randers headquarters, Jorgen Christensen, marketing manager, told QFFI that the range of ready meals was developed from recipes taken from women's magazines. In keeping with the latest trends, all items have fat content of 3% or less.

Daloon has re-launched its microwaveable range of spring rolls, and the market has responded in a positive way. The new rolls are crispy when they come out of a microwave oven.	The Livretter, or "Easy Living" range of ready meals from Tulip Food Company, has been launched in Denmark. Distribution in Germany will follow soon. All products, such as chicken in red wine sauce, have a fat content of 3% or less.

Designed to cross borders, the assortment is being introduced in Germany under the "Easy Cooking" label. Lighter than traditional German meals, it will be interesting to see how the line fares in a difficult market. However, last year's launch of the Wickie range of children's products has been a big success and few non-German companies have more experience in that market than Tulip.

Baby back ribs are being marketed in the USA under the established Majesty brand. Tests at Wal-Mart are under way at this time.

CFS

As the name implies, Convenience Food Systems (CFS) is in the business of supplying processors with complete lines. The company (www.CFS.com) manufactures everything from a comprehensive range of meat processing equipment to cooking, freezing, filling and packaging machinery.

At his office in Aalborg, Mark van den Bosch explained that CFS is now preparing to take things to the next level. A complete re-structuring will take place by year's end with an eye toward branding the company in a way that will allow processors to better understand the firm's capabilities. This is necessary because CFS currently makes many different lines of equipment under a variety of brands. Further, various aspects of all machines, such as control panels and hydraulics, will be harmonized.

As one can imagine, with a common control panel, workers will be able to operate a wider range of equipment more easily. Universal spare parts and electronics will make it easier and more cost effective for manufacturers to stock and replace parts when needed. Picking the standards to be adopted is no easy task, but the director of public relations and communications is confident that CFS will find the right solution.

Ready meals may be the ultimate convenience food and, as such, CFS has devoted a lot of effort to creating fully automated ready meal lines. The company can incorporate every function into one line. Tasks such as preparation, marination, processing and packaging can be included with the usual jobs of filling and portioning. This results in greater hygiene and lower labor costs.

In addition to supplying processing lines, CFS provides many other services. For instance, line audits can be conducted to show where money can be saved and quality improved. Manufacturers can develop and test new products in the technology center without tying up their own lines, and pack consultancy helps design cost effective packaging that will attract the attention of consumers.

Rahbekfisk Going Against Tide

Proving that there is a market for better quality frozen products in Denmark, Fredericia-based Rahbekfisk (www.rahbek.dk) has found success with an upscale range of ready meals. Launched two years ago, the "silver box range" is comprised of complex recipes using fish in pastry, with sauce and pasta and soups. While at the upper end of the price spectrum, all items fall within price points that retailers feel consumers will pay.

Mark van den Bosch of CFS has a tough job ahead of him. The equipment company will not only be re-branded by year's end, but various aspects of all machinery will be harmonized for ease of operation and parts rationalization.	Rahbekfisk has found success with a range of upscale ready meals. Nicolai Hansen, sales and marketing director, was pleased to announce that the products recently won the Prix d'Elite Special Award at the European Seafood Exposition.

Nicolai Hansen, sales and marketing director, explained that the firm received further confirmation of the quality of the range by winning a Prix d'Elite Special Award for a range of frozen prepared fish dishes at this year's European Seafood Exposition in Brussels. As as a private label specialist, the marketing of a branded range marks a departure for Rahbekfisk, although all items are available as store brands.

Known for producing seafood-based ready meals, Rahbekfisk is now making a range of meat-based items such as chicken breast in pastry with bacon. All products are packed under the company's brand but are available for private labeling.

Products from the line are currently available in Denmark, Germany, Holland, Italy, Spain, Sweden and the UK. The company's Canadian partner, Aquastar, is stirring up interest in North America.

With fish supplies and prices somewhat unpredictable, Rahbekfisk decided a few years ago to hedge bets by having its factory certified for meat as well fishery products. The result has been a range of upscale items such as chicken fillets in puff pastry with mushrooms, or bacon and pork with minced meat wrapped in pastry. Believing that consumers look for meal solutions instead of limiting themselves to meat or fish, all products are presented together in supermarkets and other retail outlets.

Royal Greenland

With raw material prices on the rise, Royal Greenland (www.royalgreenland.com) has decided to maximize profitability by moving more upscale.

Morten Sander explained that while the mass market is still the company's bread and butter, a low volume, high-end foodservice range is being developed. It is hoped that items such as raw peeled shrimp processed without water, and smoked halibut produced using traditional methods in Greenland will soon be appearing on restaurant menus. If successful, such products could show up in retail packs.

In keeping with the current trend, the Aalborg-headquartered firm is looking to move some operations out of Denmark to Eastern Europe. Smoked fish production will be transferred from the long-established facility in Glyngore to Poland. A number of products are being outsourced from Asia, including frozen sushi produced under Japanese management in Thailand.

In an effort to stir up the moribund prawn market in Denmark, shrimp are being packed for retail under the Kutter-Rejer label. A kutter is a small fishing boat, and the whole idea is to connote smaller production. The company has tried a number of things in recent years to increase consumption and change consumer attitudes, so it will be interesting to see if this effort works.

In a consumer promotion, Royal Greenland is giving away colorful cookbooks in supermarkets. With 750,000 copies in print, this is probably the biggest volume cookbook ever published in Denmark and should do something to increase consumption.

Carnitech

Now in its fifth year of operation, equipment manufacturer Carnitech's (www.carnitech.com) freezer division is continuing to gain market share. Karsten Mathiasen, divisional manager, told QFFI that things have been very busy during the past year with freezers sold for applications in the meat, seafood and bakery sectors. Most machines have been sold on a stand-alone basis, but some have been included with complete turnkey lines.

Vice president and corporate sales director for Royal Greenland, Morten Sander.	Outsourcing is the name of the game these days. Royal Greenland is selling frozen sushi, made in Thailand.

The Stovring company produces a full line of tunnel and spiral freezers, but key to the division's success is a patent pending Jet Freezer. Launched last year at the IFFA exhibition, the machine has undergone substantial improvements. Using an impingement process, whereby high velocity air jets are directed at the top and bottom surfaces of a product, freezing times are very short.

Freezing has been further optimized by a new system that provides for better airflow around the product. Incorporating an open construction, airflow is increased away from the product and this is the secret to the faster freezing times. Reportedly, the machine produces freezing efficiencies close to those of nitrogen and CO2 - but at a lower cost. Further, the evaporator has been moved to the top of the freezer, resulting in easier installation and cleaning.

Karsten Mathiasen is pleased with the way business has developed for Carnitech's freezer division. He is seen here with a cut-away freezer used for trade shows.

Despite a slowdown among ice cream manufacturers, John Weaver of Tetra Pak Hoyer is confident for the future. The machinery company has been busy helping processors develop new products.

Originally designed for small, flat products, the improvements to the Jet Freezer have made it usable for other applications. In Vietnam, noted Mathiasen, a machine is being used for the fast freezing of tuna loins up to 4cm in thickness.

A thawing and defrost test unit has been developed so that processors can perform trials before buying a machine. Installed with a customer for one or two weeks, the unit measures temperatures in the core and surface of a product. A computer controls and monitors all temperatures with all results being recorded for traceability. Reportedly, it is the only machine of its type to have gained USDA approval.

Tetra Pak Hoyer

Last year, things seem to have conspired against the ice cream manufacturers. Bad weather in the Northern Hemisphere coupled with high raw material prices and a competitive climate weighed heavily on profitability. Nevertheless, ice cream equipment manufacturer Tetra Pak Hoyer (www.tetrapakhoyer.com) had a good year. However, John Weaver, marketing manager, stated that 2004 results have caught up with the processors and investments for 2005 have slowed.

Product innovation is a prime mover in the ice cream market, so the Aarhus firm spends a lot of time helping processors design new items.

Interestingly, two distinct market segments have now emerged. The traditional indulgence side continues to grow, but there is a new market for healthier products such as the Magnum Light range. Hoyer has been quick to supply machinery for this growing sector, primarily for stick products, but a full range as well.

Globally, demand continues to expand, particularly in Asia and Pacific Rim countries. Hoyer has had a manufacturing facility in China for over 10 years, so it is well positioned to meet rising demand.

In response to requirements of smaller processors, a new automatic ingredient feeder has been designed. Ingredients such as candy, nuts and fruit can be expensive, so accurate dosing is a must for profitability. Hoyer has made very accurate high capacity feeders for some time, and this technology has been applied to a new smaller range. The Addus FF 2000 N1 can handle 100 to 2,000 liters of ice cream per hour, while dosing 10 to 200 liters of ingredients. Up to 99 recipes can be stored for ready use in a PLC control system, and the machine has been designed with hygiene and easy cleaning in mind.

Scanvaegt

With processors scrambling to cut costs, weighing and grading equipment manufacturer Scanvaegt (www.scanvaegt.com) has been developing innovative products to meet their needs. The company produces almost every type of scale imaginable in every weight range.

Kaj Christensen, marketing manager, told QFFI that the latest model is battery driven. Used in applications where the scale must be moved, it will run for 200 hours on a set of batteries. With a three kilogram range, it has the same high accuracy as the company's other weighing devices.

There have been developments with the Aarhus firm's range of multihead weighers as well. Marketing coordinator Soren Rimmen explained that Scanvaegt rarely sells a standard machine, but instead customize weighers for particular applications.

The latest machine is designed for large items, and each of the 18 weighing heads has a capacity of five liters. With the ability to measure out 150 portions per minute, the scale can be made mobile by mounting on rails or wheels.

In the field of grading, Scanvaegt keeps upping the ante by designing faster and more accurate machines. The latest model, the ScanBatcher 4700, can make decisions on 260 items per minute with an accuracy of 0.2kg. Developments in the software allow batch calculations 100 times that of the previous highest levels.

Fifty different batching jobs can be performed at the same time, and the program can be changed while the machine is still in operation. An open design allows for easy, fast cleaning at the end of a hard shift.

At the time of QFFI's visit in May, three of the new graders were out on test and an additional two had been sold.

Norfo

Kai Hansen of Norfo in the company's test area with a ScanPortioner B36. The high speed portion cutter is capable of making ten cuts per second.

Based on the Baltic island of Bornholm, Norfo (mail@norfo.com) specializes in the manufacture of highly accurate sawing and portioning equipment. Realizing that this machinery fit in well with its own range, Scanvaegt bought the company several years ago and markets Norfo equipment under its own name.

Sales manager Kai Hansen pointed out that the ScanPortioner B55 utilizes a 24 lens camera that can scan 360° of a large cut of red meat. The volume is then analyzed and the item is quickly portioned at a speed of up to 220 cuts per minute.

For those processors requiring even higher speeds, the ScanPortioner B36 can make 10 cuts per second! Further, the B36 is the only machine of its type on the market capable of making straight as well as 450° biased cuts, facilitating a more natural look.

Initially these machines were designed for the salmon market, but they have now found wide acceptance with meat and poultry processors, Tyson among them. Of course all equipment can be easily integrated with other Scanvaegt machinery. As one can imagine, these are not inexpensive machines. However, the portioners cut down on labor and their accuracy results in such better yields that payback periods are astonishingly short.

A bit less glamorous but equally important is the sawing of fish blocks, another Norfo specialty. Utilizing a series of band saws, fish blocks can be cut into the familiar fish finger shapes or trapezoid portions. The market for these products is pretty stable at this point, although there is some growth in China. However, Norfo has sold sawing lines for meat and vegetable blocks - and even frozen pizza.

Flensted

With a difficult market for french fries, Flensted Managing Director Johannes Nielsen has had to come up with other products. Using a large wedge segment, Cafe Wedges are gaining rapid acceptance in the foodservice sector.

Echoing the feelings of other processors, Flensted's (www.flensted.dk) Johannes Nielsen commented on tough times in the supermarket sector. "The concentration of retailers makes it tough and it will be tougher in the future," remarked the managing director.

What's more, the increasing use of Internet auctions by the retailers has made a difficult market even more challenging.

As Scandinavia's biggest producer of frozen and chilled potatoes, the Ansager-based company enjoys a healthy share of the Danish retail market and ships smaller amounts to Germany, Sweden and the United Kingdom. The company's big strength is in foodservice and industrial sales, and it is present in these areas in most European countries.

To further strengthen its position in Denmark, Flensted recently merged its catering operation with Danish Catering. This should allow for the capture of a bigger part of the market.

As for the product itself, potato crops were quite good last year so prices for french fries have been very low, with lots of product available. In an effort to counter the trend, new products have been developed - the most successful of which are Cafe Wedges. Using larger size segments, the skin-on specialty has won strong acceptance, particularly in Sweden.