Price Looms as Bigger Factor Than Ever
In Danish Frozen Food Marketplace
By CHARLES FERRO, QFFI Correspondent

Danish retailer Irma has a big sale on value-added seafood going with this “Five for DKR 100” special. The deal includes salmon fillets, Lake Victoria perch fillets and mussels in wine sauce and au naturel.

While the Danes talk a lot about the economic crisis, few of them really feel its bite. But consumer habits are changing, and retailers are thus offering bargains galore to shoppers.

Danish consumers have been buying at both ends of the price scale for the past few years, upmarket for weekends and special occasions and low-price for everyday eating. While around 85% of Danes surveyed recently said they do not feel any change in their private economies, the global financial crunch has had at least one major effect on the country – people aren’t spending much money.

Gloomy news has spurred retailers to focus even more on pricing as ready-meals or entrees at very low prices have stepped into the spotlight. And retailers tell how this product category has been a growing seller for a number of years. For this segment, and all other grocery areas, the chains are zooming in on prices in their weekly flyers and prominent in-store displays. In the frozen food aisle, specially colored price tags that contrast with regular price tags catch the eye on freezer surfaces.

Retailers report that it has become something of a battle to draw customers to their stores. “Prices have been declining recently. That is a typical signal that it will be more of a fight to attract consumers because they are switching over to cheaper goods,” commented Brian Poulsen, manager of the frozen food section at Coop, the country’s largest operator of retail stores.

Frozen food prices – and price levels in other sectors – are basically going down across the board. “Consumers say they are not generally affected by the economic situation, but many of them have gone over to lower-priced products, and there is greater focus on special offers,” said Poulsen.

Even before the economic woes of the past six months or so hit, low-priced ready-meals or entrees were gaining ground rapidly. Many were sold at prices that are hard to compete against, and even lower for special offers. In early June, Super Best, a 220-outlet chain, featured private label chicken entrees on the cover of the weekly flyer it sends to households. The four varieties – Kiev, Cordon Bleu, Fillets and Schnitzels – are sold in 250- to 300-gram packs of two servings at DKK 10 (just under US $2) each, marked down by as much as DKK 7.

Spar offers shoppers a choice of three varieties of 635-675-gram Chicago Town Take Away Pizza at a reduced price of DKR 25 for a limited time.

Inside the same flyer there is a whole page devoted to promoting private label frozen pizzas, Daloon spring rolls and Tulip brand ready-meals. The advertisements proclaim price and convenience. The six varieties of Tulip products are all Danish staples, sold under the label Livretter, meaning favorites. At DKK 25 for 450- to 500-gram packages, the prices are extremely low.

The Spar chain of smaller supermarkets and convenience stores also prominently features low-cost ready-meals in its flyers. In June it offered Chicago Town Take Away Pizza at DKK 25, as well as three 500-gram bags of Skögsgreven hash for DKK 20 (approximately $4). With the traditional fried egg on top of the hash, the offer in effect provides six meals for less than one dollar per plate. The dish is a Danish favorite, but sales have jumped after people started paying with pinched pennies.

Spar also offered traditional entrees from Danish Prime at DKK 10 for 350-gram packages. The three different dishes are chicken and two kinds of meatballs in a sauce that needs only potatoes, rice or pasta to make a complete meal.

Coop’s Super Brugsen chain featured traditional dish ready meals under its Coop private label at one-third off the normal price for purchases of two. Around the same discount applied to Daloon spring rolls with the legend “Good for the BBQ” to fit the season. Coop saithe or salmon fillets and shrimp were offered at three packs at approximately one third the normal price as well.

Good and Bad News

Malay Wok Mix under the Coop Asia store brand features a medley of Asian-style vegetables including baby corn, bamboo shoots and peppers. Consumers may opt to add meat or fish, as they like, to make their own signature stir-fry dish. The 600-gram pack is produced by Ardooie-Koolskamp, Belgium-headquartered Unifrost NV.

It’s reportedly been pretty “smooth sailing” sales-wise for this private label Smoothie offering from Coop Trading A/S, Denmark’s biggest retailer. Four 150-gram units of the organic blend of banana, mango and papaya come per 600-gram polybag. The supplier is Ashford, England-based Ardo UK Ltd.

With the increasing popularity of sushi restaurants in Denmark comes opportunity for increased sales of frozen retail packs. Aalborg-based Royal Greenland caters to that market with this 190-gram Sushi 10-pack containing salmon, cuttlefish, surimi, octopus, tuna, shrimp and sushi ebi specialties. The price charged recently by Super Best was DKK 54.95.

Per capita consumption of frozen food in Denmark has gained a couple of kilos in the past few years. According to a consensus of sources, it is now almost 50 kilograms per person, second only to the United States. The sources do not explain the gain, but this writer’s guess would be increased demand for organic fruits and vegetables, along with a rise in sales of frozen fruit that goes into smoothies.

Irma, the upmarket chain under Coop Danmark, reports a 50% rise in sales of organic frozens in the past few years. Consumers are apparently willing to reach for frozen food when they see a value-added aspect to their choice, and of course health is a huge topic in the media.

Roughly 85% of all Danish consumers regularly make purchasing choices from the freezer section, but it is not something they readily admit. Despite a lot of information regarding the benefits of frozens circulating in trade or consumer publications, many consumers still consider frozen foods to be a fallback.

One reason for this could be the foodie craze in the country, spurred on by the success of Danish restaurateurs winning Michelin stars. The chefs often appear on television, radio or in print, and virtually always refer to high-quality fresh ingredients. So consumers follow suit, falsely thinking that fresh necessarily means fresh.

Another reason frozen food has fallen from grace among some consumers is because of thermal abuse along the cold chain. Frozens grew in popularity over the past three decades, but all too often in the summer consumers would buy the goods and place them in a hot car. By the time they got them home and into the freezer, the goods had begun to thaw. If fruit is bruised consumers tend to blame themselves, but when the quality of frozen food is affected they unfairly blame the product.

Bright Spots and Growth

One of the biggest growth area in the past couple of years has been sales of frozen fruits, due to the immense popularity of smoothies. Retailers have been quick to identify sources for foods that have become popular in restaurants or fast food outlets. The success of ethnic ready meals over the past decade or so provides a great example.

The frozen smoothie is currently a hot item. Coop had already logged success with its store brand fruits and the organic pan-Scandinavian private label Änglamark line of frozen fruits (also other product segments). Recently it launched 600-gram “Fruit for a Smoothie” products – such as the pineapple, mango, papaya bag with portion-sized bags inside.

Ready meals, including pizza and soup, continue to show solid sales figures. Sushi is another example of popular restaurant food adapted for retailers to sell in the frozen food aisle. Royal Greenland offers a single-serving, 10-piece sushi product, complete with sauces and chopsticks. The popularity of sushi has probably helped buoy seafood sales. For a country composed of several hundred islands and a peninsula, Denmark is a surprisingly low consumer of fish on a per capita basis.

While health experts recommend around 300 grams per week, the average Dane consumes just 150 grams. Fresh fish has come under fire for the dubious proclamation of so-called “fresh,” and frozen seafood has picked up some of that trade. But price has largely been the reason, as the consumer does not receive much information about the freshness of frozen products. Still, one sees a lot of newer species in the freezers and consumers are willing to try them.

Potato products seem to be slumping just a bit as more consumers are choosing other vegetables. Popular diets dictating low carbohydrate intake have likely chipped away some potato sales.

More Space for Organic Greens

All retailers are now featuring larger selections of organic vegetables, either private label products like Coop’s Änglamark or brands such as Frigodan. Coop still sells a lot of organic frozen food, a segment that has been on the rise for the past few years. With consumers now ultra-conscious about what they spend, the premium on organics has stagnated sales among Danish retail chains. Most retailers, however, have reacted by offering special prices on organic vegetables.

Sales of frozen baked goods remain solid, Poulsen reported, although there has been a shift from traditional wheat flour items over to more exotic bread sorts or full-grain products. Hatting’s frozen bagels are another good example of a trend moving from eateries to the home. Their packages of eight bagels have been good sellers, and consumers are seeing more types of ethnic baked goods in store freezers.

Price will undoubtedly remain a sales factor for months to come. With fewer people going out to eat on a regular basis, the frozen food segment will likely pick up some of the slack as consumers eat at home. The organic trend might see a boost as Danes become more aware of related environmental concerns this December, when a climate summit organized by the United Nations will be hosted in Copenhagen. Until then, it will be business as usual, but at lower price levels.