West Best in Frozen Food Growth;
Central Europe Still Lags Behind
By J.J. PIERCE, QFFI Associate Editor

Food for Thought forecast is for slower growth in former Communist countries than in
Western Europe. Current tonnage growth is sluggish overall, but prices are up.

Frozen food consumption in Europe will continue to gain over the next couple of years. But the engine of that growth won’t likely be the new economies of the former Communist countries of Central Europe, but rather the established capitalist economies of Western Europe.

That’s the assessment of Food for Thought (FFT), Geneva, Switzerland, which has issued projections for 2009, 2010 and 2011 as well as an analysis of the 2008 market for Western and Central European countries combined. That analysis shows a tonnage gain of only one percent to 12.534 million, but a euro increase of 7.4% to 62.418 billion.

The only category tonnage increases across Europe were in vegetables (up 1.4% to 2,770,700), fish (up a bare percentage point to 1,652,600), pizza (up 4.2% to 729,400) and ready meals (up 1.7% to 1,359,800). But euro value gains were much stronger, including 21.4% to €7,927 billion for pastry products, 18.7% to €11,490 billion for ready meals, 3.7% to €13,869 million for fish, and 2.8% to €8.261 billion for vegetables.

* Central Europe: Bulgaria, Czech Republic, Hungary, Poland, Romania, Slovakia. Source: Food for Thought (FFT). Based on detailed country and product volume and value forecasts available online.

* Western Europe: Austria Belgium/Luxembourg, Denmark, Finland, France, Germany, Greece, Ireland/Eire, Italy, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom. Source: Food for Thought (FFT). Based on detailed country and product volume and value forecasts available online.

Although there were strong tonnage gains in Bulgaria, Romania and Slovakia, these were not enough to offset sharp losses in the Czech Republic and Poland. In Western Europe, by contrast, FFT recorded only slight setbacks for Germany and the United Kingdom, for which other sources report increases. Last year, moreover, was the second in a row for FFT to show losses for Poland and the Czech Republic.

Looking towards 2011, FFT sees frozen food and ice cream category increases across the board in euro volume for Western Europe (Austria, Belgium-Luxembourg, Denmark, Finland, France, Germany, Greece, Ireland, Italy, the Netherlands, Norway, Portugal, Spain, Switzerland and the UK), whereas declines are forecast for potato products, ice cream and soup in Central Europe (Bulgaria, the Czech Republic, Hungary, Poland, Romania and Slovakia).

What gains FFT does project for Central Europe are generally weaker than for Western Europe. The only exception is convenience meats, for which the market research firm foresees an average annual increase of 2.5%, versus 1.2% for Western Europe. But Central European countries are starting from a very small base. Per capita consumption across Europe averages 25.5 kilograms, with Sweden leading the pack at 51.6 and Ireland and Norway close behind at 49.6 and 48.3. Hungary, the top-ranked Central European country, can boast only 16.5. Poland’s consumption is just 8.2 kilograms per capita, and Romania’s 2.3.

Western European countries, or at least their trade associations, take more pride in their frozen food industries. “Frozen Retail Market Storms Ahead” ran the headline for a press release issued last winter by the British Frozen Food Federation (BFFF), which heralded “10 consecutive quarters of accelerating growth,” including the 52 weeks which ended on Jan. 25 – a period for which Food for Thought had found a slight loss in tonnage – as reported by research firm TNS Worldpanel.

The gain reported by the BFFF was only one percent, but sterling value jumped 6.7%. Retail volume was put at 1,987,602 tons altogether and value at £4,939,240,000. The BFFF was putting the best face on things, because four of the nine categories it listed showed tonnage losses, although there were strong gains for fish (5.2% to 123,700), potato products (5.3% to 458,115) and savory food (6.6% to 266,665). Savory food also led in sterling gain, at 10.3% to £867,337,000; followed by vegetables, at 10.1% to £388,670,000.

* All data refer to total final human consumption, including retail, catering/foodservice and artisanal/craft, thus excluding industrial consumption and on-farm consumption. †Totals exclude ice cream; Source: Food for Thought (see http://www.fft.com).

Since then, the BFFF has had more good news: for the 52 weeks ended June 14, retail sales cracked the five-billion-pound barrier, at £5,097,301,000, up 6.3%. Sterling growth was strong in every category but ice cream, and savory foods again led the pack with an 11.2% increase, to £916,304,000. Overall tonnage, at 2,016,122, was up only 0.2%, however.

Complete foodservice statistics for 2008 are due next month; data for 2007, released last November by Horizons FS, showed sales of £2.290 billion in that sector, up 2.8% from 2006. But early indications are that the recession has taken its toll. Restaurant frozen food sales for 2008 were off 0.4% to £1.136 billion with full service restaurant volume down 3.6% to £161 million (Quick service outlets gained 0.1% to £975 million.). Another report showed the pub, hotel and leisure market down 2.1% to £701 million.

An increasing number of Britons are buying frozen food as they seek great tasting, good quality, versatile meals, according to the Food and Drink Federation’s Frozen Food Group report, released Sept. 10.

Research carried out for the Frozen Food Group by Insight Track Ltd shows that 81% of respondents appreciate the taste and 78% the quality of frozens. Some 81% either agreed or strongly agreed that frozen foods are versatile and convenient. The study revealed that nine percent were buying more frozen food than six months earlier, and 10% were eating more.

“The frozen food market is changing in line with consumer needs and tastes whilst retaining its fundamental store cupboard benefits of convenience, choice and availability,” said Norman Soutar, chairman of the Frozen Food Group. “This research reinforces what frozen food manufacturers have suspected for some time: consumers are shopping smarter – they know that the freezing process locks in nutrients and vitamins and that the versatility of frozen food means it is easily incorporated into making great tasting meals.”

The industry is continuously working to respond to changing consumer needs through innovative product development. Examples cited by the Frozen Foods Group include:

• Young’s relaunched its Chip Shop Omega-3 range with reduced fat, a new “permission to eat” sunflower oil format and a new Omega-3 content.
• Preparation time for McCain’s potato products from washing, peeling, cutting and cooking through to final freezing is less than 90 minutes, so as much of the natural goodness of the potato as possible is retained. McCain switched to using sunflower oil for all its products, which has reduced saturated fat by 72%.
• R&R Ice Cream’s research identified a clear consumer demand for quality, branded, real Cornish ice cream with provenance of ingredients and “Britishness” as key motivators to purchase. The Kelly’s of Cornwall brand uses whole local milk and clotted cream.
• Birds Eye freezes all of its peas within 2.5 hours of picking, and other products are frozen within strict time scales to ensure nutrients and taste are locked in. Once frozen, the level of vitamin C content within Birds Eye peas remains largely stable. Birds Eye’s fish is also frozen at source, within hours of being caught, ensuring higher levels of freshness. The company has also invested in healthier options, including an Omega- 3 Fish Finger, Birds Eye Soya Beans and Eat Positive Meals that contain at least one of the five-a-day ingredient.

Germany is also very proactive when it comes to frozen food. The Cologne-based Deutsches Tiefkühlinstitut (dti) seems to be the only industry association that still issues complete statistics and, as usual, they don’t agree with Food for Thought’s – even without poultry, the latter figured overall tonnage last year at 2,719 million tons, versus the dti’s 2.976 million, which represented a 2.3% increase.
The dti also seems to be the only reliable source in any country for data on frozen raw poultry for both retail and foodservice. That market has been steadily eroding in recent years, but it remains significant and might become more so thanks to the current recession.

“The economic downturn in 2008 has had effects on consumer behavior,” the US Foreign Agricultural Service (FAS) reported last winter. “EU meat consumption decreased in 2008, with consumers switching to lower cost poultry meat.”

Source: TNS Worldpanel; *Savory Food includes Frozen Bread, Cooked Poultry, Meat Products, Processed Poultry, Savory Bakery, Vegetarian Products and Other Frozen Foods.

Source: Deutsches Tiefkühlinstitut (dti) * Poultry estimates from outside sources

The FAS estimated that total broiler meat production for 2008 was 9.175 million tons, a sharp increase from 2007, and projected that it would reach 9.280 million this year. Top producers, the report said, are the United Kingdom (1,422 million tons last year), Benelux (1,125 million), Spain (1,080 million), France (930 million) and Poland (800 million). How much of this is marketed frozen is anybody’s guess, but the FAS report revealed some of the dynamics of the market, as follows:

“In 2008, EU-27 broiler meat production varied among member States. For example, strong demand, a successful promotion campaign (D/D/D, “born, raised and slaughtered in Deutschland”) and enlarged slaughter capacity fostered increased production in Germany.

“In Italy, strong market signals, including a return in consumer confidence following a high pathogen avian influenza scare and the attractiveness of poultry as a low cost meat alternative (average prices have fallen by 7.4% since 2007) also encouraged a production increase in 2008.

“In Benelux, during 2007 and through 2008, the price for broilers increased close to the record price reported in 1997 (BSE crisis). The price recovery was a result of low commercial stocks as production was still at a low level after the AI crisis. Another important factor is the recent EU enlargement. EU poultry meat reportedly replaced US poultry meat imports on the new EU domestic markets.

“In France, broiler meat production increased one percent in 2008, driven by strong extra-EU export demand which compensated for sluggish intra-EU exports. However, recent indications are that French broiler producers are preparing for a potential drop in demand: slaughter data for November and December 2008 show a notable decrease (off five percent).”

What’s in Store for Stores

Walmart is the world’s top grocery retailer, and still will be in 2013, according to Planet Retail, a leading provider of global retail intelligence, in a report on the dominance of the global grocery sector by discounters.

The rest of the top five, in order, are Carrefour, the Metro Group, Tesco and the Schwarz Group – owner of the Lidl banner, which rose from ninth to fifth place and is expected to retain that standing in 2013. Non-food retailers like Target and Sears are expected to suffer as consumers rein in non-discretion-ary spending during the recession.

Planet Retail’s Global Rankings also reveal that the Top 20 grocery retailers generated overall sales of $1.95 trillion, up 10.5% year-on-year and representing 25% of the global market. Most of the Top 20 continue to open stores around the world – India and Russia are particularly hot spots – to offset slow growth in their domestic markets.

Walmart’s sales are expected to reach $606 billion, 25% from other countries, in 2013; Carrefour’s $186 billion, 64% from abroad; Metro’s $134 billion, 72% outside Germany; Tesco’s $132 billion, 40% from beyond the UK; and Schwarz, $118 billion, 61% from outside Germany. The oddest addition to the Top 10 for 2013 is Walgreens, a drug chain that derives only one percent of its sales from outside the USA.

Source: OEITFL. Note: Excludes sweet corn; Scandinavia = Denmark, Finland and Sweden; No canned vegetable sector in Luxembourg and Ireland; Data not available for Romania.

The Growing Green Scene

Frozen vegetable production, at least, is something we can get a handle on, the handle having been supplied by OEITFL, the European vegetable industry trade association. Output for 208 in 14 countries tracked by the association was 3,439,220 tons, up 5.37% from the year before. Belgium ranked far ahead of any other country at 900,479 tons, with its closest rival Poland managing just 503,000 and third-place Spain 480,000.