Basics All Strong in European Market,
From Vegetables to Seafood and Pizza
By J.J. PIERCE QFFI Associate Editor

Germany boasts the largest market, but Sweden has the highest per capita consumption. United Kingdom seems to be recovering from a weak market, but Ireland and the Czech Republic lose ground. New Focus on Central Europe by Food for Thought.

A rising tide lifted nearly all the frozen boats in Europe last year, with overall consumption reaching more than 12.3 million tons, about 2.2% more than in 2005, according to data from Food for Thought, Geneva, Switzerland.

Besides the Food for Thought data, there are national reports from frozen food industry associations in Germany and Sweden. In the United Kingdom, additional estimates come from TNS Worldpanel, a market research firm working with the British Frozen Food Federation.

Food for Thought figures for 22 countries in Western and Central Europe show that the largest gain for any category was in vegetables – up 2.7% to nearly 2.8 million tons. Potato products advanced 2.4% to a bit over three million. Ready meals were up 2.3% to nearly 1.4 million, but lagged far behind commodities in actual volume.

The only categories to show losses were the relatively minor fruits and soups. Ice cream sales advanced only 1.1% to 3.6 million liters, and convenience meats were up 1.6% to 1.4 million tons. Other gainers were pastry products, up two percent to 1.3 million ton, fish and seafood, up 2.1% to a tad over 1.6 million, and pizza, up 2.4% to 694,000 tons. As usual, Food for Thought doesn’t count frozen poultry.

Sweden is back on top in terms of per capita consumption at 48.5 kilograms, thanks not only to the growth of its own market - 3.5% according to Food for Thought, 2.8% according to the Djuprysnings Byran - but an unexpected decline in Ireland, which had taken the lead in 2005. Norway is second at 47.7, and Denmark and Ireland are tied at 46.5. Britain remains in fifth place at 43.9. Food for Thought puts Spain in sixth place, but national sources for Germany give it that rank.

The Deutsches Tiefkühlinstitut (dti) reports higher consumption for Germany than Food for Thought, even without poultry: 2.863 million tons, versus 2,586 million – a 2.9% increase, versus the 1.5% indicated by Food for Thought. Including poultry, the industry group puts consumption at 3.108 million tons, a 1.3% advance, and 37.7 kilograms per capita.

The dti also puts the value of the German frozen food market last year at 10.5 billion euros ($13.7 billion, compared to 16.4 billion euros ($21.3 billion), including nearly 3.1 billion for ice cream but excluding poultry, per Food for Thought. The latter represents a 4.2% increase in euros, but more in dollars because the dollar declined against the euro from 1.2093 to 1.3021 in 2006.

Raw poultry volume has been declining for years; it was down another 14% last year to an estimated 245,000 tons. Game was also down, but other forms of frozen meat advanced 2.8%. More than making up for that, however, were the gains in the top three categories: prepared foods, bakery products and vegetables.

Germany is bigger on frozen bakery products than any other country in Europe; at 552,797 tons, up 3.4%, it accounts for about 43% of the European total. Fancy cakes, pies and pastries may get the most attention, but at 183,870 tons (up 4.3%), they are eclipsed by bread, rolls and croissants, up 2.9% to 352,402.

In prepared foods, up 2.9% overall to 836,794 tons, the fastest growing segment is snacks, with a 5.6% increase to 187,719 tons. This segment includes what are called appetizers and side dishes elsewhere. The complete meal and partial meal segments were both up by more than three percent to 141,203 and 250,574 tons, respectively, and pizza advanced an even three percent at 244,738. The only decrease was in pan (stir-fry) meals and soups, which seems to reflect a European trend.

Prepared vegetables – up 5.5% to 161,179 tons, did better than plain, which crept a mere 0.8% to 282,599. In potato products, similarly, the growth rate for fries (2.7% to 298,247 tons) was outpaced by that for other products (3.7% to 120,091). But the biggest gain in percentage as opposed to absolute terms was for miscellaneous fish and seafood at 10.6% to 38,306 tons. A lot of this was doubtless shrimp.

According to a survey by consumer research institute Gesellschaft für Konsumforschung, 75% of German consumers believe that they need 45 minutes less time for cooking a day if they use frozen food. One of the convenience items that remains especially popular is fish sticks.

The dti reports that consumption of fish sticks has reached 22 per person, up from 14 ten years ago. A total of 1.78 billion sticks were sold last year through retail grocery stores, discounters, home services and the various food service segments.

German fish sticks must, by law, average 9 by 2.6 by 1.1 centimeters and must be at least 65% fish. Though small, they contain a lot of good protein, vitamins and iodine, and are made mainly from lean fish such as pollack, hake and cod. Experts say the secret of the fish stick’s success is that it is crisp without and soft within. The fish nowadays are filleted, skinned and frozen in slabs aboard ship immediately after being caught. They are then sawed into sticks ashore.

Brits Bouncing Back

The United Kingdom has the second-largest frozen food market in Europe by any measure. By Food for Thought’s measure, it reached 2.652 million tons and 11 billion euros ($14.3 billion). While the British Frozen Food Federation (BFFF) hasn’t taken its own measure of the market, it has enlisted two market research firms to do so.

“Having turned the corner and moved into growth, the retail frozen food market is stepping on the accelerator,” BFFF President Brian Young stated, citing TNS Worldpanel data that put value growth at 2.8% year-on-year for the 52 weeks to June 17.

Impressive growth across seven of the nine product categories was helped, he said, by the continuing renaissance of freezer center chain Iceland, increased retailer premium brand offerings, some inflation – particularly as a result of poor crops – and reduced heavy discounting.

Retail sales totaled £4.534 billion, according to the TNS data, compared top £4.408 billion a year earlier. But tonnage hardly advanced at all, from 1,962,843 to 1,963,458. Still, it was a far cry from the report for Dec. 3, which showed declines of 0.3% to £4.441 billion and 0.6% to 1,962,715 tons.

There has also been good news on the foodservice front where, according to data from Horizon FS Ltd, distributed by the BFFF, frozen food sales were up 3.3% last year to £682 million at pubs, hotels and leisure outlets. Pubs accounted for the lion’s share of that – £464 million, up four percent over 2005.

Inflation was felt most acutely in the potato products category, where sterling sales were up 7.3% to £466.5 million although tonnage was off 3.8% to 427,959. In vegetables, the market was up 3.9% in value to £350 million, but slipped 1.2% to 272,142 tons. Frozen meat and poultry were up 3.7% in value to £504.4 million, with tonnage off 1.1% to 185,820 - but sterling value had declined 1.1% for calendar 2006, so the first half of 2007 represents a real turnaround.

Frozen fish sales continued to accelerate with annual growth rates for the past four quarters moving from 3.7% to 4.4% to 5.3% and now for to an even seven percent at £607.9 million for the 52 weeks ended June 17. Tonnage was up 2.5% to 112,832, and the gap in percentages may reflect more premium products as well as inflation. Pizza, on the other hand, was both hotter and cheaper: sales were up 4.4% to £337.3 million, but tonnage jumped six percent to 94,664.

Ready meals continued to decline at 5.1% year on year to £619.8 million. This is one of the few sectors still suffering from continued deep discounting activity, but all that discounting doesn’t seem to have done anything for volume, which was off 4.1% to 191,722 tons. Maybe discounting helped savory foods (which includes everything from frozen bread to processed meat and poultry products, savory bakery and even vegetarian foods): value was off 0.2% to $772.3 million, but tonnage gained 1.2% to 250,697.

According to TNS, different suppliers have different solutions to the British frozen fish industry’s main problem: over-reliance on cod, which is increasingly expensive. Birds Eye is offering a greater variety, having launched Alaska pollock and haddock fish fingers. Meanwhile Findus offers frozen farmed cod from Norway, providing a sustainable source of the UK’s favorite fish. Tesco is expanding its premium fish line, and 20-25% of its range is now branded Finest, with products such as Australian snapper and Canadian lobster. Smoked salmon producer Kinvara is bringing out frozen monkfish, organic salmon, haddock, plaice, lemon sole and langoustines, while Young’s is launching Vietnamese basa and Patagonian scallops. Consumers are drawn to frozen fish’s health benefits, including Omega-3, and the new premium options.

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Swedish Trends

Sweden claimed a total volume of 443,620 tons last year, close to the 438,600 in the Food for Thought report. The difference was just enough to put per capita consumption at 48.7 kilograms, according to the Djupfrysnings Byran. But, as with Germany, the local figures include poultry and exclude ice cream.

For some reason, Swedes are really big on poultry. Accorrding to media scanner Esmerk, chicken consumption rose 105% overall between 1995 and 2005, reaching 12.2 kilograms per capita, with imports – which reached 40% of the total – being responsible for most of the increase. But Svensk Fagel, a trade group for the Swedish poultry industry, has taken advantage of the avian flu scare to boost sales of home-grown product.

Whatever the case, consumption of frozen poultry was up 6.5% last year to 61,910 tons, according to the Djupfrysnings Baran. That was way ahead of the 1.4% gain, to 74,114 tons, for ready meals and 1.9%, to 48,803, for vegetables. There was a one percent decline, to 62,177 tons, for meat: some meat eaters may have switched to poultry, or to fish – up 4.3% to 36,972 tons. Bake-off, a category unique to Swedish statistics although the concept is familiar elsewhere, showed a 5.2% increase, to 50,487.

Over the past five years, according to Food for Thought, Germany has led Western Europe in euro growth, followed by Spain and Italy. Norway has led in volume growth, averaging 4.6%, followed by Sweden (3.6%) and Finland (3.5). Foodservice accounts 31.4% of the markdet, versus 68.6% for retail; and private label for 23.2%. Name brands account for 72.6%, unbranded for 1.7% and artisanal for 2.5%.

Central Europe

This year, Food for Thought has broken out data for what used to be called Eastern Europe but is now reckoned as Central Europe - the formerly Communist Poland, Hungary, the Czech Republic, Slovakia, Romania and Bulgaria (successor states to the former Yugoslavia have yet to be counted).

Poland alone accounts for 44% of the euro value of 2.9 billion for the region, but then it accounts for 41% of the population. Hungary and the Czech Republic are tied at 18%, and the top three account for 80% of the market but only 63% of the population. Hungary has the highest per capita consumption at 13 kg, but that isn’t a sign of progress: consumption actually declined last year.

Ice cream accounted for 40% of the euro value in Central Europe, compared to just 22% in Western Europe. Frozen fish ranked second in both regions at 13% and 18%, and frozen convenience meat third at 10% and 14%. But frozen potato outperformed ready meals in Central Europe, and vice versa. Still, ready meals have shown the strongest real growth over the past five years, at 185.3%, Food for Thought says, with pizza second at 49.6%.

Foodservice accounts for 22.9% of euro value in Central Europe, retail foe 77.1%. But the greatest contrast with Western Europe is that there is hardly any private label - just 1.5% of sales. National brands account for 72.9%, but unbranded products are second at 23.2%, and atisanal products claim 2.4%.