European Frozen Food Market Sluggish;
Euro Values Outpace Tonnage Gains
By J.J. PIERCE, QFFI Associate Editor

Overall tonnage growth for 22 countries is only 0.4%, with euro value advances 3.6%. Ready meals, baked goods and vegetables gain, but potato products and fish suffer losses.

Frozen food consumption in the European Union and the rest of the continent west of Russia and its former republics gained last year – just barely – to a bit under 12.7 million tons.

That’s not including ice cream, which is counted in liters rather than tons, or raw poultry, which isn’t covered in statistics from Food for Thought, Geneva, Switzerland. It is unlikely that poultry would have made a positive difference to the 0.4% tonnage gain. And ice cream was up only 0.3% to about 3.6 billion liters.

Source: Kantar Worldpanel; *Savory Food includes frozen bread, stuffing, cooked/processed poultry, meat products, savoury bakery, vegetarian products and other items.

Value for the market was up 3.6% to 59.246 billion euros, exclusive of ice cream. Ice cream sales were up 2.9% to more than 16.3 billion euros, and combined sales at nearly 75.6 billion euros gained 3.4%. With a continuing debt crisis and rising material costs, prices were up and consumers may have been cutting back on frozen food and ice cream alike – a foreboding trend that may be continuing in some countries.

But not in the United Kingdom, where retail frozen food and ice cream were up 2.2% in tonnage to 2,044,517 and 2.6% in sterling value to £5.232 billion for the 52 weeks ending June 12, according to a survey by Kantar Worldpanel for the British Frozen Food Federation. For the 52 weeks ended Nov. 28, 2010, tonnage had been up 2.5% to 2,016,626, but sterling value had ballooned 11.1% to £5.111 billion. Retail prices appear to be coming under check. But Food for Thought put overall consumption for 2010, including catering, at 2.462 million tons – off 0.8%.

Again, that doesn’t include poultry – but Kantar, which lumps poultry in with red meat, has that category making only a slight gain in tonnage and practically none in value. Ice cream, on the other hand, showed robust gains through mid-year – four percent in volume and 6.5% in value. Food for Thought shows only a 0.3% gain in liters but a 5.1% increase in euro value for ice cream in calendar 2010.

Frozen food consumption was up in 19 of the 22 countries tracked by Food for Thought, with the greatest increase, six percent, for Romania. But Romania is an infant in the QFF market, with per capita consumption of only 2.3 kilograms, lowest of all. Among countries with relatively mature economies, the strongest gain was for Ireland at 2.8%. Ireland also boasted the highest per capita consumption at 49.3 kilograms – surpassing Denmark (48.6), Norway (46.8) and Sweden (44.8).

The rankings might be different counting raw poultry – without that, Food for Thought put per capita consumption in Germany at 34.3 kilograms. But counting poultry, the Deutsches Frozen Food Institute (dti) indicated that Germany had entered the 40 kilogram club. Just next door to the east, per capita consumption was only 7.9 kilograms in Poland and six kilograms in the Czech Republic – a sign of how much catching up Eastern Europe still has to do. But rates in three countries in the south of Europe – Greece, Italy and Portugal – are all below 20 kilograms, and Spain’s 27.5 is barely above the European average of 25.1.

The most inexplicable loss for frozen food volume in the Food for Thought report is attributed to Sweden – 13.2%. Greece suffered a 4.7% decline, but that might be related to the sovereign debt crisis, which has been worse there than anywhere else in Europe. On the other hand, tonnage gains were two percent or greater in Austria, Belgium-Luxembourg, Italy and the Netherlands – and even Bulgaria, another emerging economy in Eastern Europe.

Six of the nine frozen food categories tracked by Food for Thought showed tonnage increases, with the highest in pastry products and fruit (1.7% each). Vegetables were up 1.1%, and pizza and ready meals one percent each. Convenience meats showed only a 0.2% gain. But potato products, one of the usual bedrock categories, were hit with a 2.1% loss, and frozen fish were off 0.5%. Soup was down 0.2%, but that is a pretty minor category.

Germany is the only country with a frozen food industry association that does its own research, and, as usual, its findings [see page 54] are at variance with Food for Thought’s. Even without counting raw poultry, the dti put 2010 consumption at 3.062 million tons, up 2.1% – as opposed to Food for Thought’s 2.801 million, up 1.3%. Counting raw poultry, the dti total is 3.286 million, up 1.9%. Euro value is put at 11.42 billion.

Because eastern Germany mostly caught up with western Germany following political reunification, the German experience might offer a model for Eastern Europe. Growth has been steady for decades now, according to the dti. In 1990, just before reunification, tonnage was 1.616 million and sales 3.74 billion euros. Over the same period, per capita consumption grew from 20.4 to 40.2 kilograms.

Figures from the dti show gains in most categories during the past year, with the only significant declines being in meat, poultry and complete meals. Bakery products led the category increases at 5.8%; potato products were up 2.1%, vegetables and fish and seafood 1.7% each, and prepared foods overall 1.3%.
Just how much light it may shed on the frozen food market is uncertain, but a Sept. 1 field report by the Foreign Agricultural Service (FAS) of the US Department of Agriculture ranks the top five EU countries in broiler meat consumption for 2010 as the UK (1.617 million tons), Spain (1.128 million), France (937,000), Germany (956,000) and Italy (724,000). It should be noted that the dti reports only a quarter as much poultry consumption as frozen, and Kantar only a fraction of British meat and poultry consumption as such.

The FAS report cites some relevant figures from the World Trade Atlas that show EU imports last year of 14,000 tons of frozen whole chickens and 136,000 tons of chicken parts. Frozen exports for 2010 totaled 302,000 tons of whole chickens and 622,000 of chicken parts.

The FAS expects broiler meat consumption to gain a bit this year. But while poultry meat, priced cheaper than red meat, has been impacted less by the recession than red meat, per capita consumption is slightly decreasing. Low-income consumers are switching to carbohydrate products like bread and pasta.

Although there aren’t any official statistics for Russia, a survey of the frozen food industry by Barnes Reports puts manufacturer sales (as opposed to end-user sales) for 2010 at 74,269 billion rubles ($2.362 billion), up 4.8% from 2009. According to Barnes, the industry took a tumble in 2009, with manufacturing sales plummeting 26.9% from 96.931 billion rubles ($3.082 billion) to 70.847 billion ($2.253 billion).