Consumers are demanding more from their produce purchases - they still want quality and value but also want convenience, nutrition and longer shelf life. This has fired growth in the prepared produce sector in salads, vegetables and fruit. On the flipside, retailers want more from their prepared produce ranges as category reputations are under consumer scrutiny - these products need to deliver the key consumer requirements and expand the category further.
“Our growth in the prepared category has developed during the last two years to levels now matched only by our house plants and flowers category,” says Mary Ling, Asda marketing manager for prepared produce. “The recent performance trend from this category reflects the importance and focus we have given to this opportunity to change eating habits and offer meal solutions. Over the last 12 months, we have seen double-digit sales growth. We constantly refresh the range throughout the year to reflect the changes in seasons and consumer trends. We have just introduced 18 new lines into the Winter Warmers range, which are in addition to our fresh fruit and vegetable lines. The idea is to drive more choice into our stores through space and packaging innovations offering something for everyone,” says Ling.
In terms of packaging, improved graphics and overall pack presentation are more important than ever to grab the attention of the consumer, says Jane Bicknell, technical applications & marketing manager at Amcor Flexibles. “Base films are changing from the popular OPP to laminates that are more advanced and co-extrusions, which provide on-shelf differentiation. Self-venting microwave systems are being incorporated into packaging to make cooking products even simpler for the consumer, and improvements in modified atmosphere packaging have resulted in longer shelf lives, allowing consumers the convenience of once a week purchasing,” she says.
“Pack formats are becoming more important in terms of the shelf presentation in-store; utilising systems such as block bottom bags stand up pouches and shaped punnets to allow the packs to stand up on shelf,” says Bicknell. Individual packs are also becoming popular as people snack on the go, such as carrot batons and apple slices which are becoming popular with both adults and children. She says: “Prepared vegetables are also seen in this format, catering for a large percentage of the UK population who are single households. The single packs ensure they have no wastage - and all these packs are available using Amcor P-Plus MAP packaging to combine convenience, quality and increased shelf life.”
Bicknell says the increase in prepared produce is evident not only in the retail sector but also in the foodservice sector. “Pre-prepared produce saves valuable time in the kitchens and offers consistency throughout the year. Modified atmosphere packaging can be used on the whole range of prepared products from shredded iceberg lettuce through to sliced mushrooms, and packs can be designed for all product weights to cater for foodservice outlets.”
The fresh prepared foods market is a relatively young market and has developed together with the investment by the UK retailers in own brands - fresh prepared foods provide good product margins, quick stock rotation and high growth opportunities while allowing product differentiation for retail customers. Ling says there are various factors that drive Asda’s customer trends: ”They demand everyday food at low prices, but at the same time want to be inspired and there are many factors influencing them - seasons, lifestyle, travel and magazines - we take all these into consideration when reviewing the range.”
Asda have a number of best sellers in store which are a mixture of everyday basics that customers know, says Ling, as well as new products introduced through the seasonal range changes. “From our recent seasonal range change, we have seen growth of 10 per cent across all prepared categories. A couple of the favourites are the Extra Special Maris Piper potatoes in goose fat and sliced sprouts with bacon and gruyere butter from the 18 new lines in the Winter Warmer range. Other examples include ready to roast parsnips with honey butter, winter roast vegetables, creamy leek and cheddar cheese bake, neeps and tatties in Scotland, tasty Lancashire cheese mash, red cabbage with mulled fruit, and brandy and creamy garlic mushrooms with garlic bread. These are all in store now and all priced under £2.50. Next week we are launching our Winter Fruit range, which includes mango, pineapple and papaya with a passion fruit drizzle, seasonal fruit salad, and winter fruit selection. Our focus for next year remains on delivering quality produce at great value,” she says.
A new report from independent market analyst, Datamonitor, reveals that more consumers prefer light meals in response to growing informality and frequency of eating, health concerns and demand for convenience. The report forecasts that by 2008, more than four out of 10 meals will be light meals, representing almost 600 light meals per person per year. “When life gets busy, planning and cooking meals become a lower priority. Lighter meals facilitate the diet regimes of many health conscious consumers and offer a quick, convenient solution for busy lifestyles,” says Datamonitor’s consumer markets analyst, Daniel Bone, author of the report.
Categories benefiting from the light meals trend include salads, prepared sandwiches and small ready meals. In 2003, UK consumers spent more than anyone in Europe on those products, around £17.2 billion, and Datamonitor forecasts this will increase by 30 per cent in 2008. “The reason UK consumers are more prone to consuming a light meal is because convenience food solutions are widely available,” says Bone. “Manufacturers are yet to capitalise on the ‘flexi-eating trend’ and the fact that consumers see products as all-day consumables. A strong focus of what traditionally constitutes a meal means opportunities to target other food types for the light meal occasions are being missed, such as ready meals.”
However, Geest, specialist in fresh prepared foods and produce, has worked this out and recently announced the launch of a joint venture in the growing fresh ready meals sector. The launch of Geest RFG Fresh Cook Ltd is a 50:50 joint venture with chicken supplier Rannoch Food Group to produce ready-to-cook meals using raw ingredients. In its first year of trading in 2005, the Fresh Cook JV is expected to generate sales of £20 million.
Geest’s ceo Gareth Voyle says: “The ready to cook meals sector is growing at around 25 per cent, three times the rate of the fresh ready meals market. The Fresh Cook venture allows Geest to develop its revenue stream in this fast growing market sector by combining two specialists in their own fields: quality chicken sourcing and processing and Geest’s fresh prepared foods manufacturing and new product development expertise.”
In 2003, Geest experienced over 10 per cent growth in fresh prepared foods almost double that for all retail food and frozen prepared foods. The group estimates that the total fresh prepared foods market is worth £6.9 billion at retail sales value.
Geest’s lines include convenience salads, accompaniment salads, and snack salads and the market covers individual pre-packed portions, self-service salad bars and serve-over salad bars - today the company makes 27 million pots of coleslaw a year. The size of the convenience salad sector is £339 million with a growth rate of 10 per cent. The prepared single or mixed salads sector size is worth £494m and the company’s share in the market for prepared fruit is £83m and growing at 32 per cent per annum.
Based on TNS data, it is forecast that £11 billion of growth will be generated by UK food retailers from 2001-06 of which 78 per cent will come from fresh foods and 33 per cent from fresh prepared foods - equating to an additional £3.6 billion of revenue for the UK retailers in fresh prepared foods. The data also shows that consumer spend on these products is relatively low with less than half of UK households buying a fresh fruit salad, so an opportunity exists to increase the number of households buying these products, according to Geest. “In other areas there are quite a high number of households buying our types of products. Over 80 per cent of households bought a ready meal last year, but the average household only bought 15 ready meals throughout the whole year. In this example there is the potential to increase the number of times ready meals are bought,” says a company spokesperson.
Additionally, consumer demographics when it comes to buying fresh prepared foods is widening according to TNS. Consumers tended to be affluent city dwellers, in their late 20s/early 30s. Although this section of the population is still a strong consumer, other sectors, such as couples whose children have left home, are turning to fresh prepared foods for simpler options. However, the highest growth rate in consumption is among children, where fresh prepared foods are becoming part of the menu, and this generation is likely to continue to consume fresh prepared foods in later life.
Consumer demand is the momentum behind the growth of fresh prepared foods reflecting changes in demographics, lifestyles and economic trends. Datamonitor reports there are three trends influencing consumers as they become accustomed to fresh prepared ranges; convenience, health and pleasure.
Datamonitor research also confirms that quality, innovation and convenience play a greater role than price for existing buyers and fresh prepared foods are considered by many consumers to be on a par with restaurants and take away, but are cheaper. There is also the fact that prepared produce makes life easier for consumers.
“There’s a guilt issue over vegetables for consumers,” says Mark Newton, managing director with Florette. “People know they should be eating more, but they then say they don’t like them or they don’t know how to cook them.” That was the catalyst for the company’s new launch - Heavenly Veg. “We wanted to make veg more interesting and easy to cook.” And the move looks likely to pay off, with positive feedback already flooding in for the product, which is scheduled to launch in February next year.
Heavenly Veg is a range of four prepared products featuring a vegetable mix and sauce sachet in a unique patented steamer pack. Each featuring a different mix of veg, ranging from broccoli and mangetout to courgette and leek, the four flavours include Thai green curry, honey and ginger, tomato coulis and goats cheese sauce. Other flavours are also under development to keep the range fresh.
Florette, who hope the healthy method of cooking will prove a hit, has patented the steaming concept. “Stir fry is a bit passé these days,” says Claire Jenkins, marketing manager. “People are bored of their woks. By choosing steaming we’re tapping into a new segment and an area of growth.” She says the pre-prepared sector is lacking in innovation and heavily dominated by own label products. “The range on offer is limited but there’s a clear trend towards convenience.”
The market is showing year-on-year growth in value, volume and also household penetration: “Basically more people are buying more prepared veg, and more often, and that’s the kind of market we want to be in,” she adds. Feedback on the product is looking good, she says, with 80 per cent of consumers liking the concept a little or a lot. “We’ll be supporting the launch in February above the line with a £500,000 spend. We’ll be looking to fit in with our current TV campaign and also doing a lot of in-store sampling.”
Newton says Florette has spent around £1m on developing the product to the stage it is at now. Earlier this year the company doubled the size of its factory in Lichfield to enable room for expansion for prepared veg production.
Newton says: “At the moment we have the ability to do 100,000 units a week of Heavenly Veg, but have the capacity to take that to whatever it needs as well. We’re aiming to sell between one and four million units next year.” He says the Heavenly Veg launch is just the beginning, and they intend to expand further into prepared produce in the future. In fact currently in development is a range of vegetable soup kits, featuring a mix of vegetables with a base sauce which consumer cook themselves. Newton says although the product is very much in the concept stage at the moment, they are hoping to have something ready for launch around September next year.
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