If you pay attention to the national media - and who cannot - it seems like a restaurant is closing every week, as consumers choose to eat at home in their droves.
Consumers, it is reported, are cooking more at home, meaning that, suddenly time-rich, they are peeling, dicing and liquidising all sorts of fruit and vegetables themselves, and ignoring the supermarkets’ prepared offers.
But this is not strictly the case. There is a difference between what people say they do and what they actually do, which seems to be the situation with preparing vegetables. Traditional items, such as mashed potato, turnip and swede, as well as shredded cabbage, are seeing a renaissance as people turn to remembering days gone by with comfort foods.
Prepared fruit has taken a dive in the past six months, with products that are easily consumable in their own right, such as apples, grapes and strawberries, losing out on prepared market share. But are consumers happy to dissect a whole pineapple or cut around an awkward mango stone? No, but the price ticket has been pushing them away, it seems.
Price is, of course, the big variable here that overrides most consumer choices. Heavy price promotional activities in the multiples have kept the sector ticking over in volumes, if not profit. The golden £1 ticket is still a winner in the supermarkets and, while if this is worked well it can be to the industry’s advantage, who knows the full impact of convincing the consumer that they can have a mix of freshly prepared melon varieties - all the way from South America, no less - for £1.
Although some producers have taken a hit due to the supermarkets’ need to push through volume, many are quietly optimistic about it and see the logic in keeping their products in the limelight through the recession. Now the sun is shining, there is also a hope across the industry that snack-pack fruit combinations, as well as prepared salads and stir fries, will be on consumer menus once again.
Prepared vegetables are getting the same treatment, with price promotions deterring consumers from buying into the frozen sector, which is slowly but surely gaining market share over its fresh counterparts.
“Suppliers take the full hit, but have their guaranteed margin,” explains one prepared supplier to the multiples. “We need to balance it by volume; in the end, it works out. If sales grow, it is worth it.
“We have to monitor the promotions every day. We sit down and try to work out how we absorb the hit. We expect our growers to take some of the hit. It is a three-way partnership between the retailer, the supplier and the grower.
“Promotions are important in retail, especially with new products. Suppliers and producers are struggling in the recession and some people are shutting up shop, but that is where you have to jump in and make the most of all the possibilities.”
It has been said that panic among businesses and consumers at the start of the recession has now given way to just “slight concern”. While the newspapers would have us believe that the eating-out sector is in critical danger, not all types of eating establishments are in trouble.
A report on the eating-out sector published last month revealed that 75 per cent of British families would be less likely to eat out over the next 12 months. A survey of 600 consumers, carried out by Buckingham Research Associates, concluded that restaurants should focus on value for money to continue to attract the family market.
And while top-end restaurants in the UK have seen a drop in trade, it is unlikely to hit the 50 per cent drop that restaurants in France have seen, for example.
Meanwhile, fast food outlets such as McDonalds are doing better than ever and the need for healthy food within these establishments is still very much on the agenda, with shredded lettuce, mixed baby leaf, sliced tomatoes and the like still bringing in orders.
Catering giant The Compass Group is focusing its menus throughout the country on more interesting salad ideas, incorporating herbs into the lettuce mix, for example, and is also bringing back a more home-grown flavour to its establishments with both Best of British and Taste of Ireland sets of menus - calling for prepared chips, mashed potato, prepped cabbage and the like.
“Caterers are looking for the cheaper deal,” says one supplier. “It is a volatile marketplace. They will try cheaper alternatives short term, but they will return to quality.
“The pressure is high, but sales remain as we have a real mix of customers, which works in our favour.”
NORTH ANTRIM FOODS POWERS ON
There has been a huge rise in costs throughout the supply base, from basic fertiliser to land rent, writes market liaison and account manager Adrian Brannigan, from grower and processor of potatoes for retail and the foodservice sector North Antrim Foods, sister company of grower Glens of Antrim in Northern Ireland.
We have also seen two very challenging growing seasons, but we have been able to reduce costs through the supply chain, renegotiate some contracts, buy materials such as packaging and fertiliser and negotiate land rents in advance to get better rates.
Our grower base of more than 20 producers in Northern Ireland spans over 1,000 acres, mainly in Antrim. We grow the largest number of varieties of potatoes in Northern Ireland. Maris Piper grow well in Antrim. Fianna - an old variety that has been rediscovered recently - has become very popular.
Retailers are asking for a lot more local produce. We don’t like to see imported potatoes in Northern Ireland and Maris Piper is the most popular of the varieties here. Consumers are looking for a better understanding of potatoes in supermarkets, with on-bag information and access to details about seasonality and provenance, usually via a website.
Established in 1973, the business is still family owned and started life as a traditional farm. It has now diversified into a supplier of pre-packed potatoes, as well as prepared product, to Sainsbury’s, Asda and independent retailers.
In May 2008, we introduced a new mashed potato product, which is listed in all major growers and is doing very well. At the moment, our core business is retail and we supply some 12,000 tonnes of potatoes a year in all forms. We started to supply prepared products to the foodservice industry because we wanted to use as much of the potatoes we grow and source as we could, and the company has seen significant growth as a result.
Because we are new to the market, we are actively seeking new customers and due to that, we have not noted a downturn. The industry has become very competitive on price, but demand is still there.
We provide peeled whole potatoes, as well as sliced, chipped and diced potatoes to caterers, and supply different potato varieties for different uses.
Consumers have not traded so much in premium categories and are definitely more price conscious, but healthy eating remains a big trend. People want the same product for less.
The specifications required for prepared product are getting tighter and the industry has developed its requirements - we have seen a slight decline in performance as a result. There have been more promotions in the retailers to pull customers in. Through careful management of the promotions, we are seeing an upturn and coming out on top.
The volumes going to foodservice have changed. Customers usually require regular pack sizes of 9kg, while lately some customers have been going for 5kg. There has been a reduction in the volume in orders, but the customer base has remained and increased so it has evened out.
The range of prepared product available has also declined in the retailers and there has been some scaremongering, with some suppliers being delisted. But it is a matter of the prepared lines being nationalised. We haven’t heard any horror stories.
I do not believe that we have seen a huge decrease in people eating out. Caterers have seen an effect, but it has not had a huge impact. We are definitely not holding back because of the recession and we are still developing new ranges and looking forward to the long term.
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