Increasingly hectic lifestyles and cultural changes, such as more women joining the workforce, would be enough to sustain growth in the ready meals market but, writes Emily Woon of Euromonitor International, growth in Western Europe is also being spurred by the introduction of healthy and premium products.
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Convenience may still be the primary motivation for consumers buying ready meals but research from Euromonitor International suggests that other criteria are increasingly influencing the purchase of convenience foods. In particular, as part of a general trend towards premium products, Euromonitor has observed a growing demand for organic and better-for-you offerings.
According to Euromonitor International, retail value sales of organic ready meals in Western Europe grew by 17% between 2005 and 2006, while sales of reduced-fat ready meals increased by almost 11% over the same period.
Euromonitor predicts that two distinct health trends will be observed in the ready meals market over the coming few years, involving both the reduction of less healthy elements in the formulation of products and the addition of ingredients which boast active health benefits, such as Omega 3.
The former trend is seen as fundamental to the future of the sector. With healthy living and public education about food and diet becoming ever more pervasive influences over lifestyles, it is imperative for producers to address the longstanding associations between convenience foods and an unhealthy diet. The latter approach is more faddish, changing as new healthy ingredients come along, claiming to be the magic element of a healthy diet.
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By GlobalDataAlso underlining the influence the health and wellness trend is having on the market, prepared salads was one of the fastest growing ready meals categories between 1998 and 2006, with retail value sales increasing at a compound annual growth rate (CAGR) of around 12%.
Such products offer consumers an attractive combination of health and convenience, particularly to those with busy lifestyles. Packaging has also played an important role in stimulating growth, with manufacturers offering a range of formats such as single-serve salads with fork and large bowl or shaped “family” containers. In developed markets, public education campaigns aimed at promoting increased consumption of fresh produce have also spurred growth in this sub-category.
In addition to the health and wellness trend, the last year or so has seen a greater proliferation of ethnic-style dishes in the prepared meals sector, fuelled both by the popularity of Chinese, Thai, Japanese and Indian restaurants in Western European countries and increased travel to Asian countries by Europeans.
Euromonitor’s research shows that retail value sales of Indian prepared meals in the UK grew by 8% in 2005 and Chinese by 10%, whilst Thai dishes remained static and Mexican dishes fell by 17%. The biggest growth came from the general “Oriental” foods category which saw growth of 56%. This category includes Malaysian and Singaporean dishes, as well as Thai and Chinese fusion dishes.
With ethnic foodservice outlets sprouting up all over the UK and elsewhere in Western Europe, Euromonitor International expects similar, if not stronger, demand for ethnic ready meals over the next few years. Innovative offerings, in addition to the standard “sweet ‘n’ sour pork” recipes, are expected to arouse consumer interest and spur higher expenditure.
As a whole, Euromonitor forecasts that retail value sales of ready meals – categorised as frozen, chilled, dried and canned/preserved formats – in Western Europe will hit US$26.4bn in 2007. Western Europe accounted for 37% of global retail value sales of ready meals, the largest share of any region.
Moreover, strong sales of chilled ready meals, underpinned by a constant stream of new product offerings from both branded manufacturers and retailers, helped to produce value growth of 4.2% between 2005 and 2006, making ready meals one of the most dynamic segments in packaged food in Western Europe.
Growth in ready meals continues to be spurred by increasingly busier lifestyles, and socio-cultural factors, such as the increase in the number of women working and the number of single-person households.
In market terms, the fastest growth over 2005-2006 was seen in Scandinavia, notably Norway and Finland, followed by Mediterranean countries such as Spain, Portugal and Italy.
Norway was the fastest growing market in Western Europe by retail value and is expected to sustain that strong growth over the coming five years, seeing value growth of 40% between 2007 and 2012 mainly as a result of the ever-growing demand for chilled ready meals and frozen pizza.
In contrast, the UK registered the most sluggish growth of 2.6% in retail value terms. This was due to a marked slowdown in a number of sectors including frozen and canned/preserved ready meals which have lost ground to chilled ready meals, the latter having benefited from the trend towards premium and healthier products.
The chilled category has been the prime beneficiary of the growth in these areas, with consumers often looking for these types of products in the chilled section rather than in other ready-meal categories. This is something frozen food brands will have to take account of in order to halt further sales declines and Euromonitor International expects to see a raft of new frozen products in the near future that are healthier and offer reduced levels of salt, sugar or fat.
The Western European ready meals market is highly fragmented, with no one company holding more than a 5% share in value terms. The dominant forces remain the big multinational companies, with Nestlé in the number one position with a 3.8% value share in 2006, followed by Oetker-Gruppe with 3.2% and Unilever with 2.2%.
Private label products are also gaining share. There has also been a distinct rise in the quality of the private label ranges on offer from major retail chains. In 2006, private label accounted for more than 45% of the total ready meals market in Western Europe.
Private label is strongest in the UK where it accounted for around a 75% value share in 2006. Meanwhile, retail brands are less prominent in less mature but faster growing markets for ready meals such as Norway and Finland.
