Ready with zeal

We’re on the brink of a ready meal revolution as discerning consumers demand dinner that’s fresh, healthy and flirts with flavour. Oscar Rousseau reports. 

The ready meal market is on cloud nine. Value sales have increased steadily year-on-year since 2013, according to Kantar Worldpanel, and the figures for this year show a fresh market that continues to gather upward momentum. Growth in the ready meals market grew by 3.8% this year, compared with 3.4% the year before, according to Kantar data (52 weeks ending 24 April 2016). But what is driving the strong growth in the market? And, crucially, is there anything that can halt the charge of the ready meal juggernaut?

The UK’s ready meals market is being driven forward by the convenience it offers to working professionals. It provides and delivers a far healthier alternative than kebabs, fried chicken and other takeaway temptations do. And as we tell ourselves we lead busier lifestyles – despite the fact we’re increasingly eating dinner alone – ready meals are cashing in on our constant state of preoccupation. But ready meal manufacturers have to be on their toes, as the road to riches is not a walk in the park. Rebuilding trust with consumers is vital following the 2013 horsegate scandal with companies found to be advertising beef products containing undeclared horsemeat – as much as 100% in some cases. As a result of this, transparency of ingredients is crucial in ready meals if manufacturers are to continue to rebuild trust with consumers, according to market analyst Mintel.

But the positive thing for ready meal manufacturers is this: consumers in the UK eat more ready meals than any other major European country, according to Mintel. The data analytics company’s annual report on prepared meals for 2015 found that 30% of adults in the UK ate a ready meal at least once a week, in comparison to France with just 16%. A hungry market is always a good sign for the ready meals sector.
Kantar’s ready meal data, based on purchasing habits of 30,000 demographically representative households, shows chilled ready meals continued to trade ahead of frozen ones. Chilled sales increased by 5.7%, while frozen sales dropped by 3%. And both sectors have seen their respective growth and decline accelerate this year, according to Kantar. Through a refreshing cocktail of higher prices, consumers trading up and increasing the frequency of their shopping trips, chilled ready meals have improved on last year’s strong performance from last year. Out of the flavour profiles, English ready meals – like sausage and mash or cottage pie – outperformed European flavours and posted sales growth of 8.1%. Oriental and French-inspired ready meals are the fastest-growing flavours in the UK, albeit from a smaller base, with 19.4% and 10.9% growth respectively.

Italian-inspired ready meals are the second most popular in the UK with a 31.2% share of the market, but recorded a year-on-year decline of -1.1%. Indian food, the third most popular type of ready meal in the UK, with a 13.7% market share, recorded growth of 1.9%, according to Kantar. Meat-based ready meals retain the lion’s share of the market, generating 79.2% of sales. Fresh and frozen ready meals with fish generated 18.1% of sales, while vegetarian and vegan ready meals contributed 2.7% of sales.

As a business, Kerry Foods produces around four million ready meals every week to be sold in the UK. The majority of its ready meals contain protein, with its meat-free and vegetarian options forming just a small part of its overall meal solutions category. Its product range includes The City Kitchen, Hungry Joe’s and a brand new Men’s Health range of high-protein frozen ready meals – all available at the big four retailers. “The new Men’s Health FRM (frozen ready meals) range is a great example of launching a targeted proposition to appeal to a specific consumer group,” says Andy Bolton, category controller at Kerry Foods. The line of fitness-focused ready meals was only launched in March 2016, but early sales suggest performance is strong for the niche product. Bolton also says he hopes the partnership between Kerry Foods and lifestyle magazine Men’s Health will, over time, encourage new consumers to buy ready meals. “Compared to some of the other sectors in frozen ready meals, targeted health will always be quite small, so I’m not sure they are the ‘answer’ to overall category growth. However, they do highlight the role brands can play, in tandem with own label, to encourage more consumers to buy into the category.”

In last year’s report on ready meals, one trend that was picked up on was a growing shift to ‘premiumisation’ as producers tapped into consumers’ demand for high-quality ready meals. “Premiumisation is an interesting term,” says Bolton. If you look at the headline data across CRM (chilled ready meals), the average price is actually declining by 2p year-on-year. FRM is up 10p year-on-year, so it is difficult to group all ready meals together and say that they are being premiumised.” What is evident in the market, says Bolton, is that ready meals are not necessarily becoming more luxurious and decadent; rather, they make better use of high-quality, natural ingredients. “If you look at premiumisation from a different perspective and consider the quality angle, there have been significant product quality improvements across the market in all categories as retailers look to differentiate through quality now that price is becoming less of a differentiating factor.”

Value retailers rocking

Supermarkets Aldi and Lidl both continued their storming performance in the chilled ready meals category, with growth of 32.9% and 30% respectively, according to Kantar. This is particularly impressive given the fact that Aldi’s growth – the largest of any major UK retailer – declined by 50% on last year’s level. Lidl kept up the pressure on its rival, Aldi, with similar growth to that reported last year. The Co-operative was the third best-performing supermarket, recording growth in chilled ready meals of 29.9%. M&S (8.8%), Tesco (6.2%) and Waitrose (1.5%) were the only other retailers to post a growth, albeit marginal.

Lidl’s steady growth in this market category is attributed to its “great selection of authentic ready meals”, says Lukas Schmidlin, Lidl’s senior buying manager. Lidl’s ready meals are sold under the brand name Chef Select and cover a range of cuisines, with Indian-flavoured ready meals consistently its best-selling range. “The packaging of our ready meals has recently been redesigned to give it a more modern feel and make it more eye-catching off the shelf, which has definitely helped sales grow,” said Schmidlin, who added: “At Lidl, we take pride in the fact we consistently offer top-quality products, with top-quality ingredients, at the best possible prices. And the growth in sales indicates that our customers agree.”

Frozen ready meal sales fell by 3% overall, but price increases, coupled with shoppers trading up, have offered some growth opportunities for the market. This, however, has largely been cancelled out, with the majority of consumers cutting back on the frequency of frozen ready meal buys, according to Kantar. Iceland, which overtrades significantly in this category, enjoyed growth of 14.3%, despite the overall decline in frozen ready meal sales. No other retailer got near Iceland’s performance in frozen, with just Aldi reporting growth (8.1%). Iceland and Aldi are anomalies in a plummeting market, with all big four retailers reporting a decline in frozen sales. Kantar analyst Charlie McGregor said the big four were the “hardest hit” out of any supermarkets in the UK: Tesco reported a drop of 6.9%, which was in line with the market. Sainsbury’s (-6.7%) and Asda (-12.2%) recorded heavy falls, whilst the struggling Morrisons declined by 0.1%, albeit from a lower market share. Smaller retailers like The Co-operative, Waitrose and M&S also saw sales decline heavily when compared to last year. “M&S is the fastest decliner at 27.2%, followed closely by Co-op at 23.2% and Waitrose at 16.7%,” said McGregor.

Overall, ready meal sales for both chilled and frozen came to £1.98bn last year. For the market to ensure its growth spurt is nurtured and stimulated, producers ought to take heed of a host of changes in the marketplace. “Demographic changes with more single person households and an ageing population are two of the most obvious. The increased need for more specific targeted health propositions is another,” says Kerry Foods’ Andy Bolton. If ready meal manufacturers are prepared for these changes and address them with zeal, intelligence and a dash of safe experimentation, there may be little to halt the ready meal rocket from blasting off. But will it just be the chilled vertical to enjoy an upswing, leaving the frozen category to defrost and deteriorate in its blaze of glory? Only time will tell, but manufacturers need to be ready to not make a meal of this wonderfully growing market.

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