Frozen foods benefiting from recession

07-Jan-2009 - Last updated on 07-Jan-2009 at 13:02 GMT

Related tags Cent Food preservation Meal

The frozen foods market is showing signs of a revival in the tough economic climate, with indications that consumers are switching back from higher-priced chilled foods to frozen alternatives in order to save costs and reduce waste.

Data from TNS Worldpanel shows a steady increase in the growth rate for the UK frozen food sector over the past year, from 3.1 per cent 12 months ago, to 4.2 per cent in March, to 4.6 per cent in June, to 5.0 per cent in September.

The latest data, from November 30th, valued the market at £4.867bn (c €5.38bn at today’s exchange rates) and put growth at 5.8 per cent.

Brian Young, director-general of the British Frozen Food Federation (BFFF), told FoodNavigator.com that this boom is directly linked to the recession: “The underlying reason is value.”

The product sector that perhaps best illustrates the turn-around is ready meals. In December 2007 they were in value decline of 3.8 per cent; now, the growth rate is 3.4 per cent.

The difference in price between a frozen and a chilled ready meal could be as much as 40 per cent – although a precise comparison is hard to make due to the different ranges and value lines on offer.

Young predicts that the frozen boom could well attract more innovation and product launches. With ten consecutive quarters of accelerating growth it is “a much more attractive marketplace for everyone”.

In addition, consumers are trying to cut down on the food they waste – and that may mean buying less chilled food that has a short shelf life in the fridge. WRAP has estimated that around ₤420 (c€464.7) of food is thrown away by an average family in the UK each year.

“When the economy is difficult and household budgets are tight, people try not to throw so much away,” Young said.

What is more, there is an element of hunkering down to ride out the storm. People are looking to make less trips to the supermarket, since the experience and the choice on offer tempts them to buy.

“Stocking up the freezer with frozen food means you go to the shops less.”

Birds Eye view

The BBBF’s observations are already being born out in the financial results of frozen food firms.

Privately-owned Birds Eye Iglo, which was bought by Permira 18 in 2007, increased its UK sales in the UK by 5 per cent in 2008. EBITDA grew 10 per cent over the year.

“People are definitely shifting towards frozen food from more expensive chilled,” chief executive Martin Glenn is reported as saying by The Financial Times.

“Hopefully we will be coming out of 2009 as one of the companies that has – in spite of adversity – posted good results.”