Chilled food growth on the rise

While developed markets such as Japan, the US and the UK are characterised by the availability of a diverse range of increasingly sophisticated chilled food products, chilled processed meats is the only sector to have achieved significant penetration of emerging markets, the report shows.

The development of the chilled food market in potentially huge markets such as Russia and China is being hindered by low levels of consumer purchasing power and logistical problems associated with transportation and commercial and domestic storage, the study shows, leaving more mature markets to drive overall growth.

This growth has come primarily from a recovery in sales of chilled processed meats, which continues to dominate global sales, Euromonitor suggests, driven by the recovery of consumer confidence after the negative impact of the BSE crisis, the development of premium-positioned products and an expansion into emerging markets.

Chilled processed meats was by far the biggest category in the global market in 2003, accounting for 57 per cent of the total, according to Euromonitor, with chilled fish and seafood products in second place with 27 per cent.

Chilled ready meals accounted for 11 per cent of sales, while chilled noodles, pasta soup and pizza all accounted for around 1-2 per cent at most.

However, the logistical difficulties involved in establishing a broad geographic presence, combined with traditional patterns of purchasing products such as meat and fish, has led to the development of an extremely fragmented market. This situation has combined with the central role of supermarkets in chilled food distribution to lead to the development of an extremely strong private label segment.

Consequently, the need for manufacturers to develop strong and distinctive brand identities is made all the more urgent, as they attempt to define their brands in contrast to private label goods, Euromonitor suggests. Furthermore, the report shows how this is becoming increasingly difficult, as private labels themselves become evermore sophisticated.

But despite the factors potentially hindering growth in the chilled food market, the Euromonitor research suggests that the future remains bright for the category. Chilled food is ideally positioned to benefit from the major trends shaping the global packaged food market, not least the trend towards convenience.

Extended working hours and a growth in single-occupancy households have led to an acceleration of consumer lifestyles and the demand for products which minimise time spent on the preparation of meals. Consumers are thus increasingly drawn to products such as chilled ready meals, pizzas and soups, Euromonitor suggests.

Moreover, the report shows how the development of convenience-orientated products and packaging such as microwaveable formats, and individually wrapped products is becoming an increasingly central feature of manufacturers' innovation strategies.

Increasing consumer health-consciousness is another factor which is exerting a growing influence on consumption patterns, particularly in developed markets, as the media and government-sponsored initiatives increasingly draw consumer attention to health and nutrition issues.

Chilled food is well-placed to exploit this developing environment, as it is perceived as fresher and, therefore, healthier, than frozen, dried or canned alternatives. Manufacturers have looked to exploit the changing nature of consumer demand through the development of health-orientated products, such as those which are lower in fat or salt, or fortified with ingredients such as calcium or Omega-3 fatty acids, the report suggests.

Gourmet and ethnic products are also becoming increasingly popular in the chilled food segment, driven by media attention on food and cooking and an increase in international travel which have led to a growing willingness to experiment with novel flavours and ingredients on the part of consumers in many markets.

There is also a developing trend towards product segmentation, in particular for products targeting specific consumer groups such as the elderly, women and most notably, children.