The BSE and foot-and-mouth scares inevitably took a toll on red meat sales, and while sales have been steadily recovering, beef is unlikely to win back market share from other meat products perceived as healthier and safer.
Frozen processed poultry registered strong growth in recent years, stimulated by its fulfilment of major consumer demands for healthier, premium products, according to Euromonitor. Between 1998 and 2003, frozen processed poultry retail value sales grew by 27 per cent in western Europe and by 30 per cent in Scandinavia, with the vast majority of these increases coming at the expense of frozen processed red meat, whose value sales growth in western Europe over the same period was just 6 per cent.
Health has also played a part in the growth of the market for frozen reduced-calorie ready meals - previously something of a niche market, according to Euromonitor. This has been driven by manufacturers like Heinz and Nestlé tapping into the preoccupation with health and self-image with brands such as Weight Watchers, on the market since the late 1990s, 1st Choice Unislim Ready Meals, introduced in April 2003, and Findus Feeling Great! Lean Cuisine, re-launched with four new variants in 2002.
Of total frozen ready meals, Euromonitor's latest research found that the 'healthy' share in western Europe increased significantly from 30 per cent value in 2001 to 38 per cent value in 2002.
Frozen soup has also seen a significant increase in sales as a result of this health trend, Euromonitor said, although its growth has come from a relatively low base. In fact, frozen soup has been, and continues to be, the fastest-growing sector in western Europe, with retail value sales growth of 40 per cent in 1998-2003.
This is primarily because it is perceived as a healthy alternative and it benefits from a trendy image, storage advantage and convenience. However, it is a relatively new sector and still quite small. In fact, it is among the smallest in the industry, representing just 1 per cent of total retail frozen foods in terms of value sales in western Europe. This, in turn, indicates that the sector has large growth potential, and it is expected to continue to perform well in the short term.
Frozen potato products, on the other hand, have a less healthy future, mainly because of their less healthy image. This sector had the lowest growth rate of all frozen food categories in western Europe over the last five years, and is expected to show further declines in the future.
Health conscious Scandinavians, in particular, have turned up their noses at frozen potato products, Euromonitor said, not least after Swedish scientists discovered for the first time that acrylamide, a synthetic substance used in the manufacture of plastics and dyes as well as to purify drinking water, is also present in potato products that have been subjected to high heat.
Further exacerbating the gloomy outlook for frozen potatoes is the increasing trend towards low-carb dieting. The sector lost 1 per cent of its retail value share of frozen foods in 2003 in Scandinavia, and Euromonitor expects it to slowly lose value share in the rest of western Europe as well.
This, of course, spells bad news for a company like McCain, the world's biggest producer of French fries - and indeed of frozen potato products in general. McCain's sales of frozen potatoes fell last year amid a backlash against fast food and associated health risks such as obesity. The discovery of bacteria linked to Legionnaires' disease in the cooling system of a French production facility earlier this year did nothing to improve the firm's reputation.
The company is making efforts to revive flagging sales by focusing on product innovation. This includes making its fries crispier, introducing new shapes, implementing different types of seasoning and introducing microwaveable fries. Moreover, the company is attempting to diversify into the dessert segment in Europe using its potato brand - though how big a market there is for potato-based desserts is yet to be seen.