Segmentation by occasion: can it reverse processed meat slowdown in Europe?

By Pinar Hosafci, food analyst, Euromonitor International

- Last updated on GMT

Ocassion-specific launches might also be combined with flavour innovation
Ocassion-specific launches might also be combined with flavour innovation

Related tags: Compound annual growth rate, Innovation, Beef, Pork, Poultry

Processed meat has reached saturation point in developed markets, with Europe seeing a stagnant value compound annual growth rate (CAGR) over 2009-2014, according to Euromonitor International, a trend further exacerbated by slow population and economic growth, ageing consumers, and changing consumer preferences.

In this increasingly challenging and competitive marketplace, product and packaging innovation catering to occasion-specific consumption could play an important role in brand strategies for growth. In particular, chilled processed meat can drive traffic throughout the day by creating new eating occasions for different types of consumers in Europe.

Why is processed meat in decline in Europe?

Processed meat growth has been slowing down in Europe for the past five years, driven by not only the slower economic and population growth, but also sector-specific factors such as meat scandals (horsemeat, bird flu, listeria, and so on), increasing adoption of meat-restricted diets due to environmental, ethical and health concerns, and the increasing dominance of private-label, which makes it hard for manufacturers to up their margins. If manufacturers are to recover their margins in the long term, they should focus their efforts on innovation though occasion-specific consumption.

Catering to mealtimes should be at the heart of innovation

Just as Parma ham slices can effectively qualify as an appetiser for dinner or lunch in Denmark or Norway, a varied meat-based spread or pâté can help introduce a brand to the lunch/snacking segment in Spain or France. Alternatively, flavoured oven spreads such as Bruschetta Aufstrich from Campofrio can foster a competitive edge for companies by creating an alternative dinner occasion, which could be particularly appealing to consumers in Central Europe, such as Germany, Austria and Switzerland.

Bite-size variants may help counter chilled meat’s stagnation

The rise in snacking, coupled with the switch towards more protein-rich foods, has been benefiting ambient meat snacks like Jack Link’s, which recorded a 12% value CAGR over 2009-2014, significantly outpacing processed meat growth in Europe. European manufacturers like Bordeau Chesnel in France have also jumped on the snacking bandwagon through the launch of products such as "mini chorizos",​ bite-size reduced-fat versions of standard chorizo sticks. The repercussions of the snacking trend are also seen in frozen processed meat, with the Italian player Bofrost debuting "mini burgers"​ (Mini Burger di Vitello) in late 2014, ready to be served in five minutes and described as a fun way to engage children in cooking.

Packaging and product innovation should be geared to suit cooking occasions

Manufacturers of processed meat can further add value to their brands by tailoring them to specific cooking or grilling occasions. Fleury Michon, the leading processed meat player in France, with a market share of more than 10% in 2014, is heavily capitalising on this trend. The company’s recent launch, Fleury Michon Diced Chicken, provides convenience in cooking with its pre-cooked and diced slices, which come in a twin-pack with a perforation for easy tear. Fleury Michon’s successive innovations underpin its success, making it one of the fastest-growing companies in chilled processed meat in France.

Occasion-specific launches might also be combined with flavour innovation. Chilled hamburgers made of prosciutto are a growing trend in Italy, with retailers like Coop and Eurospin and leading players including Rovagnati launching prosciutto burgers to tap into the healthy grilling trend in the country, as ham is perceived to be a cheaper alternative to beefburgers.

With private-label commanding a 40% share in Europe in 2014, a figure that has been on the rise since 2008, there is a clear need for processed meat manufacturers to come up with creative innovations to remain competitive. Catering to occasion-specific consumption – be it in terms of mealtimes or through snacking – enables processed meat manufacturers to differentiate themselves from private-label products and, in turn, charge a premium to boost their declining margins in mature markets.

Related topics: Meat

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