U.K. chilled food industry to grow by 21% between 2011-2015, reach a total market value of just over £11B by 2015, report forecasts

Graziela Medina Shepnick

LONDON , June 30, 2011 (press release) – The highly competitive £9bn chilled food industry continued its prolonged period of growth in 2010, albeit at a much lower rate than in the previous year. After a strong performance in 2009 -- when the overall market value grew by 9.7% -- continued price increases and lingering consumer uncertainty have seen growth fall to 4.7% in 2010. It is thought that price increases in 2009 were major contributors to impressive growth figures that year, alongside promotions from supermarkets such as 'Dine in for £10' deals. Despite continued promotions and new product development, the high level of growth has proved hard to maintain.

Certain categories have displayed strong growth in 2010, particularly the fresh soups and ready meal sectors. Ready meals have become the subject of major promotions by supermarkets since the recession, as the retailers look to persuade wary customers to enjoy a meal at home as opposed to a restaurant. The sector's value grew by 11.5% in 2010 after a disappointing 2.9% in 2009, demonstrating that this strategy has, thus far, been successful. Consumer research suggests that ready meals' popularity declines through the social grades, eschewed in favour of less expensive frozen competitors. Recent Target Group Index (TGI) research commissioned by Key Note showed that 23.7% of those in the A social grade bracket preferred chilled ready meals, while 37.1% of those in social grade E preferred frozen ready meals.

Supermarkets try to keep ready meal prices low, and this puts ever greater pressure on manufacturers, who are also endeavouring to reduce the salt and fat content of meals. Many manufacturers are hugely reliant on the custom of major supermarkets, and those that can adapt to their demands have managed to expand their production operations. However, companies who have lost the custom of just one supermarket may have been forced out of business. Supplying Sainsbury's with ready meals represented 90% of Ethnic Cuisine's revenue, and when that supply agreement was not renewed the company's activities were no longer viable.

While ready meals bucked the overall market trend in 2010, another major sector -- yoghurts -- performed poorly in comparison. Continued development of products, prominent brand promotions and continued consumer interest in healthy eating contributed to 11% growth in 2009. However, despite continuing promotions, growth fell to 2.9% in 2010.

Key Note predicts that the UK's fragile economic recovery will result in a steady rate of growth that gradually increases as the outlook improves. Overall growth for the 5-year period between 2011 and 2015 is predicted to be 21%, resulting in a total market value of just over £11bn by 2015.
However, the continued evolution of chilled products and the sector's increasing consumer reputation as the solution for convenient meals or premium treats should stand the market in good stead for the coming year.

Key Note's 2011 Market Report Plus, Chilled Foods, analyses the market for chilled prepared foods including ready meals, pizzas, mixed and leafy salads, desserts and cakes, sliced cooked meats, yoghurts, soups and sandwiches, wraps and rolls. Dairy products (excepting yoghurts) are not featured, and are instead included in the remit of Key Note's Dairy Market Report.

Key Note Ltd has been providing commercially relevant market information to libraries, academia and businesses for almost 30 years. With over 1,000 titles available across 29 market sectors, and new or updated titles published every month, Key Note is one of the UK's most prolific and respected business information providers. Within the range, some reports are written in response to particular market conditions, whereas other reports will be produced regularly year on year.

The Market Report Plus 2011, Chilled Foods, is available to purchase from Key Note on 0845-504 0452, by e-mail at sales@keynote.co.uk or at www.keynote.co.uk, priced £605.

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