Due to its vast consumer base the Asia Pacific region is the third-largest market for frozen processed food. Although it lies behind Western Europe and North America in terms of development, the market is being influenced by common trends such as convenience and health, as Euromonitor International reports.
According to global market analyst Euromonitor International, Asia Pacific is the third-largest regional market for frozen processed foods, though not as a result of being a mature frozen processed food market, but rather due to its vast consumer base. The region still lags behind Western Europe and North America in terms of development as large rural areas of Asia-Pacific countries tend to depress the frozen processed food market, with many consumers accustomed to purchasing meat, fish and vegetables from wet markets or in unprocessed frozen forms. This preference for widely available and cheaper fresh food, urban-rural characteristics, underdeveloped distribution and transportation networks and a lack of refrigeration facilities offset the trend towards value growth.
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Asia Pacific is, however, undergoing a rapid development which provides a stimulus to the frozen processed food market and suggests a strong opportunity for continued growth in this region. According to Fanija Samak, a packaged foods analyst at Euromonitor International, the Asian eating culture and people’s perception of frozen processed foods is slowly changing. Longer working hours, greater numbers of women in the workforce and westernised trends in diet and culture have increased consumer demand for frozen food in many urban centres. More liberal economic policies, rising living standards and improved manufacturing and distribution networks have contributed to a rise in consumer purchasing power in towns and cities across the region.
Within the region, Samak believes that two main factors are responsible for shaping the frozen processed food industry in Asia Pacific: convenience and health.
Hectic lifestyles call for convenience
There is a growing tendency for consumers to be willing to pay extra for products that reduce the amount of time and effort spent on cooking. Asian people are increasingly becoming “time poor” with an increasing number of women joining the workforce and people in general working longer hours. This “time poor” lifestyle has caused consumers to pick up on the trend for “convenient” packaged food, including frozen processed food.
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By GlobalDataAs a result, people are spending less time in the kitchen. Even at weekends and on holiday breaks, people would rather spend time on leisure, amusement, sports and surfing the Internet than preparing meals.
Samak believes that the need to balance work, the demands of family life and personal needs has led Asians to frozen food. This saves them time and allows them to maximise quality time for their children or for themselves. As such, Euromonitor International expects that issues such as taste and freshness of frozen processed food compared to fresh food or even chilled food are likely to be less important for consumers in the future.
Frozen ready meals set to benefit from this trend
Euromonitor anticipates that the demand for affordable and easy to prepare meals, like frozen ready meals, will continue to attract a potentially high number of consumers due to the ever dynamic and fast-paced lifestyles of young professionals. The busy nature of consumer lifestyles has been driving sales of convenient frozen ready meals and other frozen processed foods which are easy to prepare and convenient to keep. Less time being set aside for cooking and family mealtimes has continued to increase people’s reliance on ready meals and particularly those requiring minimal preparation.
Consequently, frozen ready meals is the second fastest growing sector in the Asia Pacific frozen food market, although from a small base. According to Euromonitor’s latest research, the sector is likely to register value growth of over 12% in 2004 to reach US$331m. Moreover, the growing influence of Western diets and culture suggest further growth in frozen ready meal sales across the region.
Health trends increasingly shape frozen foods.
The prevailing trend towards healthier food also has an influence on the frozen processed food sector, according to Euromonitor’s Samak. Health conscious attitudes and the heightened trend to maintain wellbeing has led to impressive growth in functional food and other foods claiming to offer health benefits. Frozen processed foods offering functional properties, or claims that they contain high amounts of certain vitamins or minerals, are therefore expected to be a driving force for growth as anticipated by Euromonitor International.
Frozen meat substitutes benefit from health trend
Following a series of special reports entitled “Good Eating Good Living” by SBS (one of the top three broadcasting companies in South Korea), highlighting how some meat can cause adult diseases such as diabetes, hypertension and arteriosclerosis, many South Koreans have started to increasingly search for vegetarian diets.
In order to meet consumer demand, manufacturers have begun to launch frozen meat substitutes mainly made from beans.
Research from Euromonitor International shows that the frozen meat substitute sector is expected to reach US$4.6m in Asia Pacific in 2004, 96% coming from South Korea. Although it is insignificant in terms of value size, the sector is set to record the fastest value growth in South Korea among the frozen food subsectors in 2004 and Euromonitor expects it to continue to show rapid growth in the near future.
BSE crisis casts shadow over frozen red meat in Japan
The beef industry, on the other hand, has continued to suffer from low consumer confidence since the emergence of BSE in Japan in September 2001, with frozen processed red meat sales severely hit. Since then, new cases of BSE have continued to appear in different regions of Japan, and in May 2003, the Ministry of Health and Welfare announced the country’s seventh case of BSE, found in Hokkaido.
Consumer awareness of food safety issues has also been raised as a result of several government and corporate scandals, whereby the Ministry of Health and Welfare in Japan was found to have failed the public by falsely claiming that the BSE crisis was under control. 2002 also witnessed major manufacturers, most notably Nippon Suisan, Nippon Meat Packers and the now disbanded Snow Brand Foods, being discovered to have deliberately mislabelled imported beef as domestic beef in order to obtain government subsidies.
However, industry sources suggest that whilst the BSE scare did have a negative affect on the beef industry, suppressing demand for frozen red meat at the end of 2001 and in 2002, attitudes towards beef will improve and showed significant signs of recovery by the end of 2003. A survey completed in September 2002 by The Nikkei Marketing Journal and the Nikkei Research Institute of Industry and Markets revealed that beef purchasing trends had already improved, with only 7.3% of consumers completely avoiding red meat, a marked decrease compared to 31.3% in a December 2001 survey.
The latest research by Euromonitor International shows that the fall in demand for frozen processed red meat in Japan in both volume and value terms is going to slow down in 2004 and 2005 and will begin to recover in 2006.
And in other countries too
And it is not just the Japanese market that has suffered. Although in Singapore, beef products from Europe have been banned since 1996, and from Japan since late 2001, the stigma of consuming beef products still lingers and has impacted on an already low level of value and volume sales of frozen processed red meat.
In Hong Kong growth rates of frozen processed red meat, as measured by Euromonitor International, have slowed and to some extent this is attributable to the association of red meat with high cholesterol levels. Similarly, in Malaysia consumption of red meat has declined among the urban, better-educated consumers, and awareness of the health benefits of reducing red meat intake has increased.
Frozen processed fish/seafood fares well due to its healthy image
Frozen processed fish/seafood, on the other hand, is faring well partly due to the growing awareness of the importance of a healthy diet, including the benefits of eating more white meat and fish. “The growing awareness of young professionals toward healthy living would tend to dictate them to buy more frozen processed fish and frozen processed poultry,” said Samak.
Fish is considered a good source of protein and calcium. If fish can be made available in various flavours that are appealing to health-conscious groups then patronage of such products is expected to increase. On the other hand, frozen processed poultry is also favourite among fitness buffs. Most of these individuals are advised by their fitness instructors to eat more chicken breasts, as this part is known to have less cholesterol.
Euromonitor International expects value sales of frozen processed fish/seafood in Asia Pacific to increase by 7.3% to US$2.8bn in 2004. The frozen processed fish/seafood subsector is expected to show steady growth in the near future as it continues to include a wide variety of products.
Variety is the key
The wide variety of frozen processed fish/seafood available in South Korea, such as fish cutlets, coated prawns, squid rings or fish balls, are favourite snacks or side dishes to South Koreans, especially to Korean children. Smoked salmon and other such imported frozen processed fish products are also popular, especially to the middle-aged or older generations. In Japan, the most popular and commonly found processed items are fish balls, fish dumplings and fish fingers, as well as Japanese-style seafood products such as crabsticks and fish rolls.
Singaporeans have become increasingly health conscious over the past few years and against the backdrop of infected meat scandals in Europe and Japan, Euromonitor International found that sales of processed fish/seafood rose steadily over the 1999-2004 period. The popularity of processed fish/seafood products was further boosted by the fact that fish in general is lauded to be healthier. There was also an increase in consumption of seafood delicacies such as scallops, lobsters and crabs on special occasions such as the Lunar New Year. And while fresh fish/seafood is preferred, a growing number of Singaporeans are turning to frozen processed fish/seafood for convenience.
Diet-conscious Indonesians are also turning to fish and seafood for their health benefits. Heightened demand has had a positive effect on the frozen sector and unlike frozen processed red meat, frozen processed fish/seafood does not face a significant threat from its chilled counterpart as the companies that supply the fish generally sell their products in frozen form in order to maximise the distribution benefits.
Chinese vegetable imports found with chemical residue
The frozen processed food industry in Asia Pacific was hit by yet another issue concerning food standards during 2002, when in October, Japanese government officials discovered chemical residue on frozen vegetables which had been imported from China. Several Japanese importers consequently refrained from buying vegetables from China, undermining China’s exports in 2002 and 2003, as well as negatively impacting sales of frozen vegetables in Japan during 2003 and 2004.
Ajinomoto Frozen Foods, a subsidiary of Japan’s Ajinomoto, withdrew seven of its frozen food products containing vegetable ingredients from China. The value of sales lost as a result of the withdrawal of these products is expected to total some ¥700m (US$6.8m). Nichiro was also similarly affected in 2002, ceasing its imports of leaf vegetables, string beans and frozen spinach. As a result, the company announced an 80% decline in value sales of its frozen spinach from China.
Having witnessed several companies come under severe public scrutiny after being caught for compromising food safety standards, frozen food manufacturers responded rapidly and implemented several measures to ensure higher quality control for their imported vegetables. Nichiro formed an alliance with China Agrotech Holdings and Xiamen University to incorporate new safety measures and check products more thoroughly for higher quality control. Ajinomoto Frozen Foods also sought to improve its product safety checks for its imported vegetables by purchasing new specialist equipment to analyse agricultural chemicals found on vegetables.
The future ahead
Euromonitor International expects the changing dynamics of the Asian consumer base to drive growth of the frozen processed food industry in the region in the near future. “The increasing number of working women and the growing independence of the younger generation will increase the demand for convenient frozen food that can be easily stored, thereby negating the need for daily shopping trips,” added Samak. “The growing health trend should benefit the fish and seafood products as well as the small and increasingly popular frozen meat substitute sector.”
As the taste and texture of frozen processed food increasingly satisfy consumer needs and provide them with convenience, Euromonitor International forecasts that there will be more demand for frozen processed food and manufacturers need to be ready to take advantage of this. Some major players in South Korea, such as Halim, CJ Corp, Dongwon F&B and Lotte Ham & Milk, are already introducing state-of-the-art technologies and equipment in the frozen foods sector. Others in Japan, such as Ajinomoto, are teaming up with fridge-freezer manufacturers to cross-market each other’s products using joint-campaigns. Following Nichirei’s successful launch of an additive-free range of frozen processed food in 2003, Euromonitor expects other manufacturers to follow and introduce similar products which are additive- and preservative-free or offer a higher nutritional content than existing brands.
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Source: Euromonitor
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Source: Euromonitor
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Source: Euromonitor
Related Euromonitor Research:
The World Market for Frozen Food
Packaged Food in China
Packaged Food in South Korea
Packaged Food in Japan
Packaged Food in Singapore
Packaged Food in Malaysia
Packaged Food in Hong Kong
