The global convenience foods market has seen growth of nearly 9% since 2000, and it is expected to grow a further 15% by 2007. Busy lifestyles, changing consumer tastes and the expansion of the EU are all having an effect on the convenience foods market, as just-food.com’s new research report shows.
Total global retail sales of convenience foods were worth US$40.22bn in 2003, having increased 8.9% since 2000, according to a just-food.com report. Helped by changing consumer tastes and a strengthening economy, global retail sales of convenience foods are forecast to grow by 15.1% from 2004 to reach $46.30bn in 2007.
The just-food.com report defines convenience foods as packaged and processed complete meals that require few or no extra ingredients to be added by consumers and little or no preparation prior to consumption. They include ready meals, pizzas and meal centres, and can be sold in various formats, including frozen, chilled, canned or dried.
Frozen and chilled products, such as ready meals, are currently the most popular format for convenience foods. Frozen products accounted for 38.5% of total global convenience food sales in 2003. They rose by 13.8% in value from 2000 to $15.45bn in 2003. Sales of chilled products rose by 6.9% between 2000 and 2003 to $14.89bn, accounting for 37% of total convenience food sales in 2003. In contrast, canned products sales grew by 7.1% between 2000 and 2003 to $6.43bn. Sales of dried foods were nearly static between 2000 and 2003, edging up 0.8% to $3.24bn.
Innovation still important
Demand for convenience foods has increased in the last few years as lifestyles become more time pressured, and consumers are increasingly seeking quick and easy meals. However, despite the emphasis on convenient foods, consumers are not willing to sacrifice taste or nutrition. To satisfy demanding consumer tastes, manufacturers of convenience foods are having to introduce innovative, healthy, convenient, tasty foods, and are also having to launch many new products every year to maintain consumer interest.
Other drivers of the convenience foods market are the global economy, which is expected to rise slowly over the next three years, and population trends, as the global population continues its rapid growth.
Not surprisingly, the US is the world’s largest single country market for convenience foods, with sales totalling $14.98bn in 2003. It accounted for over 37% of global sales. But despite being the highest value market, the US convenience foods market has not shown the strongest growth compared to other regions. Between 2000 and 2003, growth of the North American convenience foods market was 12.8%, compared to growth of 14.9% in Australasia, 18.7% in Western Europe, and strong growth of 30.3% in Eastern Europe.
Growth in Eastern European market as EU expands
Despite being a relatively small market worth just $1.26bn in 2003, further growth of 30.8% is forecast for the Eastern European convenience foods market from 2004 to 2007, compared to expected growth of 15.8% in North America and 20.6% in Western Europe. One of the main reasons for such strong growth in Eastern Europe is the expansion of the European Union. Ten countries – Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia – joined the EU on 1 May this year, bringing the number of EU member states to 25. As more Eastern European countries join the EU, Eastern Europe is expected to become heavily influenced by Western European trends.
Another region showing strong growth in the convenience food market is Australasia, despite being the smallest regional market for convenience food in 2002. Although it has a much smaller population than other regions, it is also prosperous and its people share similar lifestyles to those in other developed regions. After growth of 14.9% from 2000 to 2003, just-food.com forecasts the regions’ convenience food sales will rise by 43.7% to $390m between 2004 and 2007.
New products and innovation are key to success in the convenience foods market in order to fend off intense competition and meet consumers’ changing tastes. In the fiscal third quarter of 2002, US cereal maker General Mills attributed its failure to meet earnings expectations to a temporary lack of innovation. The company had launched 23 new products during the quarter, and vowed to satisfy ‘the fickle taste of the American consumer’ by launching 40 new products per quarter thereafter, including convenience foods, yoghurts and breakfast cereals.
Catering to a specific demographic
Many companies choose to launch a range of products designed to meet the needs and tastes of a particular consumer demographic, rather than launch a series of individual products. One example of this is Golden Cuisine, launched by US food company ConAgra in 2003. The Golden Cuisine range is aimed at the 58 million Americans aged 55 and over, and its products are designed to be affordable and nutritious meals that can be delivered to the home.
Another group of products popular among convenience food manufacturers are those designed to meet specific dietary requirements, such as low-fat or low-carbohydrate. The low-carbohydrate food sector is currently big business in the US, and the convenience sector has by no means been missed out. Earlier this year ConAgra launched a range of low-carb frozen meals called Life Choice, which includes breakfasts as well as lunch and dinner entrees.
Weight control foods are continuing to show good growth worldwide, according to the Leatherhead Food Research Association. Sales of such foods, including low-fat and low-calorie foods, increased 25% between 1996 and 2000, and the weight control sector show no signs of diminishing in popularity, with an estimated 60 million Americans following a low- or reduced-carbohydrate diet, such as Atkins or South Beach. Food manufacturers launched 633 low-carb products in the US in 2003, compared with 339 in 2002 and just 47 in 1999, according to Productscan Online.
Ready meals are a hit in Britain
In the UK, many supermarkets offer a line of healthier convenience foods under their own label. Sainsbury’s has its Be Good To Yourself range, which competes with Marks & Spencer’s Count On Us line, Asda’s Good For You range, and Safeway’s Eat Smart products.
The popularity of such ranges emphasises the higher consumption of ready meals in the UK, compared with elsewhere in Western Europe. The British spend twice as much as the French and Germans, four times as much as the Italians and six times as much as the Spanish on ready meals. Almost one in three adults in the UK eats a ready meal more than once a week, compared with one in six across the Channel in France. UK supermarkets are taking advantage of this trend, with an increasing amount of shelf space dedicated to ready made meals. Besides the healthy eating lines, supermarkets are also catering to the popularity in the UK of ethnic foods, which account for 40% of the UK ready meals market. Indian meals and Chinese meals are among the most popular chilled ethnic foods.
Time pressure is another major factor influencing the convenience food market. Consumers are spending less time on meals, meaning those that can be consumed while at work, and even at the desk, are becoming increasingly popular. Around 67% of Americans eat lunch at their desks, while one in three finds eating breakfast is first on their ‘to do’ list when they arrive at work in the morning, according to a study by the American Dietetic Association and ConAgra Foods.
The main players in the market
Besides ConAgra Foods, which has already been mentioned, the other main players in the global convenience foods market include Swiss food giant Nestlé, with its Maggi, Buitoni, Stouffers and Crosse & Blackwell brands; Anglo-Dutch consumer products giant Unilever, whose convenience food brands include Igloo, Birds Eye Walls and Findus; US food giant Kraft, with convenience food brands including Miracoli Dinners, Lunchables, Kraft Macaroni Cheese, Louis Rich and California Pizza Kitchen; US meat processor Tyson Foods, whose convenience chicken products include Tyson Wings and Drummies, Oven Roasted Chicken and IQ*F Chicken; Canada’s McCain Foods, which specialises in frozen French fries, pizzas and oven-ready meals; US cereal firm General Mills, which recently acquired Pillsbury; and US sauces and frozen meals maker Heinz, which produces ready meals under the Weight Watchers brand.
To discover more about just-food.com’s convenience foods report, which includes information about the global convenience food market, its main regional markets, the major manufacturers and the market trends that currently influence consumer demand, and contains forecasts to 2007, click here.