The European Coated Foods Market

Coated products are now well established in Europe, particularly in the fish and poultry product areas, although there is also an increasingly high level of innovation in other areas such as coated vegetables and coated cheeses. The market has benefited particularly from movement towards convenience foods and also from increased demand for alternatives to red meat. As the market has expanded, so too has coating technology, and the sector is no longer limited simply to plain breaded or battered products, but includes crispier coatings and flavoured coatings.

This new report from Leatherhead Food RA analyses key trends and developments in the coated foods markets of five major European countries, providing invaluable information on market sizes and trends and on the key companies active in the industry.

Definition

Coverage of the coated food products market in this report concentrates on two main types of coating – batter and breadcrumbs. Other coating types, such as glazed and film-coated products, are also covered by the definition of the market. Two main sectors are discussed in detail – coated fish and coated poultry – with these segmented according to whether the products are frozen or chilled. Other product sectors are discussed where appropriate.

Key Growth Factors

On the demand side, movement towards convenience foods in general has been the main factor acting to underpin growth across Europe, with coated foods representing a quick and easy-to-prepare main meal element. Developments on the supply side have also helped stimulate demand, with product development aided by advances in meat and fish processing as well as coating technology.

Two other factors are currently impacting on the main market sectors of coated poultry and coated fish, namely health concerns and price. The former is seeing sales develop rapidly as consumers cut back on red meat in general and beef in particular, the latter subject to concern over its safety. Some of the growth in the coated poultry market is also linked to demand moving out of the coated fish sector. Meanwhile, sales of coated fish have tended to stagnate as a result of recent price increases at raw material level.

Market Size and Segmentation

Sales of coated foods in the five countries surveyed reached some 413,400 tonnes in 1998, valued at close to 2.7 billion euros. Coated fish represents the largest sector, with 46% of volume and 47% of value. Coated poultry takes a further 37% of volume and 39% of value, and the remaining sales are attributable to a diverse range of products – mainly speciality foods specific to individual countries.

The UK market is disproportionately large, with nearly 60% of sector value and over half of volume. This reflects the long-standing heritage in the UK of coating foods – especially fish – as well as the advanced development of convenience foods in the country. Germany and France represent the next largest markets, with sales tending to remain underdeveloped in Spain and Italy.

Coated poultry products are by far the most dynamic market segment, with sales in all countries showing strong growth in 1998 and into 1999. Chilled coated poultry is the main motor of growth within the market, and chilled products now outsell frozen lines in France, Spain and Italy. Chilled coated fish remains largely absent from all markets bar the UK and France, with sales mainly confined to frozen lines in the other three countries. Most of the frozen fish markets are stagnating, with price increases pushing volume lower in 1998.

Industry Dynamics

With few exceptions, the coated foods markets are supplied mainly by companies whose activities are confined primarily to their domestic markets. Unilever is the only company active in all five markets with a full range of branded coated fish and poultry, reflecting the Company’s general strength in frozen foods and ice cream throughout the region. Other companies with significant interests in several markets include UK company Bernard Matthews and Dutch firm Friki.

Unilever is especially strong in frozen coated fish, with other major players including Heinz via Ross Young’s in the UK, Frosta in Germany, Pescanova in Spain and Findus in France. The coated poultry market, especially the chilled sector, is dominated mainly by the leading poultry processors in each country. For example, market leaders are Bernard Matthews and Sun Valley in the UK, Doux and LDC in France, Wiesenhof in Germany, Agrovic Alimentacion in Spain, and AIA in Italy.

Innovation and New Product Development

All sectors of the coated food products market are witnessing development of ranges, with children’s products and more adult-oriented foods representing the two main contrasting areas of NPD.

Most of the new children’s products have been launched into the coated poultry sector, and consist primarily of new themed shapes.

Products targeted at adults are nevertheless more numerous and cut across both the fish and the poultry sectors of the market. Different style batters, ethnic or spicy coatings, snack products with dips and more convenient full meal products such as fish pieces with chips are the main areas of development. In addition, new fish finger lines with more of an adult appeal were introduced towards the end of 1999, including fish fingers topped with spinach and cheese or made with salmon.

The Future

The markets for coated foods in all the countries surveyed in this report are expected to continue to post steady or strong growth over the next few years. Total volume across the five countries should develop by around 6%-7% per annum, with sales expected to reach the 550,000 tonnes level by 2003. The rate will vary considerably from country to country and according to product sector.

The largest market of the UK is likely to continue to grow by around 5% per annum, in spite of the existing high level of coated foods consumption relative to that of the European mainland countries. Faster rates of growth of 7% to 8% per annum are expected in the German and French markets, with growth faster still at over 10% per annum in Spain and Italy.

Coated poultry products in general and more specifically chilled coated poultry looks set to continue to provide much of the additional volume in the market over the next few years. The main problem facing coated fish products is one of shortages of white fish and consequent increases in prices. While value sales of coated fish should hold up well, volume in the market may well continue to stagnate in view of this.

Executive summary taken from ‘The European Coated Foods Market’ by Leatherhead Food RA, to order your copy click here.

Details of reports from Leatherhead Food RA click here