UK frozen-food sales surged during the height of Covid-19 as consumers stocked up and as meal occasions at home increased during lockdown.
But what is perhaps more interesting is, while sales have slowed, they remain higher than pre-pandemic.
Well-placed to comment on this situation is Steve Challouma, the general manager of Nomad Foods‘ Birds Eye business in the UK and Ireland, who is a 25-year veteran of the frozen food industry and of Birds Eye itself.
Challouma says the frozen-food market – arguably for many years a staid category suffering from a lack of innovation – was on the up even before Covid struck early last year.
Sales data from The British Frozen Food Federation and market research organisation Kantar reveal UK shoppers bought more than GBP6.4bn (US$8.72bn) worth of frozen food in the year between March 2019 and March 2020, up 6.1% on a year-on-year basis.
“It [the category] had been growing anyway over the last few years but then we saw a massive growth in consumption [during the pandemic],” Challouma says.
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By GlobalDataHowever, Challouma, who has been general manager since the start of last year having previously been the company’s UK marketing director, is not playing down the boost sales received from consumers dealing with the Covid climate.
“In the UK last year we had a year of accelerated growth. The total frozen category was driven on by a massive amount of purchasing and consumption,” he says.
“We benefited from people stocking up and there was growth in penetration. People were eating at home and the kids were not at school. We saw a surge in consumption of fish fingers, chicken dippers and potato waffles as in-home lunches increased.
“There was also a big increase in the sale of freezers, up by 50%. This was strategically fantastic for the category because previously people had been limited because they only had that one freezer.”
Challouma also believes consumers who had turned the back on the category returned during the pandemic.
“We found people rediscovered the category and were surprised at the variety on offer as well as the quality and convenience,” he says.
“The stars aligned in terms of what people were looking for in terms of taste, variety, sustainability. Frozen massively comes into its own there.
“Further to that, some of the messages we had been driving for years about preserving the goodness in vegetables by freezing them came into their own.”
He reveals Birds Eye’s UK retail sales were GBR700m in 2019 but increased to GBR810m in 2020 and look like staying at that level this year. As of 11 September, sales were just under GBR800m for a period just shy of 52 weeks according to the company’s own data.
Challouma has worked for Birds Eye since the days when it was owned by Unilever. It was then taken over by UK private equity firm Permira before it was bought by the then newly-established acquisition vehicle Nomad Holdings in 2015 for GBP2.6bn.
“My claim to fame is I’ve met all seven Captain Birds Eyes [the character used to market the brand]. I went to the retirement party of the first one,” he says. “But this is definitely the most interesting time for the business.”
Challouma is a marketing specialist at heart and was behind the decision to update the Captain Birds Eye character – he is a more dashing sea captain these days than the avuncular old seafarer associated with the brand in the past.
The Birds Eye-branded products Challouma oversees include its top-selling fish fingers, the Green Cuisine range of meat alternatives and Ireland-based pizza brand Goodfella’s and Yorkshire pudding and potato products maker Aunt Bessie’s, both of which were acquired by Nomad in 2018 to add to its frozen food portfolio.
“Fish fingers is our biggest product in the UK, as it is in Germany and Italy. Birds Eye chicken is also doing well – the Chicken Shop takeaway range has been very successful,” Challouma says, by way of an overview.
Birds Eye’s most eye-catching growth, though, has been with its Green Cuisine range, its meat-free portfolio of products that includes meatballs, burgers, faux-chicken nuggets and, most recently, fishless fingers.
“Green Cuisine has gone from nothing to being the number three brand in the UK and number two in Ireland,” Challouma says.
“It has brought new people into the category, attracting a more mainstream consumer. Other brands there are more specialist but we are a mainstream brand.
“We see it as a long-term trend but also a gradual trend. We are not targeting vegetarian or vegans but people wanting meat-free occasions.
“The category can be intimidating to people and we are offering something accessible.”
The range also received a boost from people wanting healthier food during the pandemic, he suggests.
“Frozen was very well placed in respect of people wanting plant protein and meat-free,” he says.
Challouma was also agile enough to see opportunities for other brands under the Birds Eye banner during Covid.
“We also launched products that were more convenient such as Goodfella’s Pizza Pockets which did very well,” he says.
But Nomad, like other manufacturers, had to deal with demand issues linked to consumer stockpiling.
“At the real peak, we had to moderate promotional activity so that people didn’t over-purchase and we simplified the range temporarily, working with retailers,” he says.
Challouma is especially pleased about Birds Eye’s growth in Ireland.
“Trading there has been very good. We’ve got a great business there. Goodfella’s as a brand was born in Ireland and is the clear number one there.
“Over the last five or six years, Birds Eye has tripled in size in Ireland. There is very good collaboration between there and the UK.
“We’ve also had a huge push on Aunt Bessie’s in Ireland. We’ve tripled the size of it in the last year with the potato products doing well. It’s a huge segment there.
“But one difference is the [coming out of Covid] time lag. Ireland has been slower to open up its economy [than the UK].”
As well as factories in Hull and Lowestoft in England, Birds Eye has two manufacturing facilities in Ireland. Challouma says the business hasn’t been hugely impacted by post-Brexit trading issues between the two countries.
UK produce for Ireland often goes through Northern Ireland and the province has faced supply issues with goods originating in Great Britain since the country’s departure from the EU. Customs have been introduced and extra paperwork is required as the province is effectively being treated as an EU member to avoid the creation of a hard border with its neighbour to the south.
“Very little product goes directly from us from Britain to Northern Ireland. It mainly goes from the retailers, Challouma says.
“Our focus is on providing the retailers with the information they need. We need to stay agile to respond to that.”
Brexit, as a whole, has similarly caused few major issues, Challouma suggests.
“Our fish come from a global supply chain. It could be the Arctic, Alaska or elsewhere. Of the ingredients from the EU, such as pizza, we were well prepared,” he says.
“We put a team in place to prepare for it [Brexit] so it has not had a material impact. They worked with the right authorities to understand the new legislation.
“But some cans have been kicked down the road, products of animal origin etc, so there will be other things we need to do and we are working closely with our logistics partners on it.”
That partnership with logistics firms is also helping Birds Eye cope with the UK’s acute shortage of lorry drivers.
“We’ve actually been pretty resolute. We are getting through it, quite frankly,” Challouma says.
“We have a long-held strong relationship with third-party logistics providers. It is challenging but it is not creating issues we can’t overcome.”
One issue that can’t be avoided, though, is inflation in the supply chain.
“We are facing the same issues as everyone else. We are focusing on ways to try and mitigate it by driving efficiencies but there will inevitably be inflation in food costs,” says Challouma.
On a more positive note, he says he is interested in the prospects of lab-grown seafood – products created from cells without the need for fish to be killed.
Last month, Nomad announced it would team up with one of the companies active in this area, US-based BlueNalu, to explore its potential.
“It does excite me. It has potential but it is early on in its development,” Challouma says.
“We have to understand how to position it from a consumer reactions point-of-view.
“We know sustainability is at front of mind of the consumer and this is becoming more of a critical success factor across all stakeholders.
“And in terms of innovation Birds Eye has always been a pioneer. Don’t forget we invented the fish finger in 1955.”
Looking to the future, Challouma believes the UK frozen food category can continue to flourish.
“We’re expecting to see continued steady market growth as the benefits of frozen food are reinforced by consumers and brands like ourselves. The macro trends for convenience, sustainability and health very much go in the category’s favour and will continue to bolster the underlying buoyant demand for great-tasting, convenient food that offers great value for money,” he says.
“As products continue to be modernised and new innovations launched, retailers will continue to prioritise the category, and we’re in a positive position to support the future success of the category over the next few years.
“Retailers have seen the value in the category and are increasingly investing in frozen, which will naturally ensure product availability and keep shoppers coming back. Whether adding more freezer space, or working to maximise the impact of the category in store, there are a number of ways by which retailers have been embracing the growth of frozen food, and are expected to continue doing so.”
