Independent market analyst Datamonitor’s new report, “Speed Scratch Meal Components”, finds that meal components, (prepared foods that speed up the cooking process but are not complete meals – see end notes for full definition) are proving popular, as consumers want products that provide convenience but leave them feeling as though they are still involved in the preparation. Datamonitor analysed the market by levels of innovation across Europe and the US. Despite a lucrative market for branded manufacturers, the pace of innovation by private label manufacturers will put increasing pressure on the likes of Unilever, Nestle and Heinz and fire up the battle for shelf-space.
Convenience alone is not enough
Consumer trends affecting meal components are contradictory. The movement towards greater use of convenience foods is of benefit to meal components, but consumers’ desires for greater health benefits and control over the ingredients, as well as the taste and texture of foods is detrimental. These latter concerns indicate that consumers evaluate the relative benefits of meal components more rigorously than before.
Having moved on from offering only convenience, the challenge manufacturers face now is to provide better quality and added-value benefits, to make consumers think of meal components as raw ingredients in themselves and use them in everyday cooking. This is a major challenge as it requires overcoming consumer perceptions that meal components are less healthy than other foods and that they feature ‘artificial’ tastes. If these consumer perceptions can be overcome through the launch of high quality innovations, then meal components have the ability to maximise their share of consumers’ total food intake.
Private label catching up in terms of innovation
Datamonitor tracked new products launched in the meal component market across Europe and the US over the last 18 months. Although it is unsurprising that companies like Unilever and Nestlé are ranked amongst the manufacturers leading innovation, the overall number of launches is not as high as may be expected. In particular, it is surprising that apart from Unilever, no other manufacturer has launched over 30 innovations in this area in the last 18 months.
The number of launches by UK retailers is relatively high compared to the level of innovation in the last 18 months by the major manufacturers. Although the UK is a leading country in terms of private label development, European and US grocery retailers are set to catch up. The average private label share of grocers’ revenues in Europe, by value of sales, in 1999 was 18.4%. By 2005, this is expected to increase to nearly 28%. Such has been the rate of private label development in the UK that many retailers are decreasing the share of private label in their product mixes. Across continental European and the US however, retailers are seeking to significantly enhance their private label ranges at present.
Retailer rationalisation of product mix
As retailers seek to increase the share of private label in their portfolios there will be greater pressure on brand manufacturers.
“The development of more private label goods is having a major impact on the market, creating a significant threat to brand manufacturers. Whilst the major brands will still command significant shelf space, the role of secondary brands that are used to vary the product mix will change. Initially this will be as a result of a reduction in the number of secondary brands carried, but in the long-term secondary brand manufacturers will need to concentrate on more specific niche areas of meal components. It is likely that the number of major brands will decline slightly, as not all major manufacturers will get the return they expect with such intense competition, “ comments Piers Berezai, Datamonitor consumer markets analyst and author of the report.
Breakdown of “3 square meals a day”
Datamonitor’s trade research identified the breakdown of traditional eating patters as a major factor affecting the market. Consumers increasingly make more impulsive decisions about what and when to eat. Meal components can actually benefit from this trend as they can cater for consumers who opt for “planned impulse”, for instance when they purchase convenience foods in anticipation of needing time-saving meals in the future.
Beyond pizza: gourmet food and catering for parties
Part of the breakdown of traditional eating patters is the phenomenon of all day grazing, or snacking. Snacking poses a threat to meal components as higher levels of grazing means that the importance of the evening meal is decreasing, thereby shrinking the market for meal components. In response to this, there is the opportunity to target new occasions, such as evening social occasions. This is a crucial area that has already been targeted by meal kits (such as tortilla kits) in particular. However the potential is as yet under exploited, with only a limited number of meal kits presently targeting this occasion.
In particular, pizzas have dominated this type of social eating occasion to date. Meal kits manufacturers should look to positioning themselves as party food – when many people are attending a party, meal kits can provide real convenience benefits. For example, a kit allowing a meal for 10 people to be prepared quickly with only the addition of a minimal amount of ingredients has the potential to save considerable time and offer something more interesting than pizzas.
Meal kits can also offer “gourmet” standard dining. Leapingsalmon.com in the UK highlights the demand for high quality meal kits that cater for in-the-home occasions that require gourmet food. There are opportunities for similar high quality meal components and kits through retail distribution channels in order to meet consumer demand for gourmet standard food with convenience benefits.