Ready meals category report 2016

Cue the music, gather the gospel choir and praise the grocery gods because hallelujah, ready meals have been born again.

Chilled and frozen ready meals secured a whopping £151.1m growth as value grew by 5% on volumes up 5.5% [Kantar 52 w/e 8 November 2015]. That’s the same sector that only three years ago was rocked by one of the biggest food scandals in a generation.

So how’s it finally put Horsegate to rest and achieved this phenomenal growth? Who’s cashing in? Has anyone been left behind?

Nearly 90% of this year’s gains have been secured by chilled ready meals, which added £132.7m compared with frozen, which contributed £18.4m. Own label - which accounts for 94% of chilled ready meals - was the standout performer with sales up 6.1% on volumes up 8%. This was fuelled by consumer demand for healthier, more balanced foods, resulting in the creation of M&S Balanced For You, Asda Good and Counted, and Waitrose Love Life Calorie Controlled.

Healthier offerings also proved a hit in frozen as shown by the Slimming World range launched in February 2015 and now worth nearly £30m [Nielsen 52 w/e 10 October 2015].

“After only 12 months in the market, the Slimming World brand is the number one brand in the marketplace, a staggering performance as it is only sold through Iceland stores,” says Iceland joint MD Nigel Broadhurst. “The development of this brand has been a great success as a result of combining the Slimming World recipe skills with strong retail execution through our 865 UK stores.”

A major slimming club isn’t enough to guarantee success, though. WeightWatchers suffered value losses in both chilled and frozen ready meals.

Bisto value up 31%

Bisto found the freezers to be more lucrative, adding £7.4m to brand value thanks in part to its focus on more premium offers [IRI 52 w/e 2 January 2016].

“The frozen ready meals aisle is still very much centred around everyday low prices (EDLP). The majority of our Sharwood’s and Bisto portfolio has an rsp of £1 per pack,” says Charlotte Bourne, frozen ready meals brand manager at Kerry Foods, which manufactures Bisto and Sharwood’s ready meals on licence from Premier Foods. “We have, however, added some new lines to our portfolio such as Bisto Chef’s Specials and Bisto Yorkshire Filled Puddings. These higher price points have increased our average price per pack to £1.20 for Bisto.”

The ‘mid-tier’ NPD Chef’s Specials include Peppercorn Chicken with Creamy Mash & Fine Green Beans and Beef in Red Wine Sauce with Creamy Mash. Sharwood’s, meanwhile, saw 5.9% growth on volumes up 4% thanks in part to the new Takeaway range, which hit the market in October 2015.

The range was designed to make frozen ready meals a more sociable proposition with a deal of two mains and a side for £4. These meal deals are common in the chilled aisles. Value is key, with the price difference between frozen and chilled narrowing.

“The impact of promotional activity and retailer investment in base price initiatives in chilled meals is having an impact, with the price differential between the two areas narrowing,” adds Bourne. “This makes the role of brands even more critical to give frozen ready meals a clear USP and shoppers a reason to come to the frozen aisle.”

But, unlike chilled, frozen suffers from an image problem, something retailers have been looking to improve with PoS and better navigation. Iceland has supported its Power of Frozen campaign with in-store merchandising, segmenting the fixtures and improved PoS materials.

“Retailers have been investing significantly in frozen with the aisle becoming a much nicer place to shop,” believes Nick Harris, marketing director at The Authentic Food Company . “This has been underpinned by solid category management. In turn manufacturers have responded with on-trend products and differentiated packaging formats.”

Lidl, whose ready meal range is wholly made up of own label, has recently redesigned its packaging to make it more modern and eyecatching. Ready meal sales at Lidl are up 30.7%, while competitor Aldi secured growth of 25.3%.

Differentiation, premiumisation

But the discounters’ sales don’t hold a candle to those of M&S, which saw a 10.3% increase in value. Other noteworthy performances came from The Co-op (sales are up 15.7%) and Iceland (up 16.9%). “Innovation, differentiation and premiumisation have delivered both volume growth and value growth for Iceland,” adds Iceland’s Broadhurst.

While Slimming World played a major part in Iceland’s ready meal success over the past year, the retailer has also revamped its own-label range. In September it launched a range of premium ready meals for £2.59 including more than 20 recipes such as Chianti Ragu, Boeuf Bourguignon, and Beef & Pancetta Lasagne. “We will continue to innovate and help customers to enjoy more premium meals, which should help to close the gap between frozen and chilled meals,” adds .

Both Birds Eye and Young’s have also contributed to this, with Stir Your Senses and Gastro Meals for One, respectively. “Since the launch in early 2015, the Stir Your Senses range has seen value sales of £7.8m,” says Birds Eye marketing director Steve Chantry.

Premiumisation also pushed sales in chilled. Take Charlie Bigham’s, which has added £8.5m to sales and increased average prices by 2%. In October it rolled out four of its most popular recipes - fish pie, lasagne, macaroni cheese and moussaka - into single portion meals.

The brand played a key role in ready meals’ rebirth. “Ready meals have transformed from convenient, but low-quality timesavers, to dining occasions, fuelled by foil-packed products designed to be heated in an oven,” says Jack Hamilton, director of Mash Direct. “The sector is now witnessing broad premiumisation and NPD transforming it into a broad category that includes fashionable dining options.”

This trend is also leading to more adventurous flavours and expensive ingredients. “In Indian, we have seen consumers trading up from the traditional classics to regional dishes like Chicken Makhani, Keralan Chicken, and South Indian cuisine,” adds TAFC’s Harris.

That’s not to say the gravy-soaked ready meal is dead. In fact, English ready meals added £45.9m to market value this year beaten only by Italian - sales of which increased by £56.3m.

Microsnacks and pots

American ready meals also boomed as the trend for BBQ and pulled pork took off. Kepak brand Rustlers is set to tap this market with its latest innovation (see left). The brand has big plans for the next few years as it hopes to increase microsnacks penetration from 20% to 25% over the next five years. The lunchtime occasion, Kepak’s key market, offers a lot of potential for this.

In the wake of Innocent axing its Veg and Noodle Pots, the business’ former head of food launched his own range of pot format ready meals under the name Bol. Having gained listings in Tesco, Sainsbury’s, Waitrose and Ocado, Bol is on track to deliver £7m in sales in its first year, with big NPD plans to deliver on evening meal demand as well.

“Our current range is mainly consumed at lunchtime so we are proving there is a consumer demand for quick cook healthy lunchtime options,” says Paul Brown, chief executive of Bol Foods.

Ready meals may have secured £151m growth over the past year, but it’s clear the market isn’t stopping at that. With a host of opportunities waiting to be grabbed, the future is looking bright.