There’s a new breed of Yuppie in town and - the clue’s in the name - they like their pie. Thanks to a penchant for rebooted classics and innovative new flavours coupled with an ability to afford more premium fare, the Young Urban Pie-eaters have made growth, well, as easy as pie for the similarly young, urban pie brands that cater to their needs.
Although chilled pies remain dominated by own label (which accounts for two thirds of the market in value and volume), the Yuppies have helped the brands regain their momentum after a difficult 2011, when value sales fell 4% [Kantar Worldpanel 52 w/e 5 September 2011]. The brands have posted value growth of 10.3% on volumes up 5.9% over the past year [Kantar 52 w/e 2 September 2012]. Own label, by contrast, has grown a meagre 0.6% in value and slumped 4.9% in volume, dragging the overall category into the red volume-wise.
But can the brands keep it up? Or will own-label players capitalise on their natural price advantage and mount a comeback on behalf of a more humble pie?
” There is a big group of people who are looking for good food without meat in it” Mark Campbell, Higgidy
Tellingly, while the brands have grown strongly overall, this masks some wildly different performances among them. Many value and mid-market brands have struggled to compete with own-label on price and have not been helped by the upward pressure on prices from commodity price hikes. It’s the smaller, more premum brands that have been winning over austerity Britain - despite their not so austere price points.
Compelling NPD has played a key role. Take challenger brand Pieminister, which has grown 31.7% in value and 34.1% in volume [Nielsen 52 w/e 15 September 2012] - its ninth successive year of 25% plus growth. In September, it launched four new recipes, including its Deerstalker pie (venison, bacon, red wine & puy lentils), and revamped its existing range, introducing more filling and thinner pastry to improve crispiness.
The premium brand is not only growing its share of the pie market, it’s growing the size of pie, contends MD and co-founder Tristan Hogg. “It is a combination of Pieminister’s unconventional marketing initiatives, ‘edgy’ brand image and standout flavours that bring incremental business into the supermarket pie aisles,” he says, adding that the brand has also benefited from affluent consumers trading down. “Growth in the premium pie sector remains strong as people eat out less but choose ‘restaurant quality’ food to enjoy at home.”
” People recognise that we don’t reduce the size of our pies or vary on ingredients” Tim Storer, Pukka Pies
It is not the only brand attracting younger and wealthier customers. Premium rival Higgidy reports strong interest in its vegetarian fillings. “We’ve got a very strong core of vegetarian followers but a much bigger group of people who are looking to eat less meat and who want good food without meat in it,” says commercial director Mark Campbell.
Higgidy’s 12.6% value and 14% volume growth [Nielsen] has been propelled by expansion in the adjacent lunchtime slice and quiche areas, including its inclusion in Boots’ popular meal deal, adds Campbell: “We’ve found lunchtime has been a great entry point. It attracts a different customer who is slightly younger and more urban.”
Established brands have added experimental flavours to their lineups too. Peters launched a chilli with cheese slice, which “allowed us to target a younger audience”, says marketing controller Clare Morgan. And in April, pork Farms launched Saucy Rolls, sausage rolls containing pickle, ketchup or brown sauce.
The chilled pies market has achieved value sales of £252.2m in the past year, with value growth of 3.2%. Two thirds of this growth has been driven by price inflation and the remainder by bigger baskets, due in large part to an increased number of x-for-£y deals - although these have provided slightly less value for money than last year.
Beef and chicken remain the largest sectors, accounting for a combined 88.5% of the market, although their share has been diluted by strong year-on-year growth for pork, fish and mixed pies.
Branded lines have grown considerably in the past year and now account for just under 30% of sales.
M&S over-trades in the category and continues to see solid growth.Sainsbury’s and Lidl have also grown strongly, despite continuing to under-trade.
However, the strategy doesn’t seem to have paid off as well as for their more upmarket peers. Both brands have declined year-on-year by value and volume - in Peter’s case by double digits [Nielsen]. “I think a key driver [of category volume decline] is the level of inflation and increasing costs of meat. As a result of the increase in prices, customers are moving towards scratch cooking to make their budgets stretch further,” says Sainsbury’s chilled pie buyer Laura Henderson.
Indeed, the only one of the top five brands in savoury pastries to have posted sales growth this year has been Pukka, which has boosted value and volume sales by 15.7% and 15.4%, respectively [Nielsen].
Co-MD Tim Storer puts its success down to buying superior ingredients while remaining a value for money proposition. By focusing on fewer lines than some of its rivals, Pukka has benefited from greater economies of scale and a more streamlined manufacturing process. Critically, says Storer, it hasn’t engaged the cost engineering that other brands and own-label ranges have. “Some manufacturers have met commodity price inflation by holding the price and reducing the size of the product,”he notes. “But we have an offer our customers are used to. People recognise that we don’t reduce the size of our pies or vary on the ingredients.”
Category leader Ginsters moved to increase the average price last month when it relaunched its chicken and steak fillings. Out went 180g SKUs, which retailed at £1.69 and were sometimes promoted at £1, and in came 225g pies with an rsp of £1.89. Pork Farms, however, decided that keeping a £2 price point was more important to consumers and so reduced the number of single pies in a multipack from six to five when commodity prices continued to rise. It has also brought in manufacturing procedures which it says will improve quality, consistency and efficiency.
” More customers are trying a wider range of flavours with vegetarian gathering pace” Tristan Hogg, Pieminister
Efficiency is no longer a nice to have. It’s a need to have. All the main ingredients of a pie have been badly stung by global commodity hikes. Wheat, chicken, beef and pork have all been affected, and no-one is predicting things will get any easier. It has already proved too much for some. Less than a year after launching its first branded pies under the Six Hungry Sons name, ABP-owned WA Turner closed its bakery operations last month with the loss of 50 jobs.
New entrants haven’t been put off, however. Adelie added seven savoury pastries to its £50m food-to-go brand Urban Eat in September after research carried out for it by the NUS found pastries were the top choice amongst students who didn’t want a sandwich or salad at lunchtime.
“We have already got some real traction and are exceeding our forecasts at most outlets,” says brand manager Isla Biggin. As well as traditional staples sausage rolls and pasties, Urban Eat’s pastry range launched with less traditional flavours, including flaming cheese and a spicy chicken slice, to appeal to younger, more adventurous palates.
With an average rsp of £1.79, these are aimed at slightly less affluent Yuppies than Timmy’s Pies, another newcomer, which has grown from its Chelsea market stall roots over the past couple of years to supply Harvey Nichols, Partridges, foodservice outlets and Fulham FC. It is now looking at making deliveries outside the M25 following interest at the Speciality and Fine Food Fair.
” Older age groups have more disposable income and need convenient meals like everyone” Pete Johnson, Birds Eye
Founder Tim Wilkes says he likes to focus on seasonal ingredients to keep the menu exciting. Fulham FC’s corporate hospitality currently serves its pot roast pheasant and venison, stout & prune pies, for example, while a partridge & spiced pear pie has been created for Partridges’ Christmas range.
While that might be a stretch for Tesco, it’s clear the tide is turning when it comes to fillings. Beef remains the most popular filling, accounting for 64.1% of sales by value - but volume sales of beef pies have fallen 4.6% [Kantar Worldpanel] while every other flavour except lamb has grown.
Given the level of NPD, it’s easy to see how the brands have outperformed own label in chilled pies. It’s a different picture in frozen, however. Value sales have grown by 3.2%, but volumes have fallen by 5.4% and the top three brands have seen volume sales slump by double-digits [SymphonyIRI 52 w/e 4 August 2012]. Own label, on the other hand, posted 15% value and 8.5% volume growth.
While chilled pies are attracting younger, more affluent consumers, the average frozen pie buyer is still a woman over 40. “We haven’t seen a shift,” says Birds Eye brand manager Pete Johnson. However, older consumers have a greater disposable income, he points out, which is why Birds Eye is actively trying to appeal to this market by ensuring its core pie recipes are traditional and contain a decent amount of quality meat.
It has also launched pastry bakes, a slightly larger replacement - at a slightly higher rsp - of the lattices it launched over a year ago. Sales have increased by 30% since the March launch, says Johnson. By contrast, its chicken balti pie, launched last year with a younger audience in mind, is now only in Sainsbury’s.
Johnson nevertheless maintains that it’s not a lack of product excitement that has reduced market penetration, but the move by supermarkets to give more freezer space to vegetables, poultry and fish. The exception is Iceland, which has doubled its space for frozen pies and having also enticed Greggs and Ginsters to stock their first frozen products with it, is surging ahead in market share
In short, frozen may have more growth potential than people think - especially if the Yuppies jump on board.
Nothing humble about it
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Nothing humble about it