Meal deals and extensive NPD ensure shoppers keep coming back to the ready meals aisle – but there are still gaps in the market to be exploited, reports Gordon Carson
The downturn was supposed to have had us going all 'Good Life': escaping the rat race, growing our own produce and cooking from scratch. Yet, for all the talk of getting back to basics, more consumers than ever seem to be tucking into chilled ready meals.
In fact, sales have jumped 7.1% in value to £1.04bn over the past year, bouncing back to pre-recession levels unlike those of frozen ready meals, which have slipped 0.6% in value [Kantar WorldPanel 52w/e 18 April]. So how has the chilled ready meals category regained its cool? And, more importantly, what must it do to maintain its renewed growth trajectory?
A couple of years ago, experts predicted chilled would lose out to frozen as consumers prioritised value for money and eschewed categories that charged a premium. At first that's exactly what happened and the fresh ready meals category found itself out in the cold. But over the past year, retailers have dramatically ramped up their promotional activity and expanded their own-label offers to win shoppers back. And it's working.
'Dine in' promotions such as the M&S Dine In for two for £10 deal, which launched in May 2008, have provided a vital boost to the category. Sainsbury's, which rotates a £5 meal deal on a three-week basis and also offers a £10 wine deal, reports a 50% increase in sales of its Fresh and Tasty range, for instance.
It's no coincidence that most of these meal deals are own label. Own-label products account for 93% of the chilled ready meal market [Kantar] and this is where retailers believe they can address concerns about value for money and drive sales .
There's been a significant increase in NPD either to extend existing own-label ranges, create new ones (such as Menu from Waitrose) or expand into tertiary brand territory (Tesco's Ken Hom and City Kitchen ranges, for instance).
As several of the new ranges demonstrate, value for money doesn't necessarily mean cheap. Indeed, Waitrose's Menu From range of premium ready meals inspired by chefs such as Pierre Koffman and Bryn Williams includes an £8.99 Navarin of Lamb (see box-out, right).
The secret, say retailers, is to offer relative value for money coupled with real quality. For many consumers, restaurant meals remain an unaffordable luxury but they might be prepared to shell out for a decent ready meal and not just for dinner. M&S has launched several premium lunch meals it is clearly confident justify their higher price tags thanks to their quality.
Some, notably the high-protein Simply Fuller Longer range of ready meals, sandwiches and salads launched in January, also tick the healthy-eating box.
Whatever the price point, quality is key, says Rebecca Martyn, Sainsbury's category manager for meal solutions. "We have taken steps to improve the quality of our ready meals through better recipes and moves such as using only British meat in our chilled range, and this has resonated with customers," she says.
Although classic Italian, Indian and English dishes rule, retailers will continue to develop other cuisines, predicts Doug James, MD of design agency Honey Creative, which worked with Tesco on its City Kitchen, Ken Hom Chinese ready meals and Tesco Finest Restaurant Collection. "Retailers can be better than manufacturers at understanding customer demand," he believes, adding that there is real scope to increase the health credentials of other cuisines as the Ken Hom range has done with Chinese.
Tesco claims its sales of Chinese chilled prepared meals have grown 14% since the range's launch last October. But not everyone is convinced of the benefits of ready meals. According to Mintel, nearly half the people who do not eat them think they are less nutritious than fresh food.
Retailers aren't the only ones that stand to benefit if they address this issue. There could also be an opportunity for smaller brands trading on authenticity and high-quality ingredients, suggests Jonathan Ford, creative partner at design agency Pearlfisher. In fact, this could be where the biggest opportunities lie.
"The smart money is on brands that are prepared to think a bit further about what a ready meal can be," he says. "The mass production of chilled ready meals takes people away from connection with ingredients. The retailers are trying to upgrade the image of ready meals but ultimately the consumer isn't fooled."
Ford believes there is potential for brands to drive greater segmentation of the market. His company designed the packaging for Little Dish, which uses 100% natural ingredients in its ready meals for children.
Another brand trying to capitalise on demand for healthier and more natural ready meals is Easy Bean, which launched one-pot, pulse-based meals in late 2007 and was followed by Innocent's Veg Pots in 2008 and latterly by Tesco, which launched its Veggie Pots range in April.
Of course, healthy ready meals are nothing new WeightWatchers meals have been around for years. Greencore produces WeightWatchers chilled ready meals under licence, and predicts sales will grow 16% to £23m this year, boosted by NPD and heavy promotional activity.
Recent launches in the range include open-topped pies and seasonal limited-edition dishes though the bestseller in the line-up continues to be good old sausage and mash.
While NPD is key to market development, progress is unlikely to be straightforward. The industry is under pressure to reduce packaging and carbon footprints, and a project launched by Wrap in February to calculate the amount of waste in the supply chain for pre-prepared foods is likely to lead to recommendations on how to make cost and environmental savings.
One manufacturer thinks environmental concerns could prompt a move from chilled to ambient. Chilled meals "don't touch all the right buttons in today's world", claims Keith Gill, marketing and sales director at Tanfield Food, which makes Look What We Found! ambient ready meals. "There are issues to do with the quality of ingredients, chilling, wasteful distribution profile and short shelf life."
For now, though, consumers are more interested in quality, taste and value for money and that means retailers are, too. "Retailers see prepared meals as an area where they can drive a real point of difference," adds Sue Tiller, Kerry Foods consumer goods category director.
In short, chilled ready meals aren't likely to lose their cool any time soon.
Focus On Chilled Ready Meals
The downturn was supposed to have had us going all 'Good Life': escaping the rat race, growing our own produce and cooking from scratch. Yet, for all the talk of getting back to basics, more consumers than ever seem to be tucking into chilled ready meals.
In fact, sales have jumped 7.1% in value to £1.04bn over the past year, bouncing back to pre-recession levels unlike those of frozen ready meals, which have slipped 0.6% in value [Kantar WorldPanel 52w/e 18 April]. So how has the chilled ready meals category regained its cool? And, more importantly, what must it do to maintain its renewed growth trajectory?
A couple of years ago, experts predicted chilled would lose out to frozen as consumers prioritised value for money and eschewed categories that charged a premium. At first that's exactly what happened and the fresh ready meals category found itself out in the cold. But over the past year, retailers have dramatically ramped up their promotional activity and expanded their own-label offers to win shoppers back. And it's working.
'Dine in' promotions such as the M&S Dine In for two for £10 deal, which launched in May 2008, have provided a vital boost to the category. Sainsbury's, which rotates a £5 meal deal on a three-week basis and also offers a £10 wine deal, reports a 50% increase in sales of its Fresh and Tasty range, for instance.
It's no coincidence that most of these meal deals are own label. Own-label products account for 93% of the chilled ready meal market [Kantar] and this is where retailers believe they can address concerns about value for money and drive sales .
There's been a significant increase in NPD either to extend existing own-label ranges, create new ones (such as Menu from Waitrose) or expand into tertiary brand territory (Tesco's Ken Hom and City Kitchen ranges, for instance).
As several of the new ranges demonstrate, value for money doesn't necessarily mean cheap. Indeed, Waitrose's Menu From range of premium ready meals inspired by chefs such as Pierre Koffman and Bryn Williams includes an £8.99 Navarin of Lamb (see box-out, right).
The secret, say retailers, is to offer relative value for money coupled with real quality. For many consumers, restaurant meals remain an unaffordable luxury but they might be prepared to shell out for a decent ready meal and not just for dinner. M&S has launched several premium lunch meals it is clearly confident justify their higher price tags thanks to their quality.
Some, notably the high-protein Simply Fuller Longer range of ready meals, sandwiches and salads launched in January, also tick the healthy-eating box.
Whatever the price point, quality is key, says Rebecca Martyn, Sainsbury's category manager for meal solutions. "We have taken steps to improve the quality of our ready meals through better recipes and moves such as using only British meat in our chilled range, and this has resonated with customers," she says.
Although classic Italian, Indian and English dishes rule, retailers will continue to develop other cuisines, predicts Doug James, MD of design agency Honey Creative, which worked with Tesco on its City Kitchen, Ken Hom Chinese ready meals and Tesco Finest Restaurant Collection. "Retailers can be better than manufacturers at understanding customer demand," he believes, adding that there is real scope to increase the health credentials of other cuisines as the Ken Hom range has done with Chinese.
Tesco claims its sales of Chinese chilled prepared meals have grown 14% since the range's launch last October. But not everyone is convinced of the benefits of ready meals. According to Mintel, nearly half the people who do not eat them think they are less nutritious than fresh food.
Retailers aren't the only ones that stand to benefit if they address this issue. There could also be an opportunity for smaller brands trading on authenticity and high-quality ingredients, suggests Jonathan Ford, creative partner at design agency Pearlfisher. In fact, this could be where the biggest opportunities lie.
"The smart money is on brands that are prepared to think a bit further about what a ready meal can be," he says. "The mass production of chilled ready meals takes people away from connection with ingredients. The retailers are trying to upgrade the image of ready meals but ultimately the consumer isn't fooled."
Ford believes there is potential for brands to drive greater segmentation of the market. His company designed the packaging for Little Dish, which uses 100% natural ingredients in its ready meals for children.
Another brand trying to capitalise on demand for healthier and more natural ready meals is Easy Bean, which launched one-pot, pulse-based meals in late 2007 and was followed by Innocent's Veg Pots in 2008 and latterly by Tesco, which launched its Veggie Pots range in April.
Of course, healthy ready meals are nothing new WeightWatchers meals have been around for years. Greencore produces WeightWatchers chilled ready meals under licence, and predicts sales will grow 16% to £23m this year, boosted by NPD and heavy promotional activity.
Recent launches in the range include open-topped pies and seasonal limited-edition dishes though the bestseller in the line-up continues to be good old sausage and mash.
While NPD is key to market development, progress is unlikely to be straightforward. The industry is under pressure to reduce packaging and carbon footprints, and a project launched by Wrap in February to calculate the amount of waste in the supply chain for pre-prepared foods is likely to lead to recommendations on how to make cost and environmental savings.
One manufacturer thinks environmental concerns could prompt a move from chilled to ambient. Chilled meals "don't touch all the right buttons in today's world", claims Keith Gill, marketing and sales director at Tanfield Food, which makes Look What We Found! ambient ready meals. "There are issues to do with the quality of ingredients, chilling, wasteful distribution profile and short shelf life."
For now, though, consumers are more interested in quality, taste and value for money and that means retailers are, too. "Retailers see prepared meals as an area where they can drive a real point of difference," adds Sue Tiller, Kerry Foods consumer goods category director.
In short, chilled ready meals aren't likely to lose their cool any time soon.
Focus On Chilled Ready Meals
No comments yet