Long-term discounts on own-label meat-free products and the continuing struggle for retail shelf space have dented sales of many branded vegetarian products. Beth Phillips reports

There's plenty of evidence to suggest that cutting down on meat improves physical wellbeing and helps the environment. Unfortunately, the latest meat-free data suggest most Brits are happy to remain fat and for the environment to go to hell in a handcart.

Having clocked up value growth of 5.8% and volume growth of 2.8% in 2009, sales have fallen 3% to £220.9m and volume has dropped 2.4% over the past year [Kantar Worldpanel 52w/e 31 October 2010].

It hasn't helped that two of the top three brands had a grim year (although Premier Foods' sale of Quorn and Cauldron to Exponential Private Equity was driven by a need to reduce its debt rather than by their underperformance). But the malaise is not just down to a dearth of marketing investment behind these key brands. Something more worrying is afoot.

Although the number of vegetarians has remained static at about three million [The Vegetarian Society], the number of 'meat avoiders' has slumped dramatically as less committed shoppers trade down to reduce their spending. "Meat-free is losing shoppers, even as the amount purchased per buyer has increased," confirms Kantar's Stephen Rocks. "The market is more reliant on core shoppers, and losing those at the margin".

So where have all the meat-free shoppers gone? And what are manufacturers doing to coax them back?

Of those who haven't left the category altogether, a good chunk have switched to own-label, sales of which were up 77% by value and 71% by volume [52w/e 31 October], albeit from a low base. And they've been lured away by deep discounts.

"There has been strong discounting in the category, particularly in the own-label market where all the major retailers implemented a permanent multibuy on their meat-free ranges, moving away from short-term promotions," attests Justin Dobson, UK country manager for vegetarian food producer Tivall UK. Although meat-free is still dominated by branded products, "they simply didn't drive new consumers into the meat-free category in any significant numbers", he adds.

To compound the problem, the market has struggled for shelf space, particularly in the mults' smaller stores, which stock a limited range, if any. "There were some space reductions in 2010 for meat-free as they looked to reallocate space seasonally to other categories," says Quorn sales director Richard Garner. "This also had a small negative impact on volumes."

According to Vanessa Brown, head of corporate relations at the Vegetarian Society, there won't be a significant increase in the size of the category until supermarkets improve the range of products they carry. "If supermarkets stock a wider variety of products, giving meat-free consumers a choice of ingredients, meals and meat replicas, they may feel better catered for," she says.

Sales are much more buoyant in specialist health food stores where those on a dedicated meat-free diet know they will find what they need, adds Redwood Wholefood Company, the vegan food manufacturer owned by Heather Mills. "Our sales were up 10% last year," says MD Nigel Phillips. "This year we're expecting sales to increase by a further 25% and have just doubled production capacity at our site in Corby. More people are also buying online."

Holland & Barrett head of food Stephen Cook has seen a similar trend. "More than one million customers a year buy from our meat-free range. The chilled category alone grew 8% last year," he says.

Premier has had a more turbulent year, with sales of Quorn falling 8% by value year-on-year [IRI 52w/e 31 October 2010], while its sister meat-free brand Cauldron slipped 11% despite a relaunch in April. Brand activity hasn't slipped noticeably since October, when Premier revealed it was considering selling its meat-free business, but all eyes will now be on Exponent to see whether it sticks with Premier's gameplan.

Quorn's Garner insists "strong plans for 2011 are in place to reverse this decline and put the brand back into growth" and adds that much of Cauldron's sales slump was down to a range rationalisation. "This worked well and the brand delivered double-digit sales growth in both October and November," he claims.

Despite the sales slump, Quorn has maintained a strong NPD pipeline, introducing 10 new products in the past year, including Tikka Pieces, Sweet Chilli Stir Fry Strips and Roast Style Sliced Fillets.

And this month the brand returned to TV for the first time in 18 months, with a campaign designed to promote Quorn as a healthier alternative to meat. Accounting for the bulk of Quorn's £6m marketing budget for 2011, the new campaign has deliberately eschewed the current trend for digital communication.

"The creative route we have developed has resonated extremely strongly with our target consumer groups and we believe that a strong TV campaign is the best way to deliver our clear, powerful message," says Quorn marketing director Chris Wragg. "We're confident that we will be able to draw significant numbers of new consumers into the brand and the category, as well as increase frequency with our existing core vegetarian consumer base."

It could do worse than take a leaf out of the Linda McCartney brand's book. Unlike Quorn and Cauldron, it has had a good year, with sales up 14% [IRI]. Its NPD in 2010 included Vege Mince and three ready meals, while Italian Sausages and Peri Peri 1/4lb Burgers will be launched this spring.

Consumer demand
The brand has put innovation in the hands of the consumer with its Kitchen Table campaign, launched in November. Consumers were asked to submit their favourite meat-free recipes, which next month will be assessed by a panel of judges, including Sainsbury's food buyer Alison Atkin. A product based on the winning recipe will hit supermarket shelves in September.

"Brands have to stay one step ahead" says James Gentle, marketing manager at Linda McCartney Foods owner Hain, acknowledging the success of own label.

Campaigns such as this help suppliers find out more about their customers, adds the Vegetarian Society. Next month, it is holding its first Meet the Manufacturer day, enabling suppliers to meet vegetarian consumers.

"It's a chance for the consumers to tell manufacturers exactly what they want and even share ideas for new products and ranges," says Brown. "There are many possibilities for meat-free it's all about giving consumers choice and value."

Focus On Meat Free