Suppliers are latching on to meal kits as a way to meet consumer demand for greater authenticity and freshness without cannibalising sales of ready meals – with mixed results. Rachel Barnes reports
Is the meal kit the new ready meal? You'd be forgiven for thinking so given the amount of kit-related NPD of late. But although its convenience, authenticity and freshness are winning over today's more sophisticated consumer, its appeal has not been universal witness Mars' withdrawal of PurAsia.
The ready meal, meanwhile, hasn't exactly rolled over and played dead. Volume sales of non-English meals have gone up 4.4% by volume and 4.5% by value over the past year [TNS 52w/e 6 September] suggesting meal kits are bringing in new consumers rather than taking share from their more established cousins.
Indeed, as world cuisine goes mainstream, the whole category seems to be thriving, or at least it is when the price, format and cuisine are spot on.
The mixed fortunes of meal kits illustrates neatly what happens when one or more of these aspects isn't right.
Having already gone big on meal deals down the fresh aisles, Waitrose and M&S have now turned their attentions to meal kits in a bid to inject excitement and value into the fresh category. Brands have also been getting in on the act. Bespoke Foods launched its range of Thai meal kits into Sainsbury's in September under the brand Thai Taste, and Blue Dragon is preparing to launch a meal kit as part of a new Japanese range that will hit shelves in the coming weeks. Both are ambient and require the addition of fresh meat or vegetables.
But there's a fine line between a product that hits the mark as far as consumers are concerned and one that doesn't. Consumers are more price-sensitive than ever and there's a danger they will baulk at even a modest price premium, as Mars found to its cost when it was forced to axe its PurAsia meal kits range this summer. The range, which included Indian, Thai and Chinese kits, was on sale exclusively in Tesco for a nine-month period, but failed to hit sales targets after the £3.29 price proved too high, given the need to add the fresh ingredients to the ambient kits.
The fact that one of the cuisines it covered was Chinese won't have helped. There is mounting evidence consumers have grown bored with supermarket Chinese offerings perhaps because they perceive takeaways as more authentic and still relatively affordable. While chilled ready meal volume sales have risen 1.6% to £2.06bn overall, sales of Chinese meals have slumped 10.8% [TNS], a trend that, if it continues, will soon see sales of American ready meals overtake Chinese.
Tesco has responded to the slump by replacing its own-label chilled Chinese ready meals with a range by celebrity chef Ken Hom. The meals are intended to offer a more authentic Oriental flavour and use Chinese symbols on the packs, designed by Honey Creative, to make them easier to identify in-store.
"Sharwood's recent label redesign within its Chinese range was a smart move," says Sanjay Sood, sales director for Tiger Tiger, a Chinese, Indian and SE Asian foodservice brand, which launched its first major retail push this summer. "Overly anglicised Chinese meals have fallen out of favour. It's a wake-up for sweet and sour sauces."
As yet, they haven't been badly affected. Sales of Chinese sauces and accompaniments are up 10.5% to £119.9m, although volumes have slipped 0.3% suggesting fewer people are buying into the category.
The meal kit arena doesn't necessarily offer much solace. General Mills, which pioneered the meal kit with its Tex Mex Old El Paso brand, launched into the Asian arena in March with new Chinese meal kit brand Wanchai Ferry. However, in its first seven months since launch it had generated just £655,000 in sales.
General Mills MD Jim Moseley is nevertheless confident the range can still meet its £8m first-year sales target.
"We launched at the peak of the recession, with non-recessionary advertising," he says. "We recognised people are looking for value and have now launched a new campaign that has a money-back message." In the three weeks the new ad has been on air, the sales uplift has been "massive", he claims. "We consider this the real trial driving period."
Others share his optimism. "The surge in home dining and entertaining has definitely influenced our decisions when it comes to deciding what to stock," says Sam Sangha, MD of Asiana, an Asian wholesaler. "All-in-one Chinese meal kits are doing particularly well as they help consumers experiment more in the kitchen."
Whether Chinese meal kits take off or not, the omens look pretty good for other cuisines. Non-Chinese Oriental ready meals are enjoying extraordinary growth (see box p52) and brands predict demand will be just as high for Thai and Japanese meal kits.
"We see meal kits as a low-risk, easy, whole meal solution," says Bespoke Foods business development manager Carine Gauyet. "The kits remove the fear of cooking from scratch and encouraging trial is our key strategy. They are already doing extremely well. We believe meal kits are indeed the new ready meal for this category, attracting the sort of people who watch cooking programmes."
AB World Foods is equally optimistic about its Blue Dragon kits, which it claims make it the first brand to bring Japanese food to the masses. "Research has shown Japanese cuisine is increasing in popularity among British consumers," says AB consumer and trade marketing controller Tracy Hughes. "The new Katsu Curry Meal Kit will introduce the accessibility of Japanese cooking to consumers' homes."
Others see the format as a way for more established cuisines to extend their reach. Premium Indian brands Mumtaz and Masala Masala are both planning to launch meal kits next year. "No manufacturer has developed a true Indian meal kit that offers something worth buying," reasons Mumtaz commercial director Bill Kimberling. "We plan to launch an exciting range of meal kits next year. Kits will attract many newcomers as they are seen differently from ready meals, most of which fall way short of customer expectations."
However, not everyone is jumping on the dinner kits bandwagon. Indian brand Geeta, which reports total sales up 16% to £4.5m in the year to October, does not have any kits. Category manager Sally Campbell believes consumers are confident cooking Indian cuisine and so don't require the prescriptive approach of a meal kit.
Although admitting to keeping an eye on the format, Sharwood's remains firmly on the fence. With sales of Indian meal kits down 2.5%, but Tex Mex kits up 11.3% [IRI 52 w/e 3 October], it's too hard a market to read, says Carine San Juan, head of categoryfor savoury at Premier Foods, which owns Sharwood's.
"It's a mixed picture," she says. "Tex Mex has been about kits from the beginning. In categories like Indian and Chinese, which have been all about sauces, it's harder to ask consumers to do something different, but to get the same end product."
New entrants won't find it easy to replicate the success of meal kit pioneer Old El Paso. Despite having been in the UK for 25 years, the Mexican brand is going from strength to strength with value sales up 9.1% to £68m over the past year [IRI 52w/e 3 October] and has hopes of becoming a top 100 brand within the next. "For a Mexican brand to be a top 100 grocery brand was unthinkable 10 years ago, but Old El Paso is on the cusp of achieving this with 12 years of back-to-back growth," says General Mills sales director Andy Foweather.
He adds that sales of Mexican dinner kits are growing 12% year-on-year, according to the company, with Old El Paso delivering more than three-quarters of this growth.
Kits are outperforming Tex Mex cooking sauces and accompaniments, which have seen sales rise 9.7% to £172.3m over the past year on volumes up 7.9% [IRI]. Despite this, Old El Paso challenger Discovery Foods believes the future lies not with kits but with ingredients.
The brand relaunched with a £2.3m marketing drive in July, ditching its beige-based livery in favour of a uniform red for a more distinctive and consistent appearance. New squeezy bottles of guacamole, soured cream, salsa and the more child-friendly smooth salsa, which is free of jalapeño pepper, were also launched along with Fajita Seasoning Pastes.
"Although we still feel it is important to support those consumers who have less experience with Mexican, presenting a need for kits, there is also now a need to offer the more adventurous a range of products that challenge their taste buds and cooking skills," says Bev Taylor, senior brand manager at Discovery Foods. "Data now shows the fajita DIY/separates segment is dominating the Mexican category, representing 37% of the total category value and of greater value worth than fajita kits."
Discovery is still significantly smaller than Old El Paso at £27.7m, and its growth over the past year hasn't matched up to the leading brand, with sales up 4.1% in value [IRI 52w/e 3 October]. Yet the brand is confident it can gain market share.
"Time was when Mexican at home consisted of spicy hot stodge and a choice from a wall of yellow packs," says Don Williams, chief executive of branding and design consultancy Pi Global. "Today, though, Old El Paso is under serious threat from Discovery, which has relaunched with a wide variety of motivating and less banal Mexican products."
Discovery isn't the only brand that continues to capitalise on the popularity of sauces and accompaniments. Indian brands are enjoying strong sales in these subcategories. Sales of Indian sauces and accompaniments have risen 9.6% to £205.3m over the past year with volumes up 8.1% [IRI 52w/e 3 October].
Driving this growth is own label, which accounts for the biggest part of the Indian sauces and accompaniments market. Own label has increased its share of Indian cooking sauces from 32% last year to 34% this year, with sales up 16.2% to £69.8m [IRI].
Significantly behind own label are the two biggest brands Sharwood's and Patak's. Sharwood's just beats Patak's in the Indian category, with sales up 0.7% to £49m. Although trailing slightly on £48.5m sales, Patak's is, however, outpacing Sharwood's in terms of growth, with value sales up 11.8% in the year to October [IRI].
Patak's kicked off a £7m relaunch in September with new packaging, its first new TV creative in five years, the launch of a first-to-market oven-bake biryani cooking sauce, as well as a new sub-brand, Easy, a range of single-use paste sachets and side dishes, including Saag Aloo.
The Easy range is intended to encourage people to recreate the restaurant experience at home, says AB World Foods' Hughes. Although Patak's says it accounts for £1 in every £4 spend on ambient Indian food, it believes there are still growth opportunities. "The British love curry, but only 54% of consumers actually cook Indian food at home, so there is clearly a great opportunity for category growth," says Hughes.
Rival Sharwood's has also launched a biryani sauce this year, and new brand Side of Plate, which includes side orders such as Bombay potatoes and saag aloo. The latter has achieved sales of £440,000 since its February launch, according to Premier.
Its Chinese range, meanwhile, was relaunched in March. Sharwood's is putting £5m behind new pack designs and new flavours, as well as segmenting the range into key Chinese regions to promote authenticity. As a result Sharwood's further strengthened its leading position in Chinese sauces and accompaniments, growing just ahead of the category, with sales up 10.6% to £30.5m.
Blue Dragon is a strong challenger, though, with sales up 22.7% to £21.2m, pushing Amoy down to third this year, despite 9.9% sales growth to £21.1m. Uncle Ben's takes the fourth spot, with a sales growth of 5.2% to £19.1m, while own-label trails with sales of £17.7m, despite value growth of 11.9% [IRI 52 w/e 3 October].
But although Indian and Chinese cooking sauces and accompaniments are where the big success stories lie, it is non-Chinese variants that are generating the real excitement, particularly Thai.
Traditionally a Chinese brand, Amoy expanded its Thai range in September with the addition of Thai stir-fry sauces. The £25.22m brand has grown total sales 14.2% in the past year and sales of its Thai sauces shot up 43.1% to £4.13m [IRI 52w/e 3 October]. It hopes the new lines will help it tap into "increasing consumer interest in Thai cuisine" and that tactical new product launches, along with a packaging revamp in January, will raise its profile with consumers beyond its core soy sauce offer.
"Despite Amoy being number one in soy sauce and Straight to Wok noodles, our research has shown 70% of consumers purchase only one Amoy product from the portfolio, primarily soy sauce, as they were unaware of the rest," says senior brand manager Caroline Grimshaw. "The original pack design was weak in terms of pushing Amoy's key strengths authenticity and heritage. The repackaging will bring the whole range in line with a contemporary image."
Asda, which reports a 40% rise in ethnic food sales in the past year, is also getting behind authentic imported Oriental brands, and admitted to having "overlooked" Oriental in the past. The store's new ethnic range, which covers Chinese, Thai, Korean and Japanese food, was introduced following a tip-off from a local store manager in the summer .
Some like it hot
Meanwhile, last year's big news story, Caribbean food, is still going strong. Growth is being driven both by ethnic and mainstream consumers. Much has been made of the impact of Levi Roots' Reggae Reggae sauces, but, claims Asda, that's not where the main sales are coming from. "Our Caribbean sales are strong," says Cathryn Ramsden, customer planner of Asda's emerging markets team. "We sell primarily to African, Caribbean and West Indian customers who aren't necessarily influenced by Reggae Reggae. "
The success of Levi Roots' sauces has nevertheless helped boost sales of Caribbean sauces and accompaniments, which are up 20% in the year to June [IRI], and marked the transition of Caribbean into the mainstream.
Enco Foods, which owns the Caribbean brands Grace, Dunn's River and Encona, certainly believes the distinction between ethnic and mainstream is beginning to blur. "We are seeing greater presence on mainstream fixtures, with the lion's share of our Encona sauce brand now being delivered through the table sauce fixture," says commercial director George Phillips. "This is indicative of a more mainstream acceptance of products that would have previously been considered ethnic."
As the world cuisine category becomes increasingly mainstream, the challenge now will be to ensure that NPD truly is innovative, and, more importantly, that the price is tempting enough to keep drawing consumers away from traditional favourites and towards new, exotic flavours.
Focus On World Cuisine