Analysis by Sarah Hardcastle Frozen food is back on form. After a disappointing couple of years in which growth slowed, in 1999 it put in a very positive gain of 4.1%, pushing the total market to £3.8bn, excluding ice cream. This year the expectations are that gains will be even greater. "Some of the higher value sectors, like burgers, are doing extremely well," says Birds Eye Wall's trading director Neil Jones, "so there's some very encouraging performance in the market." Convenience is the driving force behind frozen food's growth. Improvements in quality, plus extensive product innovation are also having a positive impact on sales. Price is also a key driver, with over 40% sold on deal. Consumer research shows this is one of the main attractions. Birds Eye Wall's and own label have been the market's dominant forces in the last few years. Heinz's acquisition last year of UB's frozen operation, which includes top brands such as McVities's Go Ahead! pizza and desserts, Jane Asher and Devonshire desserts, the Linda McCartney vegetarian range, plus a substantial own label business, has brought a second major player to the market. "Heinz has designated frozen food as a growth category in the UK and globally, so we will be investing heavily in it, on both brand and own label," says Philip Connolly, general manager of Heinz European Frozen & Chilled Foods. So which of the market's 10 categories are thriving and deserving more freezer space? And which ones are on a losing streak? Fish, the biggest sector at £621m, is sliding, with volumes down 7% last year. This is largely due to raw material shortage which, in turn, has pushed up prices and led to less promotional activity in the marketplace. BEW, the biggest brand, saw a sales value increase of 7.2% for its fish products, says Jones, largely due to the success of its Simply Cod, a four portion pack of breaded or coated chunky cod steaks which came out in 1999. "It's been one of our most successful fish launches ever and that's because it's a quality product," says Jones. BEW's icon brand Fish Fingers fared less well, slipping 7% in volume and gaining less than 1% in value, a performance partly attributable to the healthy eating trend and the marketplace's breadth of choice for children. The fish market can now look forward to a period of interesting development following the Youngs Bluecrest merger last year to create the largest UK owned chilled and frozen seafood company. Chief executive Wynne Griffiths says the two businesses have been brought together and restructured to create a retailer focused sales force that will handle both own label and the brand portfolio which includes Young's, Ross and Chip Shop. "We have the largest seafood sourcing infrastructure in Europe. "This gives us a tremendous resource to grow the market which we plan to do by adding value, making fish more convenient for consumers, and by creating new ways of eating fish," says Griffiths. Within the company's portfolio, the strongest performers are prawns, scampi, recipe meals and fish cakes. The rising demand for shellfish is confirmed by Anchor Seafoods which says frozen sales rose 7% last year driven by convenience products such as its prawn party packs. Green vegetables put on a small growth spurt, following decline in 1998, mainly due to promotional activity and rising demand for prepared products. Despite this, BEW's Jones says the category is static, with natural vegetables continuing on a downward slope. The exception is peas, BEW's stronghold, up 2% in value last year. Fisher Foods believes the main culprit in natural vegetables' decline is dull, lacklustre packaging, particularly in own label, which fails to capture consumers' interest. Own label has the majority of the market and accounted for two thirds of the 100 new vegetable products launched last year. Fisher is to redress this with new products, packaging and point of sale marketing In contrast, potato products, romped away with 14% rise mainly due to innnovation and the development of higher value products. BEW's Jones says the company's waffles are one of the biggest selling lines. Its Tom & Jerry character shapes, launched early this year, "have an encouraging rate of sale", says Jones. "Generally, though, character lines have a short-term appeal and so the area is constantly in need of ideas and innovation. We are looking at a number of initiatives in the way the market is split between children, family and adults." Heinz is also planning to look at fresh opportunities in this market as it now has a UK potato products manufacturing facility, says Connolly. McCain remains the biggest brand in this area, with a line up that includes Smiles, the leader in children's shapes. Of its seven chip varieties, the fastest growing is Micro Chips, a microwaveable product that's brought new users to the fixture. The company has been very active in helping to grow the category through its National Chip Week and National Smile Week promotions. This year it's spending £30m on promotional support, research, new product and market development. Red meat ­ burgers and grills ­ is another good performer. BEW's Jones says it is driven by the growth of premium products, which rose 17.3%. "Consumers are upgrading because of health concerns, plus there's fewer economy products around. We withdrew our economy line last year to concentrate on quality." Confirming the trend to premium, Jones says BEW's newly launched 100% beef Homestyle burgers "are selling well above expectation". Dalepak's Flame Grilled range is also performing well. The company says it has secured 8% of the marketplace and is listed by nearly every major multiple. Similarly, its majority share of the grillsteaks sector is also growing. In the vegetarian sector, its range has received a packaging overhaul and a new crispy/crunchy vegetable line introduced. Poultry's growth at 2.3% has slowed somewhat. Jones says the children's sector, which includes its Dippers and Chicken O's, did the best, giving BEW 3% market growth. Pizza's growth has been nothing short of outstanding at 17.3%, making it one of the key drivers of the frozen food market. In a market crowded with own label, Schwan's Chicago Town is the biggest brand with 17% share growing at 20%. Schwan's says Chicago Town's versatility as a meal or a snack is the key to its popularity. Its premium rising dough Freschetta is developing a new market as an indulgent treat, bringing fresh users to the category. Schwan's says 17% of Freschetta sales in the last year have come from chilled consumers buying frozen for the first time. Innovation's role in growing the market has been critical, illustrated by the success of McCain's Micro Pizza, the first to be designed for the microwave. McCain's says the product has gained one third share of the individual frozen pizza sector. Freiberger is also developing the snack potential of pizza. Its new Pizza Toast can be prepared in the toaster in four minutes. Due for launch this summer, the product has been successfully trialled by two major retailers. Heinz now dominates the low fat sector, its McVitie's Go Ahead! being the leading brand. The Weight Watchers from Heinz pizza is to be discontinued. The ready meals sector has been through a spectacular turnround, moving from 6% decline in 1998 to a very healthy 8.9% rise in 1999. "It's cooking on gas at the moment," says BEW's Jones. "And that's because the quality image of frozen food as a whole is being raised, largely through our improvement drive over the last two years. "Consumers now have greater confidence in frozen meals. The growth we are seeing is coming from increased weight of purchase and more repeat purchases." Ethnic meals is the most buoyant sector, growing at 12%. Anglicised meals still hold over 60% of the market, but RHM Frozen Foods says authenticity is increasingly important as consumers become more adventurous and familiar with different cuisines. Its Sharwood's medium chicken balti holds the number eight position in the national top 10 of frozen Indian meals. The healthy and vegetarian sectors are destined to see a great deal of activity through Heinz's development of the Linda McCartney brand. The Findus Lean Cuisine brand, now under new ownership by Swedish company EQT, is also being revitalised. The entire frozen meals market is seeing a great deal of innovation. Developments include a new Italian line from Hibernia Foods, and an Italian snack noodle range from RVP Foods. Savoury bakery continues its downward trend, though innovations such as Freshbake's Microbake, an individual microwaveable pie are helping to draw new users into this traditional category. Jus-Rol, the leading frozen pastry brand, has stepped up its campaign to broaden pastry usage, predominantly seasonal, by launching a magazine with recipe ideas mailed to 130,000 consumers. Desserts declined too, despite a great deal of innovation ­ RHM Frozen reckons 300 new products made their debut last year ­ and a high level of promotional activity. Bestsellers remain the classic, such as RHM's Mr Kipling slices. {{FOCUS SPECIALS }}