Rice and pasta have proved popular foods in the recession but brands are still facing pressures from price inflation
Familiar, cheap and versatile: rice and pasta are both riding out the recession with sales rocketing.
Rice, in particular, has enjoyed impressive growth, with category value sales rising 17.3% to £399.2m and own label up 20.5% to £166.6m. However, shelf price hikes stemming from higher commodity costs and the falling value of the pound accelerated value sales faster than volumes, which were up 3.4%.
“As with most grocery categories, volume sales growth is behind value sales, but this still represents an increase of more than 5,000 tonnes on last year,” says Alex Condron, senior category and insight manager at Tilda, which grew sales by 8.9% to £44.2m.
“Our strong promotional programme has helped to deliver some of this growth, as well as the continued NPD programme. New 500g packs of Tilda Long Grain and Tilda Easy Cook Long Grain were launched into the multiples with success, as well as two new packs in the microwaveable category.”
Uncle Ben’s, the Mars-owned market-leading brand, also rose in value but customer marketing manager Wendy Wing admits conditions were a challenge.
“A lot of our rice comes from Europe. The exchange rate remains a challenge and we have passed on price rises over the past year because of commodity inflation.
“In this climate, it has been essential to heavily invest in TV, in-store merchandise and promotions, to get the message across that Uncle Ben’s products are high quality,” Wing adds.
Such supply challenges do not seem to have hindered high-flying Veetee. The premium microwaveable brand has leapfrogged Batchelors and Riso Gallo to claim third spot and anticipates it will be able to more than double sales growth to £30m in 2010 following completion of a new factory next summer. The increased capacity will enable Veetee to build on this year’s improved distribution, says Vikas Magoon, CEO. The company launched new basmati rice and mushroom & vegetable pilau rice into Asda and Tesco, and the number of SKUs in Asda doubled. The Co-op also doubled its Veetee range on shelf in August and the brand gained its first listings with Morrisons in May.
However, Magoon warns of tough times ahead for the category with further commodity pressures coming through on shelf. “In 2008, rice prices went up to a record $1,000 a tonne. Now the price is down to $600 a tonne but a drought in India is adding further cost pressure.” Current rice levels are down about 18 million tonnes compared with the previous year, he adds.
The outlook for pasta is more encouraging. While innovation has been less of a factor, admit suppliers, a sales jump of 11.8% to £215.4m also saw brands taking share, says Nigel Singh, UK commercial manager for Pasta Lensi, the biggest own-label pasta supplier in the world.
“Consumers have developed their understanding about the quality of pasta through going on more holidays to Italy and watching cookery shows, and are switching to brands because they believe the product is of higher and more authentic quality,” says Singh.
The sub-category benefited from a fall in the price of durum wheat – an essential ingredient in pasta – over the past year although prices were still higher than they were two years ago. “What is more, Italian farmers are purposefully keeping prices inflated by planting less durum wheat,” adds Singh.
And what drop there has been was offset by the weak exchange rate, says Remmelt Jongkind, marketing director for Napolina – the market-leading dry pasta, distributed in the UK by Princes.
Jongkind agrees consumers are increasingly switching to branded pasta but maintains the strong growth in own label is a positive sign the category was “successfully accommodating a variety of consumer needs”. “Our premium range is doing exceptionally well as people sacrifice dining out for eating at home,” he adds.
It has been a more exciting scene in the rejuvenated pot snack fixture. Instant pot snacks were lent a helping hand by the credit crunch, but, says Batchelors senior brand manager Sarah Fordy, “these products are as much about convenience as value for money”.
It also helped that Pot Noodle, the daddy of the category, rediscovered its marketing mojo, with a new doner kebab flavour launched in the spring, and a limited-edition Christmas dinner ‘Pot Noel’dle’ also on shelves in December.
But the change in consumer spending patterns has given dried food specialist Symington’s the confidence to raise its profile. In October it locked horns with Unilever’s Pot Noodle with the launch of Golden Wonder: The Nation’s Noodle. Symington’s anticipated £15m in sales in its first year but Unilever retaliated this month with Pot Noodle in a Mug packet soup. However, with 41.1% sales growth to £4.7m, Symington’s Mug Shot brand looks capable of handling the competition. “We have accelerated brand growth by offering permanent multibuys, which allow consumers to stock up from the wide range of flavours and variants,” says David Cherrie, marketing manager at Symington’s.
Premier Foods-owned Batchelors is the second-biggest brand behind Pot Noodle and Fordy puts the 13.7% growth to £45.6m down to NPD. It launched a new range of Wholegrain Pasta n Sauce and three new flavours in Super Noodles.
“Both of these new products have brought incremental users into the category and innovation in 2010 means Batchelors will continue to drive growth,” she promises.
Top launch: Golden Wonder: The Nation’s Noodle Symington’s
Thirty-two years ago Golden Wonder created Pot Noodle. It was acquired by Unilever in 1995. How fitting, then, that Golden Wonder owner Tayto should team up with Symington’s to launch rival snack Golden Wonder: The Nation’s Noodle. It’s a bit like the scene in Star Wars where Darth Vader and Obi-Wan Kenobi face off: the apprentice challenging the master. But with chip shop curry-flavoured noodles rather than lightsabers.
Top Products Survey 2009