Executive Summary

Retail sales of frozen food amounted to Ł5.32bn in 2003 or 8.6% of total consumer spending on food and drink products in the UK, a moderate growth of 1.5% from 2002. The market is broken down into ten sectors; meat and meat products, poultry and poultry products, ice cream, fish and fish products, ready meals, potato products, cakes and desserts, pizza, vegetables and fruit and vegetarian foods.

The market first took off in the UK in the 1960s when freezer ownership became increasingly widespread. It received a further boost in the 1980s with the introduction of the microwave and considerable new product development (NPD) in sectors such as pizzas and ready meals. The development of the industry has been heavily influenced by two of the key factors affecting food markets over the past 40 years - growing demand for convenience products and concerns about health. Frozen foods were one of the first beneficiaries of demand for convenience products; with the introduction of frozen peas in the 1960s, boil-in-the bag meals in the 1970s and ready meals in the 1980s helping to drive demand.

However, over the past 5 years growth has slowed sharply and the market now appears to have reached maturity. Ownership of freezers and microwaves is now ubiquitous, while the scope for further product development appears to be limited. Furthermore, the emergence of chilled produce represents a major challenge to frozen foods. The range of chilled produce has expanded dramatically in the UK in the past 5 years and it offers considerable advantages in terms of convenience over frozen alternatives. Furthermore, consumers believe chilled products are more flavoursome, natural and healthy than frozen alternatives. Retailers and suppliers have also concentrated their marketing and NPD activity on chilled produce, which offers higher margins than the frozen sector. Chilled produce is also far more attractively presented than its frozen alternative and is normally located close to the entrance of many stores, while the sterile-looking frozen food section is often at the end of the store.

Within the frozen food market, fish, poultry and ice cream probably have the greatest growth potential. Suppliers such as Young's are exploiting the positive health image surrounding fish with some success, while poultry is also regarded by consumers as being healthy. Ice cream is obviously greatly influenced by the weather, but faces no competition from chilled produce and growing demand for premium products is also boosting the overall value of the sector. The low-fat ice cream segment also appears to offer huge potential. The potato products and cakes and desserts sectors, by contrast, appear to be in decline.

However, frozen foods continue to offer advantages in term of convenience and bulk buying, and are a long-established item on consumers' shopping lists. They also offer benefits in terms of health - they do not contain the preservatives found in chilled produce - that have yet to be fully exploited by the industry. Thus, Key Note believes the market will continue to grow, albeit at a moderate rate, with the value of the market reaching around Ł5.63bn in 2008.

Price:	£ 499.00 GBP ex VAT (£ 586.33 GBP inc VAT )
Publication date:	31 Oct 2004
Licence period:	365 days

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