Executive Summary
Chilled foods represent an extremely competitive and diverse sector of the UK retail grocery market. In 1997, the UK market for chilled foods was valued at £5.1bn, representing an increase of 5.4% on the previous year. Chilled foods accounted for 6.3% of total grocery sales in 1997.
Dairy products (including yellow fats), accounted for 68.4% of value sales in 1997. Cheese remains the single largest sector, valued at £1.38bn and taking 27.2% of total sales. Yellow fats, valued at £916m, and potted yoghurts/chilled desserts, valued at £1bn, accounted for 18.1% and 19.9% shares, respectively. The cream sector was worth £160m, representing a small but steady 3.2% of the market.
The key growth areas in the UK chilled foods market were chilled pizzas and prepared salads, which increased in value by 51.7% and 37.5%, respectively, over the period 1993 to 1997. Strong growth was also recorded in the chilled ready meals sector, which increased by 32.4% over the same period.
The dominance of the grocery multiples in chilled foods retailing is reflected in the high penetration of retailers’ own labels in many sectors, e.g. chilled ready meals (95%), chilled pizza (90%), cheese (64%) and prepacked salads (70%). In contrast, the chilled foods market also houses some of the strongest, high-profile brands, especially in yellow fats, e.g. Anchor, Lurpak, Flora, Stork and St Ivel.
The market continues to be driven by lifestyle factors, e.g. convenience, health and quality, while taste has also become more important, especially in yellow fats and cheese. The increasing trend towards snacking and grazing has provided tremendous marketing opportunities for chilled food manufacturers, especially in impulse snacks and the vibrant children’s lunchbox sector.
Competition in the marketplace has intensified over the past year, with most of the leading retailers expanding their own-label ranges and focusing on quality, while a number of frozen food manufacturers have also diversified into chilled foods, e.g. McCain Foods and Iceland.
The future looks extremely promising for the UK chilled foods market, with further expansion expected well into the next century. Key Note forecasts the market will grow on average by 5.5% year-on-year from 1998, to reach a market value of £6.51bn in 2002.
Ninth Edition 1998
Edited by Phillippa Smith
ISBN 1-85765-856-6
1-85765-611-3
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