Executive Summary

Ready meals represent a dynamic and fast-moving sector in the UK grocery market. In 1994, total retail sales grew by 5.8% to £936m. There are three main types: frozen, chilled and ambient, with the frozen varieties taking the largest share, with 56.1% (£525m), in 1994. Chilled ready meals accounted for 40.6% (£380m), with ambient ready meals taking a 3.3% share (£31m).

The underlying trend is towards greater variety and better-quality products, with manufacturers introducing larger-sized portions and more convenience packaging. This can be seen in the nutritional sector, where the products have been repositioned away from calorie counting, to concentrate on healthy eating and low fat.

The frozen sector has seen intense price discounting in recent years, with a growing influx of budget, economy brands selling under £1. A new concept in frozen ready meals was Birds Eye Wall's recent range of `assembly meals' under the Panflair brand.

In the chilled sector, the main growth has come from ethnic and healthier meals, e.g. fish, vegetarian and pasta dishes, reflecting the move away from red meat consumption. In ethnic ready meals, new emerging cuisines have included Thai, Mexican and Cajun/Creole, with manufacturers introducing more authentic-style dishes, recreating convenient takeaway-style food.

In ambient ready meals, there has been a noticeable shift towards snack products and moist formal meals, with an increase in own-label activity.

In terms of supply, the frozen sector is dominated by the major food conglomerates, with Birds Eye remaining the market leader, with a value share of 24% in 1994. Other leading players include United Biscuits, Nestlé and Heinz. The chilled sector continues to be dominated by own labels, which accounted for around 96% of value sales in 1994. The pioneer and market leader is Marks & Spencer PLC, which had a value share of around 50% in 1994. With the withdrawal of the market leader Batchelors, in moist ready meals with its Microchef brand, the only major manufacturer is Heinz, with its Lunchbowl range. Own labels feature prominently in this sector.

Key Note estimates that the UK ready meals market will grow at an average annual rate of 5% from 1995 when it was estimated at £1bn, to reach £1.2bn in 1999. The fastest growth will be from the chilled sector, which will grow by 7.1% to reach £530m in 1999, while the frozen sector will only show growth of 3.4% to reach £652m in 1999. Growth in ambient ready meals will remain strong, and the market is expected to stand at £43m in 1999.

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