Are consumers in the UK starting or finishing with frozen dessert?

Don't look now--especially at waistline--but it seems that desserts are carving out a bigger piece of the action. Elsewhere around the UK, did Birds Eye miss out on a golden opportunity to sink roots in the USA vegetable market? Slowly but surely, healthy-eating products on the British retail scene are giving way to a resurgence of the kind of desserts that gave the UK frozen food industry a dramatic impetus in its second decade of growth during the 1950s. Healthy eating has scarcely run its course, as the public is apparently beginning to tire of the strident publicity and is turning again to desserts, cakes and pastries, while becoming obsessed with ice cream and yogurt. Data about the market is not easy to find, but Marketpower, a London-based research agency, has been analyzing the catering sector since 1979 and just recently started to bring its information about frozen desserts and ice cream up to date. Having last looked at the catering scene in 1991, information for the new survey will be obtained from 750 "carefully selected" caterers.

Desserts and ice cream in this sector have been severely affected by economic recession, and Marketpower reports that from 9.1 million meals consumed in 1990, the number of meals eaten away from home last year slumped to 8.8 million. The UK frozen confectionery market itself was worth about |pounds~215 million in 1992, according to one account. But a Market Intelligence survey published last June valued the frozen desserts category at |pounds~197 million in 1992, an increase of 33% since 1988 at current prices. In real terms, the market has seen a slight decline since 1990 as a result of the recession and competition from other products such as ice cream and chilled desserts. Two factors may influence the shape and content of this sector in the next few years. One is the attitude of Wall's, now that it is linked with the Kraft General Foods ice cream brands in the United States (Unilever took them over recently); the second is the poor showing of Wall's ice cream sales last year. Joint Chairman Michael Perry, in the company's annual report, blamed the latter result on poor weather during the peak sales season. No reference was made to the Monopolies Commission investigation of the ice cream industry in Britain, nor to the EC or Irish disputes in which Wall's and Mars are in head-on confrontation (without apparently damaging each other's brand shares). More surprisingly, there was no mention of Philip Morris' (Kraft's corporate parent) announcement in September of its aim to dispose of its Birds Eye operation in the USA. Surely it must have caused at least a few conversational exchanges in the board rooms of Unilever, at London's Blackfriars, and Birds Eye-Wall's headquarters at Walton on Thames. A former chairman of Birds Eye UK would have found the North American opportunity irresistible to pass by!

As for desserts, that's an area of product development in which Unilever--like the rest of the UK food industry--has not been conspicuous. According to Mintel's exclusive research, some 59% of the population bought a frozen dessert in the six months before this survey because "the whole family likes them and because they are perceived to be good value for money."

Brake Bros., the UK catering supply specialist whose plans were considered in a special feature in the October issue of this magazine, enjoys a professional knowledge of the growth areas of the British frozen food scene that is perhaps second to none. Responding to QFFI's inquiries about desserts in that market, CEO Frank Brake sent a thoughtful letter which is published in the following six paragraphs.

"It is estimated that 500 million portions of dessert are consumed in the UK each year. And with the continuing trend toward de-skilling and tighter budget control in the kitchens of caterers, there has been a very significant move towards individual and pre-cut desserts. These products offer the caterer accurate cost control when planning menus, plus the added benefit of being able to thaw only the amount that is required in any one day. So instead of thawing a whole gateau and letting it stand for two or three days until sold, caterers can now remove the number of portions they require for each day and not have to worry about whether they will stand up to a prolonged period out of refrigeration.

"Despite this trend towards individual and pre-cut products, there still remains a large market for whole gateaux and desserts. Indeed, a number of caterers are now calling for desserts that they can offer larger portions from, and so give an extremely good 'value for money' perception because of the plate coverage given. It's almost like giving customers more than they can possibly eat so they feel that they must have had a good value meal because they could not finish it. "With ice cream we have seen a very significant growth in the premium dairy end of the market. This had been largely due to Mars entering the field. Consumers were initially intrigued that the products they recognized as confectionery lines were now being marketed as dairy ice cream. The interest sparked by these products in dairy ice cream has seen this sector grow rapidly, although it is fair to say that the initial euphoria has waned slightly and growth has slowed. "But with Mars in the market, Wall's still dominant and Nestle now being extremely active with the Lyons Maid brand and ice cream variations of their own candy lines, the "confectionery ice cream" sector is most definitely here to stay.

"Still, the biggest sector is vegetable fat-based ice cream which accounts for approximately 75% of UK foodservice ice cream sales. The main advantage of this product over its dairy counterpart is price. Vegetable fat ice cream is still a high quality product at about half the price of its dairy equivalent. It is a standard of product that the UK public has grown up with and accepts. And while we will continue to see the dairy sector grow, it will never replace vegetable-based ice cream in the cost-conscious segment.

"The foodservice sector in 1992 was estimated to be worth |pounds~100 million, with 60% of this being supplied through the wholesale market. Total market value is put at approximately |pounds~700 million," concluded Mr. Brake.

Most of the product development in recent years in the UK has taken place in categories such as cheesecake, yogurt, mousse, ice cream--and not in the origination of entirely new dessert concepts. In some American supermarkets one can perhaps see why. What has emerged in their deli and bakery sections is a whole new category of baked desserts that defy waistlines and freezing technologies with equal equanimity. Publix, the Florida-headquartered chain, has confounded public opinion with a range of cakes, pies and pastries so appetizing that fewer and fewer shoppers these days consider scouting the QFF cabinets for similar items.

Nothing quite like this exits in England except in a few freezer centers, although both Tesco and Sainsbury's could get there quickly. Both would have to persuade a friendly packer to do the development work itself--but that's no big deal.

Back in the 1950s, when this writer was editing the English trade magazine, Frozen Foods, many of the leading packers were putting up mixed fruit segments in polythene bags. A number of suppliers still do this and it may well be that some of them with a marketing interest in desserts may reassert this presentation. Brokers in Europe and America have been searching for the gaps for at least the past 10 years. And it's gap analysis of this kind that keeps an industry moving forward and inventive. In the USA, the Birds Eye company has found gaps for microwave entrees such as Easy Recipe meal kits of frozen vegetables and ready-made sauces that turn out "home cooked meals" in only 15 minutes. All the consumer has to do is add the chicken or beef. Imagine what would happen if this kind of thinking were to be applied to mixed fruits. And if it were to be taken up by Birds Eye in England, what might result? How about sorbets and sauces to which you add the mixed fruit?

Did Birds Eye Blink?

Given their international connections, maybe the two Birds Eyes should have joined forces after all. But it's too late now that Kraft has sold the Birds Eye business to Dean Foods Co. The deal includes the well-known line of basic frozen fruits and vegetables. value added sauces and vegetable blend products marketed under the Farm Fresh, International Recipe and Easy Recipe labels, as well as plants in Waseca, Minnesota, Fulton, N.Y., and Celaya, Mexico. The company has annual sales of about $250 million.

The line will be handled by Dean Foods' Larsen Co., a division in Green Bay, Wisconsin. It will give Dean some 20% of the total canned vegetable market and about 30% of the frozen segment, a share comparable to that held by Green Giant. Meanwhile, all was apparently silent from Walton on Thames in England. Across the Atlantic in New York, analyst John McMillin of Prudential thought Dean would give more attention to Birds Eye than Kraft did, and would be more committed to the success of the business. It is not known whether Dean has spoken to Birds Eye in Britain or whether Birds Eye was seriously approached by Kraft, but the opportunities are endless and a close watch will be kept on the situation. Grander Grand Met

International perspective has certainly given a new marketing thrust to Grand Metropolitan's Pillsbury Company. Who would have thought five or six years ago that one of the UK's leading beer brewers and hotel chains would come together with a Minneapolis food producer to create what is on its way to becoming one of the world's largest food conglomerates. Haagen-Dazs, of course, is a Grand Met subsidiary. It was just about a year ago that Grand Met PLC announced that Haagen-Dazs, "the world's largest brand of super-premium ice cream," had inaugurated a $60 million European production facility in Arras, France. The global growth has been exemplified by volume increases in both Europe (which tripled in 1992) and the Far East (up 35%). New product lines, such as Extraas, a novel concept featuring flavorful "mixed-in" ingredients, have also shown growth and are more than exceeding original expectations.

Ice cream and frozen yogurt will be produced at Arras where there is a total capacity of 45 million liters. Haagen-Dazs is now sold in 11 European countries where over 10,000 listings were added in 1992.

Grand Met is not, though, by any means a purely Anglo-American venture. Not so very long ago the Grand Met company at the sharp end of the publicity was Watneys, the brewer. Today, the focus has shifted to food. In September Pillsbury announced that it would acquire 49% of the equity capital in Pacific Star de Occidente, a major distributor of frozen and refrigerated products in Mexico. During the first year of operation Pacific Star will nearly double its reach to more than 1,400 supermarkets in Mexico.

"We are committed to extending our flagship brands into key international markets," said Paul S. Walsh, Pillsbury CEO. And with this joint venture it clearly gains a strong and efficient distribution and sales system for Pillsbury, Green Giant and pizza brands in Mexico.

Pillsbury is a key player in Grand Met, which itself is one of the largest international companies in the UK with sales in excess of $14 billion. Other US subsidiaries of Grand Met include the Burger King fast food chain, Carillon Importers, Hublein, Paddington Corp., and Pearle Inc.

Later in September, Pillsbury announced formation of a joint venture with Table Top for the manufacture and sale of Pillsbury products throughout the southern part of the African continent. Its partner is a division of Foodcorp, Johannesburg, which just happens to be South Africa's fastest growing food company, with leading brands in frozen vegetables, prepared meats, snacks, flour and baked goods. Its Table Top division is the country's No. 1 branded vegetable business, and the market leader in frozen vegetables.

In the same month, Pillsbury announced a $100 million reorganization of its Green Giant vegetable division "as part of a continuing effort to improve profitability and customer service." Some of this thinking rubs off on the company's plants in South Africa, where Pillsbury and Table Top will form a new company, Pillsbury Africa Ltd., which will be responsible for manufacturing Green Giant vegetable products and Pillsbury baked goods. Its manufacturing facilities will be based at Table Top's factories at George and Port Elizabeth on the east coast, close to the country's major vegetable growing areas.