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With only 11% household penetration, microwaves slowly cooking up FF boom.

With Only 11% Household Penetration, Microwaves Slowly Cooking up FF Boom Still considered a luxury item to some, many Germans are finding the appliance to be a modern convenience they can't do without. The potential for FF packers is unlimited.

The Microwave march continues conquering new territory in West Germany as citizens of Europe's richest nation slowly but surely increase their purchases of the kitchen appliance that is revolutionizing at-home meal, preparation in the industrialized, non-communist world. In response, more and more frozen food manufacturers are labeling their products fur mikrowelle, or "microwave suitable," thanks to a logo designed by the German Deepfreeze Institute.

Statistics, however, show that microwave ovens are still considered luxury items by many Germans. While about 2 million units were sold last year, only 11% of German households cook with them. Hence the market still has considerable room to grow. In the meantime, Manfred Sassen, director of the Deepfreeze Institute, is urging appliance manufacturers to adopt 600 watts as a common electric power standard so that product preparation instructions can be based accordingly.

On the FF packer side, the director urges promotional support of the microwave concept. Emphasis should be placed on the appliance's convenience and time-saving qualities for families with students or commercially occupied members. The oven's ease of operation and the flexibility of frozen foods work hand in hand in this regard.

The best selling frozen microwave-ready dish categories are vegetable and potato products, with market shares of 29% and 26%. However, no further growth in either product category is anticipated as they are likely to be soon surpassed by prepared dishes (presently 20%). Frozen soups, meat dishes, snacks, ready-made meals, and partly prepared dishes together show a double-digit annual growth rate. Especially active is the single person ready-meal designed for the microwave oven. Frozen baked goods, particularly torts, are also posting dramatic gains.

Indeed, frozen food is inseparably involved in the market growth of microwave ovens. The extraordinary growth of frozen prepared dishes in 1987 (+10.1%) in comparison with FF in general (+5.6%) may serve as an indication. Polls of consumers have shown that microwave owners eat more of the following than non-owners: frozen potato items (+48%); frozen prepared dishes (+31%); frozen pizza (+31%); frozen vegetables (+28%).

Who Uses Them?

What households cook with microwaves? The market and media research of the Bauer publishing group recently issued a demographic study of potential owners. The age concentrations of microwave owners lie in the 40- 49-year-old (0.92 million users) and 30-39-year-old (0.56 million) heads of households. Greater than two-thirds come from the upper income groups (more than 3,000 DM disposable net household income). Within the 4,000 DM income group and up, a market penetration figure of 14% has been reached. Thus, the researchers conclude, the market is well removed from a "Volks-microwave."

Unlimited Potential

"Taking all this into consideration," Sassen said, "frozen food has practically unlimited growth potential in West Germany because the microwave household is also an intensive frozen food household."

The director reported that per capita consumption of FF hit 14.4 kg in 1987 and will probably reach 15.4 kg in 1988 after all the numbers are added up. Yet despite such volume growth, the amount of retail store space devoted to frozens has not kept pace. This was cited as a possible reason why FF is more widely used in other countries on the Continent, notably Denmark where per capita consumption is now 22.5 kg. It might also explain why home delivery sales in the Federal Republic have increased in recent years.

It should be noted that the frozen food sector has advanced steadily in recent years while the overall national food market has been flat. Including ice cream and poultry, the total FF market was worth some 10 billion DM in 1987. Subtract those two categories and the value is 5.4 million DM. About half of all FF volume is moved through retail groceries, while the rest is sold through bulk catering outlets such as restaurants, factory kitchens, transportation feeders, etc.

Frozen food accounts for about 4% of all retail grocery sales. A sales growth rate of between 6% and 8% is anticipated this year.

Home Delivery Services

The benefit of convenient, catalog shopping is perhaps appreciated more in Germany than any other country when it comes to frozens. Direct distribution of FF via so-called Heimdienste (home delivery services) has assumed considerable importance. By 1986 some 15% of all households were counted among the customers of such services. The volume share of the entire retail market in the same year was 23%, while the value share was an even higher 30%. Two decades earlier the latter figure was only 2%.

Two firms basically dominate the direct FF distribution market. More than a million households are served in regular cycles of four to six weeks by company-employed drivers (Bofrost) or mainly independent franchisers (Eismann). Both companies have large presences in the bulk consumer (commercial) market. Prices of home delivery services are perceptibly higher than those of non-mobile retail outlets.

About 80 other firms are active in direct distribution of frozen food, but as yet have only regional reach.

The success of "meals on wheels" may prompt retailers to boost shelf space for frozen foods, according to the Frankfurt-based Commerz bank. "We expect higher growth rates here than with home delivery services," it opined in a recently published industry report. "New sales incentives are now promised by the introduction of no-fee credit cards that--for the first time in the purely retail grocery field--allow cash-free shopping."
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Title Annotation:frozen foods industry in West Germany
Publication:Quick Frozen Foods International
Date:Jan 1, 1989
Words:932
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