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Getting the customer exactly right is the relevant way beyond 1992 Europe.

Getting the Customer Exactly Right Is Relevant Way Beyond 1992 Europe

Newspapers on both sides of the Atlantic carried extensive reports on May 30 of Campbell's decision to re-think its European strategy and sell off large parts of the Freshbake company in England - which it bought as recently as 1988. In the United States, the Campbell Soup Co. has acquired considerable experience in low calorie recipe dishes with its Le Menu, Swanson's and Mrs. Paul labels. But the experience has not really been put to the test in England or Europe, where the majors - Unilever, Nestle and Heinz - are battling it out on just this territory.

Quick Frozen Foods International now has it from a Campbell spokesmen in Camden, New Jersey, that they will indeed be heading in this direction in Europe. In a sentence rich with PR contrivance, The New York Times quoted the new chief executive, David Johnson, as being committed to "rebuild the frozen food convenience operation, which promises international synergy and long-term potential."

Which products though, this reporter asked the PR men? Quiche, said one spokesman, mentioning one of the products that Freshbake produces for Campbell in England, as well as marketing their own, which can sometimes be seen alongside the Campbell pack. And he then went on to speak of Campbell's experience in the ready meals market!

It was not altogether clear which sectors of the old Freshbake busines were up for sale, though Campbell Seafoods, born out of the J. Marr company in Britain, is said to be one, as is Campbell Vegetables, which The New York Times strangely reported as having "a 20% share of the frozen green vegetable market in Britain," and Campbell Irish Foods and Mallow Foods, also of Ireland.

Neither is it clear who from the old regime in Europe will remain with the new organization under David Johnson, and European president, Edward Glover. At the time this news was coming in, Ken Manley, who founded Freshbake with John Taylor, had a "European" role under Glover, and Leo de Bruijn of Groko, Holland, along with Ian Player, who has been heading Campbell Vegetables, UK, were still in position.

Is Campbell committed to Europe then? The Camden spokesmen were categories. Yes, but it will be a different sort of business. This is confirmed by the Financial Times report, in which Glover says: "We see our future in Europe as being a medium-sized multinational that concentrates in niche categories or in leveraging the parent company's technology from the US. We will seek to avoid going head to head with BSN, Nestle and Unilever. We think there's plenty of room. . . Contrary to what other people think, I believe it is totally viable to be a regional producer and marketer of packaged consumer goods in Europe."

Fine talk, but it was a former marketing vice president of the same company who told this reporter last year that one of Campbell's biggest initial mistakes in England was to mis-read the customer there. He observed: "Like so many of us, they thought that anything they had successfully marketed in America would do equally well in Britian, given a little promotion and publicity."

England itself has been guilty of similar chauvinism in the past, but not perhaps in the food market. There is not a lot there to be a chauvinistic about!

The perception of English attitudes to food and culinary skills is widespread in the United States, but also in Europe. There is a story of two Frenchmen travelling through the beautiful Cotswolds in a train. Gazing out of the window, one turned to the other and remarked: "Ma foi! How beautiful!" "Yes," the other replied. "Thank God they can't cook it."

America also gets it wrong. A television program aired in the States during May which featured Britain's principal contribution to culinary innovation: fish and chips. "It's so easy," said the presenter, pulling some fillets through a batter sauce, then into oil, and slicing a potato into oblong strips.

On camera anyway, the result didn't look in the least like the fish and chips that one buys in any corner "chippie." Any more than McDonald's in Surbiton or Moscow remotely resembles the ones in Cincinatti or Atlanta.

You have to find out the way people like their food before you sell your version to them. They will transform it anyway. . . and chew up your balance sheets in the process.

The issue inspired a major feature in the May 15 edition of the Wall Street Journal which teased the reader with a headline: "U.S. Food Firms Find Europe's Food Market Hardly a Piece of Cake." The arguments, which will be familiar to readers of this column, and concentrated on the struggle in Europe between Lean Cuisine, Weight Watchers and Birds Eye's Healthy Options.

What was surprising was the lack of reference to Con Agra's Healthy Choice range of nutritionally balanced entrees, which enjoy healthy facings in almost all of the major supermarkets in the USA with Weight Watchers, Lean Cuisine and Budget Gourmet trailing. Advertisements in the promotional colour pages of American newspapers directly compare Healthy Choice entrees with Stouffer's, Weight Watchers and Lean Cuisine, usually on four dimensions - sodium, fat, cholesterol and calories.

"When you eat light, you eat right," the copy reads. "New Healthy Choice entrees are delicious main courses made from leaner meats and lighter sauces, so they're lowest in sodium, fat and cholesterol. Available in ten great tasting varieties like Glazed Chicken, Fettucini Alfredo, and Chicken a l'Orange."

The other seven featured in the ads are Spaghetti with Meat Sauce, Linguini with Shrimp, Sole with Lemon Butter Sauce, Beef Pepper Steak, Chicken Chow Mein, Lasagne with Meat Sauce, and Seafood Newburg.

In Britain, Birds Eye have been telling Financial Times readers about Healthy Options, a similar concept now strongly visible in Gateway supermarkets, Sainsbury's and other multiples. One has not seen so much Birds Eye visibility in Britain for some years, and it's mainly on the "healthy eating" platform that so many of us predicted in the early '70s.

"When we launched our Healthy Options range of low fat meals in 1989, we found we were filling a gap," a Birds Eye spokesman said. "Our research told us that while there was a move to healthy eating, none of the existing brands fitted the bill. Consumers wanted good tasting, satisfying recipes that were also low in fat, and no artificial additives. Within four months Healthy Options had captured double the market share we expected."

What this demonstrates, in both the UK and USA, is that public opinion, in the view of manufacturers, has moved on from an obsession with slimming (understandable in the States) to a recognition that calories are less important in the public's mind that a proper balance of nutrients. HEALTHY eating, in other words.

Jenny Salmon, who started Birds Eye off in the '70s, with nutritional information on the backs of packs, will be getting a huge kick out of all this. But it remains to be seen whether the frozen food industry can develop this initiative or whether the public will move on by developing healthy recipes at home.

Or maybe the supermarkets will dictate a faster pace for the chilled sector. Forecast to rise to $46.3bn in Europe by 1993 - up from $36 billion in 1988 - the chilled sector has been going through a quiet phase in Britain, as manufacturers there digest the effects on public opinion of the lysteria publicity last year.

The reasons for rising sales, according to one market report, is the increasing number of working women and one and two-person households, coupled with an aging population. Other factors are the greater penetration of microwave ovens and the reduced use of food manufacturers' preservatives. A shorter shelf life can now be coped with by chilled food distribution systems.

France, according to this Frost and Sullivan research, has the biggest market for chilled foods, with volume put at around $9bn., followed by West Germany with over $8bn. UK, sales worth 6.6bn. [pounds] in 1988, could rise to 8.31bn. [pounds] by 1993. The frozen ready meal market is nearly three times the size of the chilled equivalent, but the latter has been growing at a faster rate since 1985.

Putting this in terms of the battle of international brands, the Wall Street Journal reported: "Pittsburgh-based Heinz, which wants to become a bigger force in post-1992 Europe, is finding that its Weight Watchers dishes face a costly battle in Britain. For that matter, many US food companies are having a harder-than-anticipated struggle to raise their bit-player status in the European Community's integrated market.

"While hungrily eyeing the continent's $550 billion food industry, Americans have underestimated the competitive clout of European food giants...and the lingering diversity of 320 million West Europeans - with their nine languages and distinctive national eating habits."

From recent, first-hand experience, this reporter could also add that few American food companies really care all that much about the European food market, stretched as they are over a huge continent, with the world's most advanced food distribution systems.

US analysts are now skeptical about opportunities for American companies; European companies are cocking a healthy snook. The same analysts say that Campbell expanded too fast in Europe and overpaid - $201 million or 24 times earnings - for Freshbake Foods PLC, which the Wall Street Journal describes as "a British frozen foods producer with little brand recognition and a third-place market share.

"Despite two years of management shuffles and the shutdown of four of Freshbake's eight plants, the British operation remains a drag on Campbell's earnings."

Most of the major European battles in frozen foods are still fought on British territory, so what the big league players do there clearly affects retail policies, although not so much as they did a few decades ago. The freezer centre phenomenon started by Bejam, now virtually absorbed entirely by the younger, virile and adventurous Iceland Frozen Foods company, is where you can observe the major players' strategies...and Iceland have done well too with their own brand of recipe dishes.

In March, they reported a surge in annual pre-tax profits from 9.03m [pounds] to 35.41m [pounds], largely because of the takeover of the rival Bejam group in January 1989. The combined group made sales of 672.1m [pounds] (205.2m. [pounds]) but the original Iceland business increased food sales by 24% to 254.8m [pounds] and the Bejam business saw food sales fall by 7.7% to 365.5m [pounds].

Malcolm Walker, chairman and chief executive of Iceland, said sales of 35m [pounds] has been "lost" by Bejam, which had affected group profits. However, he was confident that the Bejam shops which had been converted to the Iceland format were showing sales gains once more.

So far, 124 Bejam shops have been refitted at a cost of 20m [pounds], and a similar number of refits, in the current year, would complete the conversion of Bejam stores. Last year, 42 new Iceland stores were opened; a further 30 are due to open in 1990 and a higher number in 1991. Mr. Walker believed there was room for 1,000 Iceland stores in the UK as a whole.

He is probably right, but at the more conventional end of the trade, Tesco, one of the big five supermarket chains, got the season off to a flying start with the announcement of a 31% rise in pre-tax profits, to 361.6m [pounds] in the 12 months ending Feb. 24.

Volume in existing stores rose by 3% while there was a 6% sales gain from net new space. Extra volume and the higher margins obtained in the newer, larger stores helped lift the group's net margin, excluding property profits, from 5.9% to 6.4%.

Superstores, which now account for 57% of the total space, achieved 12.5% sales growth on a like-for-like basis.

Another sign of esco's clout in the UK marketplace came with the news that it was buying three superstore development sites from a fellow operator, Asda, for 54.75m [pounds] in cash. Asda chairman, John Hardman, said the sites being sold were "surplus to requirements" and that the 705m [pounds] acquisition last autumn of 61 superstores from Gateway and Asda's own 13 store opening programme in the new financial year meant that by April 1991 the group would have increased its sales area by 89%.

Sainsbury's, Tesco, Asda, Gateway and Argyll's Safeway are the "big five" in the British supermarket league, and all seem set on course now after a couple of decades of re-thinking and re-shuffling. Gateway has gone through a number of ownership exercises in the past two decades, and is now owned by the highly leveraged Isosceles company, which recently decided to keep its Herman's sporting goods chain in the US, bought by a former management, the Dee Corporation.

Isosceles said in April that it was looking at a significantly larger business than the one it expected when it took over Gateway. Instead of selling assets to reduce debt, further equity capital would be needed. The comment followed its failure to sell a package of 81 UK stores for 212m [pounds] to Wm. Low, the Scotland-based food retailer.

Wm. Low and the CWS, the UK stores group, had agreed to buy the stores and split them roughly 50:50 in terms of numbers. Low would have taken the larger stores and borne a greater proportion of the cost.

Gateway operates a conventional frozen food policy, but has recently given significant facings to Birds Eye's Healthy Options range. The supermarket leader, Sainsbury's, on the other hand, continues to offer its own range of Ready Recipes ("no artificial colors or flavours") with Toad in the Hole and Liver and Bacon. (UK mainstays, unsaleable anywhere else), alongside chicken supreme and rice, chicken lasagne, vegetable curry and rice, moussaka, and orange and lemon cheesecake.

In the catering and foodservice sector, one of the old stalwarts, Brake Bros., turned in a 22% increase in profits during 1989. Turnover expanded from 124.78m [pounds] to 145.35m [pounds], demonstrating again the virtues of concentration. A new food preparation factory is expected to be completed this year in Kent.

Japanese Taste Enhancers

Being Introduced in UK

Four Umami taste enhancers for meat, poultry, fish and vegetables are being introduced in Great Britain by RHM Ingredients Ltd., Toree Road, Leeds, West Yorkshire LS9 7R2 UK.

The enchancers were developed under a technology agreement with Nikken Foods, Japan's leading flavour house. The Umami range is just one of a number of Nikken products to be imported for applications in seafood, fish, vegetable and ready meal processing.

RHM, which boasts of having started the coatings craze with the slogan, "If it's edible, it's breadable," for its Pandora brand Japanese crumbs, plans to phase the new taste enhancers into its Functional Ingredients range of natural products. All are free of HVP and MSG to permit "clean" labeling.
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Title Annotation:frozen foods industry in the United Kingdom
Author:Kemp, Graham
Publication:Quick Frozen Foods International
Date:Jul 1, 1990
Previous Article:When it comes to frozen food trade, Japanese market is open to imports.
Next Article:Amidst all the talk of 'Euro-branding', ice cream and 'healthy' dishes in vanguard.

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