Healthy-eating trend and price issues driving frozen food market in Denmark: low-fat and organic products gaining favor. Many Danish consumers are going for upscale food on weekends, while consuming 'cheap and cheerful' meals during the rest of the week.
At least for the first half of 2008, consumers have generally continued to make purchases from both ends of the price spectrum, choosing gourmet items and delicacies for weekends and being guided by price on weekdays. While price remains a big factor, especially in the frozen food department, the health trend has shifted into an even higher gear.
The health kick has two basic drivers, low fat and organic. Both segments have seen growth, while producers have been able to come up with low-fat alternatives or have altered recipes. Obesity has been a topic that has generated a tot of discussion and media coverage in the past few years. Health awareness--with obesity at the core--automatically points the consumer in the direction of the fruit and vegetable section.
State and medical organizations have been promoting the idea of increasing consumption of these healthy, low-fat products. However, the consumer generally heads toward the fresh produce section and needs to be prompted to look in the freezer case of an outlet for fruit and vegetables. While there are in-store signals to lead the shopper to the frozen zone, weekly bargain flyers are a more effective tool.
At the same time, sales of frozen seafood products are reportedly up in connection with health. Other areas such as baked goods, meats and desserts remain somewhat stable, while pour-and-heat QFF products continue to be fine sellers. One item that has seen boom times in the past decade or so is frozen pizza, but sales may slide in the near future. TV reports mid newspaper articles have declared pizza to be one of the unhealthiest fast foods on the market, so some consumers will most likely shy away from it.
"The frozen food market is stable, which in a way is a positive word for flat, in that it is not moving much as we see it," said Hemming Van, chief executive officer of Daloon. "There is, however, some movement in our category, especially new products. We are classified under the ready-meals segment and this has been fairly positive for the past two or three years, with worthwhile volume increases within our range. One reason is presumably the fact that our products have a lower fat content than the standard range of certain types of meals." He reports annual growth of around 10% for the past few years.
"We are pursuing the opportunities that are open to us, and we are making progress," Van added. "The combination of frozen foods and the general trend toward health is what we are concentrating on."
Daloon is in the process of introducing a face-lifted range of four oven-bakeable spring rolls in Scandinavia. "We've redesigned the packaging and tweaked the recipe," said Van. The rolls have around 5-6% fat content and contain 40-50% vegetables. To catch people's eyes, the company has highlighted these features on its new packages more than they were on the old ones.
The packaging has relevant consumer information on the front of the packages, and the products have earned seals of approval for their improved health benefits from state-authorized institutions in Scandinavia. "We hope we can build up the market for them by 10% per annum," Van said. "In general, we've also reduced the fat content and worked on the flavors to reduce the amount of salt in products. We want to get below 30% fat content across the range."
Healthy Bodies--and Pocketbooks
Health in terms of balanced nutrition and the link to organic products will probably continue to be a buying factor for many Danish consumers. With advances made in organic production and a relatively high volume of produce coming from farms, these products can most likely sustain any moderate downswing from a sluggish economy. Products with health appeal have generally maintained their price levels, though in some cases margins can be somewhat improved.
"This is a price sensitive market," said Van. To be sure, a sizeable segment of the overall demographic is guided by price, and in the current economic climate price will most likely become more of a factor.
In trying to cover both ends of the market, retailers often use "deluxe" on the label and write low prices in big letters on other products. If consumers did more homework, they would discover the difference between some products is only price. In blind testing surveys done for the national TV station DR, with input from the national food research institution, consumers chose the cheaper product. In one case, deep-discount peas won 22 votes from consumer blind tasting panels, against 15 for a top-end product, which costs nearly double. Other analysis showed little difference between the contents of discount veggies and "deluxe" items.
The same survey showed that comparisons of the nutritional content in high- and low-end vegetables indicated very little difference. In some cases the two products were from the same chain. In a comparison of deep-discount Danish peas versus imported product from suppliers in Belgium, the nutritional contents were virtually identical, though the price difference was 40%.
The same study proclaimed that frozen fruit and vegetables contain nutrition that is on par with so-called fresh product. The Danish food research institution said there could be a 10-20% difference between frozen and fresh, but only if the produce was very fresh, which is rarely the case. On average, they said QFF was as good as or better than 'fresh' produce in supermarkets--a fact that is no surprise to OFFI readers, but is certainly not known by a lot of Danish consumers. If consumers did a quick web check, they would find the same statement on sites from the medical profession, consumer institutions, and state organizations--all independent of the Dozen food industry.
As Vail pointed out, however, people are definitely looking for heallhier alternatives, but the frozen segment is not the obvious place they go to find such products. QFF has unfortunately been too closely linked with prepared foods, which the consumer does not associate with health. Obviously, the truth is otherwise, but shoppers need to discover this. Packaging may proclaim health benefits or improved products, but the consumer needs to head for--or be drawn to--the freezer section to discover this. The industry needs to find a better means of getting the word out to the consumer.
Irma Remains the Innovator
The ignorance about QFF as a healthy alternative (or first choice), however, is not a universal rule as high-end buyers, and consumers who take an active interest in the environment/health or have social concerns, will head for the freezer for specific items. The Irma outlets--part of the Coop Danmark group--illustrate this.
Irma has had tremendous success with its overall organic program, with figures representing over 20% of total sales for the first half of this year, compared with around 16% for all of 2007. What's even more dramatic is how Irma has boosted sales of organic berries, vegetables and seafood by 95% between the two periods.
"Health is a prime reason sales are so good," Quick Frozen Foods International was told by Irma's chief purchaser Hans Christian Ipland. "Frozen is easy, and people are eating healthy foods. In the case of berries, consumers have been making smoothies with our organic berries because they don't want to use products that have been sprayed with various substances."
Irma has recorded solid increases in sales of organic seafood, fanned products that consumers are becoming aware of after initially confusing them with wild-caught fish. Salmon is the most popular selection.
"Seafood has been developing for some time. People have rediscovered fish," said Ipland. "Danes haven't been big fish eaters despite the fact we're surrounded by seas. And we can offer a broad selection."
Irma's lines of pour-and-heat vegetable mixes remain great sellers. Its selection is growing, and producers such as Nutana are keeping pace with consumer trends. "Demands are growing on a global level, so new products are available all the time," said Ipland, who stressed that "taste" is a major driving force behind sales.
Irma also has a decent selection of game year 'round--formerly it was only available during hunting seasons. The chain carries local game, venison, pheasant, and also more exotic items such as kangaroo and wild boar.
How Sweet it is: Private Label Dessert
In the dessert area, the retailer has had success with private labels and local brands. Most of the products are sold at a premium, but often appear on a dinner table to be homemade. There is also an Irma line of organic ice cream that contains fair trade ingredients such as sugar, vanilla, cacao and other items.
Irma uses its weekly flyers, which tell of cut prices, to promote QFE But Ipland said that most customers are aware of the products' quality beforehand and go for the bargains. According to the chief purchaser, price was generally at the core of everything 15 years ago. "People still look at the price, but if something is good it will cost, but it must be a fair price," he commented.
In-store promotions are also prominent in the freezer section. On the longer term, Irma will probably do away with the weekly flyers. "Along with environmental concerns, we don't see the flyers as a viable medium. We will probably go exclusively with the web," Ipland predicted.
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|Title Annotation:||EYE ON SCANDINAVIA|
|Publication:||Quick Frozen Foods International|
|Date:||Oct 1, 2008|
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