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Norwegian frozen food market profile: steady upward pace & great potential.

Norwegian Frozen Food Market Profile: Steady Upward Pace & Great Potential QFFI from-the-field report portrays northernmost Scandinavian country as red-hot for frozen fish and vegetables. Far-flung population bases and distribution challenges, however, prevent deeper inroads.

Vegetables and fish dominate the Norwegian frozen food retail market. More than half of all sales in recent years has fallen into those two categories, and this does not include potato products whose movement continues to zip upwards.

Although tonnage does not compare to neighboring Scandinavian heavyweights Denmark and Sweden, Norwegian consumption of FF has demonstrated healthy gains each year of this decade. Consumption in 1987 was up 6.7% over the previous year, while sales through the first three quarters of 1988 indicate that the trend will continue.

Some 78,000 tons were sold in 1987, with the difference between retail and foodservice segments being only around 7,000 tons, in favor of the former. The per capita mark amounted to 18.7 kilograms. In spite of satisfactory growth, this number is just over half the figure for Denmark, a nation similar in many ways to Norway. The average Swede consumes a great deal more frozen foods as well. Why the big difference?

Norwegian distribution channels, with the exception of air transportation, are virtually the same now as they were a millenium ago when Vikings traversed the land. The only modern difference is that today there is asphalt on the roads. The national railway system is excellent, but it certainly could not be considered a network that covers the whole country. This means double handling of product.

Much of Norway appears to be made of solid rock. Settlements grew in the valleys and although one village may be only a few miles away from another as the crow flies, it would take a refrigerated truck hours to make the trip. And this is assuming that the road can structurally accommodate a heavy truck, and that it happens to be open in the winter when fresh produce is unavailable.

While Norway is one of the largest countries in Europe, it has one of the continent's lowest population density ratios. Hence frozen food sales in urban centers and mid-sized towns are disproportionate if viewed on a per capita basis.

Another factor that affects volume is trade barriers. Norwegian agriculture is an extremely protected industry. Quite simply: if food can be grown in quantities to supply the nation, then it is not allowed to be imported. Since harvests are unpredictable few can plan in advance for produce. Spur-of-the-moment sourcing is what's left, and this is ineffective and unprofitable. On top of this, only about 3% of the land is arable. To be sure, there is importation of certain vegetables such as broccoli and corn. But Norwegians tend to be very conservative in their eating habits, which is one reason why ethnic dishes have not taken off here as they have in neighboring countries.

"Norwegians are not quick to respond to foreign eating habits, even though 10% of the population goes to Spain annually on holiday," explained Liev Birkelund of Frionor, a leading frozen fish exporter. "It took people here a long time to acquire a taste for pizza."

Frozen pizza sales began about six years ago and have been rising steadily ever since, powering a 13.1% volume increase in baked goods from 1986-87. It has been said, though not documented, that Norwegians are the world's leading per capita consumers of frozen pizzas. However, the market has been flooded with scores of different products and new ones continue to enter the race. This factor may be adversely affecting sales. Some retailers interviewed by Quick Frozen Foods International reported excellent volume, while others said pizza turnover was slow. Producers in general were not pleased with the current situation.

Norway may be a few steps behind when one compares per capita consumption with other northern European countries, but by looking just at the domestic situation there, things seem very optimistic. New territories and markets are yet unclaimed and the Norwegian industry may not be as developed as others, but the means is certainly there. New products have inroads to cut, and likely will.

While the word "convenience" has great currency on the FF scene around much of the globe, it is of minor importance on the Norwegian market. While all frozens can be called convenient, the term has come to be associated with such items as ready meals and ethnic dishes. Neither is really established here, at least not on a national basis. Microwave oven sales took a giant step in the beginning, but present reports depict steady, but not great turnover of the appliance. Market penetration hovers at around 5%. This figure will undoubtedly go up in the future, and more compatible packaging continues to appear in stores, but the microwave march is apt to be relegated largely to denser-populated areas for quite a while.

A growing number of Norwegian households are becoming dependent upon income from two earners, which should help stimulate sales in many areas. However, QFFI heard repeatedly -- from both producers and retailers -- the word "traditional" used as a general description of what was moving well. This can include breaded fish fillets and frozen vegetable mixes which, while not included in the strict classification of "convenience items," in truth boast preparation times which are not much greater than true convenience products.

At a Domus Hypermarket in Honefoss, a medium-sized town an hour from Oslo, the assistant manager remarked: "Frozen food sales have been increasing evenly over the past few years, and two years ago we increased our freezer capacity from 36 running meters to 50."

Coffin-type freezers are utilized at Domus, with a length of approximately 10 meters each. Product arrangement varied with some by category and others by brand. Shelving separating two halves of a freezer displayed condiments to go with the FF. Signage, mostly handwritten posters hanging above freezers, announced specials. However, Frionor (a company that has a special arrangement with the retailer) had prominently-displayed signs featuring pictures of Monica Kristensen, the Norwegian woman who led a recent polar expedition.

The assistant store manager explained that vegetable sales were slow, which is usually the case in the summer when locally-grown produce is available. One product which he singled out as being a particularly good seller was Danefrost ready meal mixes of rice, vegetables and fish or meat that can be poured from a reclosable plastic bag and heated on a pan.

Norway, like most other industrialized nations, has become acutely aware of diet and health. However, there was little to suggest that advertisers were capitalizing on the "no-additive" attraction of FF. Since fish and vegetables have always been good sellers, not much would be gained by promoting the health angle of these items. What was missing was "low-cal" and "light" products, which are merchandised elsewhere as healthier alternatives to existing products, Through more sophisticated advertising campaigns, it ought to be possible to boost sales in this area, as well as ethnic fare and general ready meals.

At WM Westbys Mathus, in central Oslo, employees also reported the dominance of fish and vegetables in the frozen foods section. This outlet, one of a nine-store chain, is a fairly typical inner-city supermarket. It receives only around five or six new products annually, with some remaining in the assortment while others fail. The store manager said: "Baked and half-baked goods sell well, especially breakfast buns and dinner rolls. Lasagna, pizza and tacos have also taken off in the past five years."

Findus and Nora were the main brands in the freezer. Another noticeable feature here was how much freezer space was filled with larger packages. One-and-a-half kilo packs of pre-cooked Karbonade (meat patties), along with approximately 1,000 gram boxes of fish fillets, were being sold at rates slightly lower than smaller sizes. Other fish selections ranged from whole fish to breaded fingers or fillets.

Potato products took a substantial 13.5% retail volume leap between last year and this, as French fries accounted for the bulk of sales. Nestle recently launched an alternative to standard selections. "It is a patty made from grated potatoes for heating on a pan or in the oven," explained Pierre Goetschi, company president. "originally a Swiss recipe, I think it will fare well in our market."

Nestle manufacturers all frozen foods sold in Norway from domestic produce, with the exception of certain items such as broccoli, corn on the cob and orange juice. The company has gone into frozen pizzas, lasagna and other similar products. However, according to Goetschi, sales are not overwhelming due to the flood of products on the market. Meanwhile, sales of ready meals plod along slowly as well. About 15-20% of annual turnover is in seafood, or what Goetschi called "traditional products." But he added that certain areas such as breads, desserts and cakes are making headway. The only category to exhibit faltering sales, - 26.5%, was "miscellaneous," where sweets are placed. But on the foodservice end sales soared 35.7% in 1987.

Whether one calls it catering or foodservice, this is the area that has demonstrated the most growth. And it's a trend that is most likely to continue. The gap between retail consumption and foodservice has significantly narrowed over the past few years. In 1982 the split read 60/40, but by 1987 foodservice accounted for 46% of the FF market. While both segments have steadily increased in volume, foodservice has gained ground more quickly.

Restaurants account for the major portion of this as they have evolved from formerly being eating places strictly for special-affair occasions. Historically, dining spots were either renowned restaurants or "so-so" establishments. An across-the-board upgrade has been spurred by the opening of ethnic places, though these are almost exclusively found in major cities.

Throughout the 1980s tourism in Norway has boomed. North and South Americans as well as Asians have been visiting in record numbers, along with the more traditional, European vacationers. Their meal requirements have certainly helped push volumes upward, as has the opening of domestic and international fast-food chains. Foreigners' patronage adds to the volume that is prepared in commercial kitchens, but the natives are the core of this business as Norwegians are eating out more often.

Lunching habits have also changed. What once was largely limited to sandwiches has become an occasion to take hot meals that are usually quickly served. Lunch breaks on the job have been lengthened as well, giving many in the workforce time enough to eat out.

Roadside spots have also gotten much better over the years. This is aided both by increased tourism and greater mobility of the local population, which is shifting from train travel to automobile travel. Years ago these places were mostly "greasy spoons," but now cafeteria-style restaurants abound.

While retail FF sales rose 5.4% last year, another factor must be considered -- one that makes this figure look better. Spending habits have changed during the past generation in Norway. Traditionally there has been an equal 20/20/20 cut to food, housing and transportation. Now only about 18% of disposable income is allocated to food. Health plays a part in this, as people are eating less. But more Norwegians are taking holidays abroad, car ownership is up, and greater sums are being spent on housing. Naturally, paying for all this gobbles up a bigger portion of disposable income.

Statistics from the Norwegian Frozen Food Institute illustrate how positive trends in the FF industry are, and spokesmen will confirm this, along with optimism about the future. Low key gains have been made steadily for more than a decade, but there is so much room for expansion that present trends will likely continue moving upward.

PHOTO : Examining a wide variety of products ranging from single-servings to family-sized packs, a

PHOTO : customer makes a frozen food selection at an Oslo supermarket.

PHOTO : A typical coffin-style case at Domus Hypermarket. The store's freezer capacity has been

PHOTO : expanded in the past few years to handle increasing demand.

PHOTO : Hand-written signage dominates frozen food merchandising in the fish section of a

PHOTO : supermarket in rural Norway.
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Title Annotation:includes related article on shrimp harvest
Author:Ferro, Charles
Publication:Quick Frozen Foods International
Date:Jan 1, 1989
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