Frozen Foods Market Growth Despite Horsemeat Scandal and Improving Economic Environment

Frozen Foods Market Growth Despite Horsemeat Scandal  and Improving Economic Environment

According to Frozen Foods 2014, a new Market Report from market intelligence provider Key Note, the UK retail market for frozen foods grew by 2.9% in 2013. This was less substantial than in the previous 3 years, but is still impressive given the exposure of the horsemeat scandal in early 2013 and the gradual and sustainable economic recovery.
The latter is a potential threat to volume sales. Greater economic security will reduce the influence of price on consumer product choice, which is currently a major driver on sales of frozen food. In a Key Note commissioned consumer survey, conducted in January 2014, 50.2% of respondents claimed to buy frozen foods because they offered value for money. If money is no longer the primary concern, consumers are likely to trade up to fresh foods; the survey showed that 77.1% of respondents thought fresh foods tasted better than frozen. Yet the market still experienced growth in 2013 for two reasons. First, the economic recovery is gradual and many UK consumers still feel financially vulnerable. Secondly, companies are beginning to develop premium ranges, designed to exploit the desire for quality rather than value for money. The extent and effectiveness of this strategy will have a crucial bearing on this market as the economic recovery continues, but for now, growth in 2013 remains positive.
In terms of the horsemeat scandal, the Key Note commissioned survey indicates that 22% of respondents have reduced their consumption of certain types of frozen foods, such as ready meals, because of concerns about their contents in the wake of the horsemeat scandal. Consumer confidence in mass-produced food, particularly within overly complex supply chains, is still extremely low. Demand for frozen ready meals and processed red meats plummeted but slashed price selling techniques limited the damage somewhat. Moreover, the breadth and variety of the market for frozen foods, combined with the positive effect that the crisis had on the demand for frozen vegetarian foods, as well as poultry and fish, further prevented substantial loss. Provenance remains an important issue, particularly with regard to meats and ready meals, but if this trend is exploited, the affected sectors will have a successful year of trade in 2014.
In summary, given the threats of economic recovery and the horsemeat scandal to the frozen foods market in 2013, yearly growth of 2.9% is encouraging. These threats will continue to contribute to a changing marketplace over the next 5 years, but provided there is successful industry management, Key Note forecasts total market growth of 12.6% between 2014 and 2018.

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