ETHNIC FOODS – A tasty business to be in – the comment from the grocery trader

chaz1The UK market for ethnic cuisine is sizeable, with a retail value in 2008 of over £1.3 bn according to research experts Mintel, following a growth of nearly 15% in current prices. In real value terms, the market has not kept up with inflation, dropping 2%.

Ethnic cuisine is extremely popular in the UK, with 83% of adults claiming to enjoy Chinese and 71% Indian cuisine. Restaurants and takeaways have played a major part in establishing these cuisines as popular ethnic styles. More recently, long-haul travel, innovations from manufacturers and retailers and developments such as a rise in cooking from scratch have helped further stimulate the market.
Nevertheless, ethnic cuisine faces stiff competition from other styles, with Italian, for example, outperforming the likes of Chinese and Indian in the ready meals segment.

Ready meals have historically been a popular way to eat ethnic food. However, in line with the wider decline in ready meal consumption, demand for ethnic ready meals is falling back – sales fell almost 6% from 2003/08 – as growing numbers of consumers look for more authentic products. Cooking sauces and accompaniments/seasonings are currently the main beneficiary of this development, assisted by the wider trend towards cooking from scratch.

Manufacturers of ethnic food are responding to these trends placing greater emphasis on product quality and provenance as well as broadening their ranges. Cost and authenticity are the most important decision factors when purchasing ethnic cuisine, making these areas a priority for the retail sector.

With the impact of the recession, ‘value’ ethnic lines are expected to be profitable as well as those lines that target family mealtimes. Opportunities also exist to improve frozen meal sales, as more consumers are turning to the freezer aisle to do their grocery shopping.

The ability of other cuisines to break into a market where Chinese and Indian are embedded will become more important. Mexican and Tex-Mex appears to be achieving this, but only after very heavy promotional support from manufacturers. Thai is a good example of a cuisine that has a strong following, but one where this following is not enough to prevent it being subject to competition from established and emerging styles.

Authenticity will continue to be a major issue in ethnic foods, as increasing amounts of so-styled ethnic products are made here, tailored to the UK audience’s taste buds. Another factor is that increasingly the demand for quality will be joined by a demand for healthy and functional ethnic cuisine. This brings interesting opportunities for NPD, but manufacturers need to be aware that not all consumers will pay a premium for ethnic foods to eat at home.

The Grocery Trader