2015 has been a tough year for the major retailers whilst the discounters and premium retailers have gone from strength to strength.
Most retailers are finding growth hard to come by with costs falling both in terms of input prices and energy cost and, there are no signs of a bank rate increase anytime soon. Indeed inflation has been more benign than in living memory.
Despite those testing conditions to be able achieve value growth, frozen has managed throughout the year to show small but meaningful growth whilst other categories have struggled. Frozen is doing particularly well in home delivery and continues to build distribution, reach different consumers and increase the basket size resulting in impressive growth.
This year has seen impressive growth for the pizza category whilst ready meals are well and truly out of the doldrums. The desserts sector is thriving again and the weather whilst it has not been brilliant has been good enough for the ice cream sector.
In other countries frozen is facing the same challenges of low inflation, discounters winning the retailers price wars and consumer confidence still fragile. The USA has seen a significant investment in educating consumers about the benefits of frozen whilst in Germany the sustainability challenge is, once again, taking a higher profile.
Frozen continues to appeal as levels of innovation have grown, more aspirational but affordable products have come on to the market and consumers awareness of the amount of food wasted has become heightened.
As we look forward to 2016 the big four retailers are making major savings, reducing the number of SKU’s and embarking on new initiatives whilst the discounters continue to be the only players actively looking for more space and outlets. The level of home delivery continues to grow and indeed many predict major new entrants will come into the market.
So what’s the outlook for frozen? Well, from my perspective, I believe that frozen will continue to outperform other categories. The rationale for that is any expansion of home delivery benefits frozen. Immediately the bank rate increases and people have to pay more for their mortgages, disposable income will become squeezed again as indeed low income families will be with the changes to tax credits and under those circumstances value for money and minimising waste will become more important.
I am happy to be accused of bias but in times when large parts of the population are attempting to balance the books, and many more understand how immoral it is to throw away perfectly good food I have no doubt that the benefits frozen food can bring will become ever more relevant.
Brian Young, chief executive of the British Frozen Food Federation wrote this article for The Grocery Trader.
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