A Review of the
UK Food Market
Contents
Summary… 3
1 Introduction… 5
2 Market Overview… 6-11
2.
1 Production and Sales… 6
2. 2 Consumption and Expenditure… 7
2. 2.
1 Population… 7
2. 2. 2 Spending… 7
2.
2. 3 Eating and Cooking Habits… 8
2. 2. 4 Eating Out… 9
2.
2. 5 Regional Variations… 10
2. 2. 6 Attitudes to Local Produce… 11
3 The Size of the Market…
12-40
3. 1 Dairy, Eggs and Yellow Fats… 12
3. 1.
1 Milk… 12
3. 1. 2 Cream… 13
3. 1.
3 Cheese… 13
3. 1. 4 Butter and Non-dairy Yellow Fats… 13
3.
1. 5 Ice Cream… 14
3. 1. 6 Yogurt and Chilled Desserts… 14
3.
1. 7 Eggs… 15
3. 2 Meat and Poultry…
15
3. 3 Fruit and Vegetables… 18
3. 3. 1 Overview… 18
3.
3. 2 Potatoes… 19
3. 3. 3 Fresh Vegetables… 20
3.
3. 4 Fresh Fruit… 22
3. 3. 5 Processed Fruit and Vegetables…
24
3. 3. 6 Exotics… 25
3. 4 Fish… 26
3.
5 Bread, Cakes, Biscuits and Cereals… 28
3. 5. 1 Bread and Morning Goods…
28
3. 5. 2 Cakes… 28
3. 5.
3 Biscuits… 28
3. 5. 4 Breakfast Cereals… 29
3.
6 Ready Meals, Soups and Sauces… 30
3. 6. 1 Ready Meals…
30
3. 6. 2 Sauces… 31
3. 6. 3 Soups…
31
3. 7 Savoury Snacks… 31
3. 8 Baby Foods…
32
3. 9 Confectionery… 32
3. 10 Traditional, Speciality and Gift Foods… 32
3. 11 Nutraceuticals…
33
3. 12 Organics… 34
3. 13 Drinks… 35
3.
13. 1 Overview… 35
3. 13. 2 Beer…
36
A Review of the UK Food Market 2
3. 13. 3 Cider… 36
3. 13. 4 Wine…
37
3. 13. 5 Spirits, Liqueurs and Fortified Wines… 38
3. 13.
6 Flavoured Alcoholic Beverages… 38
3. 13. 7 Soft Drinks…
39
3. 13. 8 Hot Drinks… 40
4 The Catering Industry…
41-46
4. 1 Hotels… 41
4. 2 Restaurants…
41
4. 3 Fast Foods and Takeaways… 42
4. 4 Pubs… 43
4.
5 Contract Catering… 44
4. 6 Tourism Catering… 44
5 Conclusion… 46
References… 47-48
A Review of the UK Food Market 3
A Review of the UK Food Market
Summary
ss Developments in technology and policy during the 1990’s led to huge changes in
the food industry.
Businesses became increasingly globalised and automated
and, as a result of mergers and acquisitions, the main players became larger,
fewer and accordingly more dominant but also more efficient.
ss At the same time the UK population has been growing and becoming older as life
expectancy increases and birth rates decline. More women are working; families
spend less time eating together and the number of single person households
continues to increase. This, coupled with rising affluence, has led to massive
demand for quick, convenient foods that require little preparation and an increase
in eating out of the home, both in catering establishments and ‘on the hoof’.
Although still firmly entrenched in traditional British tastes, the nation’s food has
become increasingly cosmopolitan. However, significant differences remain
between the UK’s eating and drinking habits and those of our European
neighbours.
ss Food prices have increased at a greater rate than general retail prices, but as
disposable income increases, spending on food accounts for a smaller proportion
of the average household budget. Farm gate prices have not increased at the
same rate as retail food prices. Competition from imports and the strength of
Sterling against the Euro appear to be the main factors forcing downward
pressure on prices.
ss Some of the increase in the volume of imported foods is due to increased
consumer demand for all year round availability of certain fresh foods and wide
variety and choice.
ss Primary production in the dairy and meat industries is currently difficult. The price
paid to UK milk producers is the lowest in the EU. Increasing consumer demand
for processed meat products, rather than fresh meat, is often met through
imported raw ingredients.
ss The desire for convenience also affects the market for fruit and vegetables.
Sales of processed potatoes, such as oven chips, have increased at the expense
of fresh potatoes and, again, a large proportion of this market is being met by
imports. Exotic fruit and vegetables are gaining in popularity at the expense of
indigenous produce; often due to their ease of preparation and / or quick cooking
time and their suitability for use in exotic recipes.
ss The UK market for fresh fish has been one of the most successful in recent years
although, yet again, the increase in demand has been for varieties not found in
UK waters. Farming of salmon has increased its availability and decreased its
price to the extent that it is now the most commonly purchased fresh fish.
ss In all processed food sectors, variety and convenience is of paramount
importance. Individual sub sectors have developed, catering for the needs of
those looking for ‘healthy’, premium quality, organic, children’s or good value
products. New products and packaging ideas and new marketing angles (notably
in own-label ranges) are continually being introduced, although core products
with established brand names remain firm favourites with the UK population.
ss The drinks industry is the focus of much innovation and opportunity and is a
A Review of the UK Food Market 4
significant growth area, although some of the traditional drinks such as beer,
sherry, tea and coffee have experienced decline.
Convenience is important to
consumers because an increasing number of drinks are bought for out of home
consumption and this is the market in which the best returns are obtained.
ss The boundaries between out-of-home and in-home eating are blurring as
supermarkets offer ready-cooked, hot or ready-to-heat meals, and restaurants
offer takeaways or home deliveries. As a result, the growth in the fast food and
takeaway sector has been slowing after rapid growth in the 1990’s.
ss Mid-market hotels and restaurants appear to be finding the current market place
difficult as budget options and fast foods take the lower end of the market and
premium up-market offerings become more affordable to those in the middle
income bracket whose disposable income is increasing. Many pubs are offering
food as a means of compensating for falling income due to a decline in sales of
alcoholic drinks.
ss The best performing sector of the catering industry is currently the contract
catering sector.
ss Plenty of scope exists for the catering sector to exploit opportunities offered by
the tourism industry in a more focussed manner.
A Review of the UK Food Market 5
A Review of the UK Food Market
1 Introduction
This research has been carried out as the first part of a two part project between
Cornwall Taste of the West and Cornwall Agricultural Council. The complete project
is intended to reveal current market trends within the whole of the UK food industry
and to assess where the food industry in Cornwall and the Isles of Scilly sits within
that market.
This part of the study looks at the whole of the UK food market. It is a review of
recently published data, intended to provide not only an overview of the market,
examining both production and consumption trends, but also an analysis of the size,
value and scope of individual market sectors.
The second part of the project is a separate study of food production, distribution
and processing in Cornwall and the Isles of Scilly, and is believed to be the first
study to look to this extent across the whole of the food production spectrum in one
geographical area of the UK.
The full findings of that part of the project are
published separately (Reed et al, 2003). A further report (Huxley, 2003) provides a
summary of the combined results of both parts of the project and considers the
implications for the food industry in the area.
The aim of the project is to provide data that might guide the food industry within the
Objective One area of Cornwall and the Isles of Scilly and the organisations that
support it. This report can be used to assess the market potential for Cornish foods
and to identify strengths, weaknesses, opportunities and threats. It covers all the
main areas of food production carried out in the area and includes data on parts of
the food processing industry that it is felt might, or potentially could be, of relevance.
A section on the catering industry is also included, with emphasis on the relationship
between tourism and catering, because of the significance of tourism in the area.
The report does not offer in-depth analysis of each sector or sub-sector. To do so
would create a lengthy and unwieldy document. Its value is in its breadth rather
than its depth; and its provision of information in a concise and accessible format. It
is well known that those working within one sector of the industry tend to focus on
that sector alone.
This report seeks to encourage readers to take a look at the
whole spectrum of the food industry; to make comparisons and perhaps identify
opportunities for working in new ways or with new partners.
Note: The content of the report is intended to be of relevance to the Objective One
area of Cornwall and the Isles of Scilly. For ease of reading, the terms ‘Cornish’ and
‘Cornwall’ are used extensively, but are intended to apply to the products and the
industry of the whole area, including the Isles of Scilly.
A Review of the UK Food Market 6
2 Market Overview
2. 1 Production and Sales
According to Key Note (2002 a), production of food commodities in the UK is
increasingly being replaced by a manufacturing industry which concentrates on
processing and adding value to raw ingredients. This has led to a situation where
the UK is a net importer of food, with a trade deficit in the region of lb 10.
65 bn in 2001
and food imports accounting for almost three times the value of exports.
The manufacturing and processing industry is itself consolidating and participants
are becoming fewer and larger, due to an increasing number of mergers and
acquisitions. Key players have developed vertical alliances as a means of retaining
control and streamlining operations through all stages of the production cycle,
thereby increasing profitability and effectiveness.
Retail food prices are currently increasing at around 3% – about double the rate of
inflation, although this is by no means the case throughout all sectors. In 2001,
lamb, pork, dairy produce, fresh fruit and vegetables and bread all increased in
price, whereas beef, fish and potatoes showed little change. Total retail food sales
in the UK in 2001 amounted to almost lb 100 bn.
The best performing sectors overall during the five years 1997 – 2001 were bread,
cakes, cereals and biscuits and fish and fish products. Ready meals, pizza and
cooking sauces also did well. Fruit and vegetables now account for a 27% share of
the market – for the first time replacing meat, which has previously always attracted
the largest market share.
Many organic conversions were completed in the UK during 2001, increasing the
area under organic cultivation by 133%.
This led to an increase in UK supply,
particularly in the meat sector. However, this was not matched by increased
demand and organic meat and milk were both sold into the mainstream food market
without any price premium. Imports of organic food reduced by 5% from the
previous year, but nevertheless remained at 70%.
The downturn in the performance of specialist and independent stores halted in
2001. Greengrocers, butchers, fishmongers and bakers all saw an upturn, with
greengrocers doing particularly well.
Mintel (2003) confirms these findings and
states that in 2000 the value of sales through small food businesses grew by 3. 8% –
the highest recorded growth in recent years – whereas the growth in the value of
sales through large food businesses declined to around 3-4% from 6-7% during the
1990’s.
Young (2000) reports that petrol stations attract an increasing number of food
shoppers, with some reporting as much of 25% of their trade coming from non-petrol
purchasing customers and up to 16% of customers arriving on foot.
Recognising that their customers tended to be looking for top-up and last-minute
food purchases, the independents have led the development of the convenience
store format, where small stores incorporate convenient and attractive features,
such as off-licence, bread baking and hot ready meals facilities alongside extended
opening hours. This move has not gone unnoticed by the major supermarkets, who
are fast developing their own presence in this field and returning to town and city
A Review of the UK Food Market 7
centres.
2.
2 Consumption and Expenditure
2. 2. 1 Population
The UK population is set to increase by over 2 million to almost 62 million over the
next 10 years. Increased life expectancy and declining birth rates are leading to an
increasingly elderly population and this trend is set to continue as the large numbers
of ‘baby boomers’ reach retirement age. Eventually there will be fewer people of
working age, which will impact on the Government’s ability to provide a state
pension for the increasing numbers of retired people.
For those unable to make
alternative provision, retirement may therefore also mean becoming accustomed to
a substantially reduced disposable income. Furthermore, an increasing number of
people will enter retirement without dependents or partners, and this will lead to an
increase in the numbers of elderly people living alone. And as those people become
unable to manage on their own, the need for residential care will increase.
As fewer and fewer people choose to marry or settle with a partner, or do so at a
later age, and more of those who do marry become divorced, the number of younger
adults living alone will also increase, although this will be balanced in part by the
number of young adults forced to remain living at home with parents, due to the
predicted shortage of affordable housing, particularly in rural areas.
2. 2.
2 Spending
Key Note (2001) states that spending on food is rarely sacrificed for other spending,
except in very low-income households. However, as disposable income increases,
so do both expenditure and consumption. There is a limit to consumption of course,
but even when this limit is reached, per capita expenditure on food continues to
increase with disposable income level. In other words, with increasing wealth,
people not only choose to eat more, but also choose more expensive food.
Even
so, wealthier households spend a smaller proportion of their disposable income on
food than the less well off, as their increasing wealth allows them to spend more on
other luxuries.
With increasing affluence and a relatively stable economy over recent years, the UK
has seen the shift take place in food purchasing patterns towards increasingly
expensive food items rather than the more ordinary. However, food expenditure as
a proportion of overall expenditure has decreased to less than 10%. According to
Key Note (2002 a), people in the UK spend less of their disposable income on food
than any other European country.
A Review of the UK Food Market 8
2. 2.
3 Eating and Cooking Habits
Key Note (2001) also considers that there are four main factors that influence eating
and cooking habits: –
ss Supply / availability
ss Price / affordability
ss Time
ss Knowledge
It is worth mentioning, however, that consumers themselves are not always aware of
what it is that influences their decisions. For example, whilst ‘greater awareness of
dietary requirements and effects on health’ is cited by consumers as the most
important factor that has a lot of influence on their eating habits, the data provided
throughout this report indicates that eating habits bear little resemblance to dietary
recommendations and this is substantiated by the population’s increasing obesity.
On the other hand, as few as 15% agree that the availability of different ingredients
and foods affects their eating habits, when it is the widening range of foods made
available to the UK population through global trading that has probably had more
effect on food purchasing habits than anything else in the post-war years.
Price and time are two factors that are interdependent when it comes to food habits.
The increasing number of women working and / or opting not to have children has
been one of the contributory factors in increasing wealth. However, because this
means that households can afford to spend more on food but have less time in
which to prepare it, the use of ready meals and ready prepared ingredients has
soared.
Today’s lifestyle places less emphasis on the family unit and family mealtimes are
becoming a thing of the past. The use of microwaves and the availability of single
serve sizes of prepared or quick to prepare foods enable family members to prepare
their meals individually. According to the British Potato Council (2002), 47% of
adults eat their main meal in front of the TV and Key Note (2002 a) states that 40%
of adults eat their evening meal alone.
The three-meal day is also becoming eroded. Key Note (2001) suggests that it is
increasingly replaced by the five-snack day, and identifies the main snacking
occasions as follows:
ss The early morning commuter rush
ss Mid morning
ss Lunch time
ss End of the school day
ss Return home from work.
The British Potato Council (2002) highlights 10-11 pm as the most common time for
in-home snacking and 1-2 pm as the time when most snacks are eaten outside the
home. In-car snacking, or ‘dashboard dining’ is a growing trend.
Where people do eat three meals a day, their content is changing. The British
Potato Council (2002) finds that consumption of the traditional English breakfast of
bacon and eggs declined by 23% between 1990 and 2000 whilst consumption of
cereals and yogurts increased and products like croissants, bagels and crumpets
are increasingly eaten as substitutes for bread and toast.
Breakfast is no longer
always eaten at home. Cereal bars and breakfast offerings from fast food outlets,
A Review of the UK Food Market 9
such as McDonald’s, provide solutions for ‘on the hoof’ breakfast. Alternatively,
breakfast can be bought en-route and eaten on arrival at work. This habit has given
rise to a new eating occasion – ‘deskfast’.
According to the British Potato Council (2002), the working environment is the main
driver of lunchtime food choice. Lunch is the main meal of the day for 13% of the
population. Most people eat sandwiches for lunch, although the home prepared
lunch box is being replaced by shop-bought sandwiches. The market for lunchtime
catering out of the home was worth about lb 22 bn in 1999.
Key Note (2002 a) finds
that there is a revival in interest in hot lunches, possibly because more hot snack
alternatives are available.
People now look for convenience when it comes to the evening meal and have
responded eagerly to all time-saving innovations, whether they are prepared dishes
or sauces, home meal replacements which include all the meal components ready
prepared, or one of the latest ideas – a pack of measured, part-prepared ingredients
with instructions for converting them into a luxury meal, for those who wish to feel
they are cooking from scratch but are lacking either the time or skills to do so.
As generations become accustomed to meal solutions such as these, their
understanding of what represents a home-cooked meal has become somewhat
blurred. For example, 60% of respondents to a British Potato Council survey felt
that chicken nuggets and baked beans could be classified as such and 59% felt the
same about pasta and prepared sauce (British Potato Council, 2002).
Two generations are now growing up without having acquired the knowledge of
cooking as an essential skill.
In recent years, TV chefs have done much to promote
cooking, but this has raised it to something akin to hobby status. As a result people
are spending more time on meal preparation at the weekend, when cooked
breakfasts are becoming more popular once again and meals are cooked from
scratch using only authentic ingredients. However, cooking is one of many hobbies
that have to be fitted into a limited amount of leisure time and mealtimes at
weekends remain adaptable to accommodate whatever other activity is taking place.
2.
2. 4 Eating Out
Eating out is another definition that is becoming blurred, as the multiple retailers and
convenience stores offer take-home meals and ready-to-eat hot foods. However,
the British Potato Council (2002) estimates that approximately 35 p of every lb 1 spent
on food is now spent on out-of-home eating and that nearly 30 m people eat out at
least once a week.
Such a wide range of catering outlets now exists that people can eat out at virtually
any time of the day and the snacking trend is well catered for.
Eating out for snacks
is especially popular with younger consumers who enjoy doing so whilst shopping
(especially in out-of-town centres) or straight after work (Key Note, 2001).
Eating out is explored in more detail in Part 4.
A Review of the UK Food Market 10
2. 2. 5 Regional Variations
Mintel (2001 a) produced a report which analysed differences in eating and drinking
habits in the different regions of the UK. The South West is incorporated in an area
that includes Wales and the West of England in the study, so the figures cannot be
relied on for total accuracy, but as the demographics of Wales are not dissimilar to
Cornwall’s – being rural, remote, and having a strong agricultural focus and an older
population than the national average, the key findings are worth reporting.
Household expenditure on food in the region is average for all the regions outside
London and the South. Spending on meat is fairly high, although only when taking
into account both carcass and processed meat. Purchases of carcass meat alone
are around average levels, so it is the spend on processed meat that is high in the
region. Consumption of eggs is low. Expenditure on, and consumption of fruit,
confectionery, alcohol and soft drinks is high. An average of 415 ml alcoholic drinks
per person per week is consumed and is second only to Scotland’s consumption.
On average, each person in the region drinks almost 1. 5 litres of soft drinks per
week; the highest consumption levels anywhere in the UK. Consumption of fish, at
134 g per person, per week, is low compared to the national average, although it
would be worth more investigation to see if this figure is any higher specifically in
Cornwall where fishing is one of the main industries.
People in the West and Wales eat more meat and meat products when eating out
than other regions and, again, the least fish, although the same comment applies
here about the need for more localised information. Consumption of alcohol and
soft drinks out of the home is in line with other regions and does not appear to
reflect the high levels of household consumption.
The population mix in the region is reflected in eating and cooking habits.
People in
the region prefer to stick to traditional cooking or recipes, whereas nationally the
preference is for cooking to be mainly traditional, but with occasional
experimentation. Fewer people than anywhere else in the UK responded positively
to the statement ‘I never cook’ and a high number of people say that they always
cook from scratch. Nonetheless, a fairly high number of people also claim to eat
microwaved evening meals.
The West and Wales have the fewest dieters, the most meat eaters, the least child
influence and the highest number of people eating lunch as their main meal of the
day.
A Review of the UK Food Market 11
2. 2. 6 Attitudes to Local Produce
Since the late 1990’s, farmers’ markets, farm shops and the Internet have opened
up distribution channels for the marketing of local foods and much attention has
been given to the benefits of buying food from a local source. Mintel (2003) carried
out research to ascertain how much consumer support exists for the concept of
buying locally produced foods and found that although support is dominant in
distinct categories of consumer, the situation is by no means straightforward.
About 12% of the population are keen, or even fanatical, local or British produce
buyers, and their numbers increase with both age and social status. On the other
hand, 47% of the population are carefree, buy anything, anywhere buyers.
Those
who are least likely to notice the origin of foods or for whom origin plays no role in
their food purchasing decisions are the under 25’s, one-person households under 65
and ABC 1 families. Convenience takes precedence over origin for full time workers
and financial considerations take precedence for the less well off.
23% of the population use farmers’ markets and / or farm shops and do so primarily
in order to support their local economy and because they find the produce fresher.
The over 45’s and ABC 1’s demonstrate a preference for their local produce,
although those within social group E are also supportive. This group tends to find
supermarkets expensive and are likely to cook from scratch. Therefore they may
well be searching for sources of good value primary ingredients at farmers’ markets
and farm shops.
C 2’s show least interest in local produce.
Those who use a local grocer are the most likely to be loyal and discerning when it
comes to local or British produce. Many shoppers claim to try to buy produce of
British or local origin, but will freely substitute with foods from abroad if local or
British equivalents are not available. 14% of the population still has difficulty in
locating their local products.
Those who are most likely to demand local or British produce are also those who
demand year round availability and choice. Both of these desires increase with
social status, even though they may conflict in principle.
Those who shop for food at
Marks and Spencer, for example, are the most choosy and demanding on all counts.
A Review of the UK Food Market 12
3 The Size of the Market
This chapter details the size and scope and recent trends within individual sectors of
the food and drinks industry, selected because of their relevance or potential within
Cornwall and the Isles of Scilly.
3. 1 Dairy, Eggs, and Yellow Fats
This section deals mainly with the dairy industry, but includes other yellow fats
because of their common use as dairy alternatives.
According to Key Note (2002 a), the total market for all these products is valued at
almost lb 9 bn and still grows at around 2. 5% each year, although this figure hides
disparities in growth between the different component sectors of the industry.
The
information in this section is sourced from Key Note (2002 a) except where specified
otherwise.
3. 1. 1 Milk
Retail milk prices are lower in the UK than virtually anywhere else in the EU. They
did increase by 6. 4% in 2001, but price cuts and record production levels in 2002 led
to further difficulties in the UK liquid milk industry achieving realistic prices.
About 50% of milk supply is used for liquid milk consumption and about 60% of all
liquid milk sales to households are via the multiples. According to the Dairy Council
(2003), 17% is still sold through doorstep delivery and 15% through other retailers.
Imports of liquid milk in 2000/2001 were about 100 million litres less than in 1995/6
and most household consumption in the UK is satisfied by domestic supplies.
The number of UK dairies continues to fall as production becomes concentrated
around larger enterprises which can afford to invest in new equipment and satisfy
the demands of the multiples.
Combined UK per capita consumption of liquid milk and cream has remained
relatively stable over recent years at around 2 litres per week. However,
preferences have changed and pasteurized, semi-skimmed milk now accounts for
about half of all household consumption and continues to increase in popularity.
Whole (standardised) milk accounts for 29% of the market and skimmed milk takes
a 15% share (Dairy Council, 2003). UT long-life milk is also increasing in
popularity and now accounts for 8% of the market.
Relatively new products such as flavoured milks and vitamin- or mineral-enriched
milks are experiencing growth and offer good prospects. Seymour Cooke (2002)
estimates this market to be worth lb 80 m and growing by about 1% per year.
Although flavoured milks were originally created for the children’s market, some are
now being aimed at adults.
Organic milk production rose to 70 million litres in 2001 – about 1% of total UK
production. However, insufficient demand led to about half this quantity being sold
into the standard milk market without any price premium.
A Review of the UK Food Market 13
3. 1. 2 Cream
According to Seymour Cooke (2002), 275 million litres of cream are produced in the
UK each year.
Key Note (2002 a) estimates annual consumer spending on cream to
be about lb 165 m and this figure has barely changed over the past five years. It is a
difficult market. Its high fat content does not make cream easily marketable as a
commodity item and it does not lend itself to new product development. A few
flavoured cream lines have been developed, but by and large cream is bought either
as a cooking ingredient or as an accompaniment and tends to be reserved for
special occasions.
Although the retail market is challenging, more opportunities might lie in the food
processing and catering sector as consumer habits for eating out and for buying
ready prepared foods increase. These are occasions on which consumers look for
treats and in this market place the luxury or indulgent qualities of cream can be used
as a marketing tool.
3. 1. 3 Cheese
Retail sales of cheese in the UK in 2001 amounted to 335, 000 tonnes, worth an
estimated lb 1. 7 bn – a growth in value of over 9% since 1997.
Cheddar accounts for
around 60% of all cheese sales, but there is evidence that consumers are becoming
more sophisticated in their tastes and premium varieties, blue cheeses and regional
and speciality products are becoming more popular. Soft cheeses now take a 15%
share of the market. Own brands have 80% of the hard cheese market but brands
do well in the processed sector (Key Note, 2002 a and Seymour Cooke, 2002).
Seymour Cooke (2002) estimates new products aimed at the snacks and lunch box
market to be worth lb 160 m a year. Half of these products are aimed at children.
Total UK annual per capita consumption of cheese is 9. 7 kg – a little over half the EU
average of 18 kg per person (Seymour Cooke, 2002). Key Note (2002 a) finds that
most households use 250 g or less of block cheese per week. Retail sales account
for only about two thirds of consumption. The remaining third is sold through the
catering industry and the public sector.
Cheese is the leading dairy import and most imported cheese comes from the
Republic of Ireland (Key Note, 2002 a).
3. 1. 4 Butter and Non-dairy Yellow Fats
According to Key Note (2002 a), consumption of block butter is in long term decline
and spreadable butter now accounts for about one quarter of all butter sales, even
though it is more expensive. Spreads and margarine together account for over 60%
of the total yellow fat sales, although butter still retains the largest single sector of
the market with a 38% share.
There is little brand loyalty in this sector – consumers
appear to shop on price and will therefore respond to price promotions.
The total yellow fats market is worth lb 830 m and growth in value does not keep pace
with inflation, due to falling butter prices and keen competition in the spreads sub
sector.
Less than half of all households use butter, whereas almost 60% use soft
margarine. Butter consumption increases with age and social class and
consumption of margarine and spreads decreases within these groups accordingly.
There is little significant regional variation in the use of butter and other yellow fats.
A Review of the UK Food Market 14
Seymour Cooke (2002) attributes the decline in household consumption of yellow
fats to the decline in home sandwich making and home baking rather than a trend
towards a reduction in overall fat consumption.
3. 1. 5 Ice Cream
Seymour Cooke (2002) states that retail sales of ice cream in the UK in 2001
amounted to 520 million litres, worth nearly lb 1. 2 bn.
This equates to consumption of
8. 8 litres per capita per annum. Consumption volumes are stable and comparable
to consumption levels in Italy, Ireland and Germany. Premium, luxury and children’s
products are the current growth areas.
According to Westbrook (2002), the premium ice cream market is not yet saturated,
but constant new flavours and innovation are needed. Emphasis in 2002 was on
alcohol-based flavours. Ice cream is another dairy product that has grown up and
become a luxury, indulgent, adult product; often marketed as intimate, for couples to
share. Regional products can be part of this market, but must have quality if repeat
purchase is to be guaranteed. Variations in packaging sizes can be used as a
marketing tool.
3. 1. 6 Yogurt and Chilled Desserts
Key Note (2002 a) states that this sub-sector of the dairy industry is currently looking
healthy following some rationalisation which has cured the overcrowding that had
been developing. It has shown better growth than other parts of the dairy industry –
13% between 1997 and 2001 – and currently growing at around 5% per annum.
Seymour Cooke (2002) estimates market volume to be 600, 000 tonnes, which
amounts to 10 kg per person per annum; worth just over lb 1 bn.
New product development is prominent in this sub-sector and has reacted to
consumer trends appropriately, introducing products aimed at the snacking market,
single person households and children as well as meeting demand for ready
prepared, luxury products.
The value of the sub-sector has increased consistently
alongside these trends in innovation and adding value, and Seymour Cooke (2002)
forecasts that both value and volume will continue to rise. There has been some
decline in the market for ordinary low fat and natural yogurts as people opt for luxury
lines.
Key Note (2002 a) states that yogurts make up 55% of the market, other chilled
desserts take a 28% share and fromage frais accounts for 17%. Seymour Cooke
(2002) estimates that organic varieties of yogurt take 3% of the overall market.
Drinking yogurts are a dynamic growth area and confectionery brand names are
becoming more and more prominent in the chilled desserts ranges (Seymour
Cooke, 2002).
A Review of the UK Food Market 15
3.
1. 7 Eggs
Key Note (2002 a) reports that the egg market is in long term decline. Household
per capita consumption is about half that of 1985 levels and currently stands at
around 1. 75 eggs per week. This is again indicative not only of changing tastes but
also of the decline in home preparation of food and home baking.
The value of the egg market is lb 525 m – the same as 1997.
Eggs from caged birds
still account for over 70% of the market, although there has been interest in free
range and organic eggs and, a more recent introduction, eggs from specific breeds
of hen.
3. 2 Meat and Poultry
The data on which the information in this section is based has been taken from Key
Note (2002 a) except where stated otherwise.
The problems associated with UK farming have been well documented and are not
discussed in any detail here. However, the following tables clearly illustrate the way
in which all UK red meat production has declined over the past 5 years.
The effects
of swine fever in 2000 and foot and mouth disease in 2001 are also evident.
However, one of the most noticeable trends is the all round steady decline in the
export market for UK meat which, although enforced at times of crisis by either our
own export bans or other countries’ import bans, can also be attributed to the
strength of Sterling and a lack of confidence in UK produce. This has been coupled
with an increase in the quantities imported, so farmers have not only lost their export
market but have to compete for the domestic market.
Table 1: UK Supplies of Beef and Veal, (000 tonnes) 1997-2001
1997 1998 1999 2000 2001 p
UK production 698 700 679 706 646
Plus imports 217 152 183 196 262
Less exports 13 9 11 9 8
Stock change -45 16 83 21 1
Total 857 859 934 914 901
Table 2: UK supplies of Mutton and Lamb, (000 tonnes) 1997-2001
1997 1998 1999 2000 2001 p
UK production 351 386 403 391 270
Plus imports 152 142 137 134 113
Less exports 141 147 154 134 43
Stock change -2 0 1 5 1
Total 360 381 387 396 341
A Review of the UK Food Market 16
Table 3: UK Supplies of Pork, (000 tonnes) 1997-2001
1997 1998 1999 2000 2001 p
UK production 888 931 831 725 610
Plus imports 177 190 235 274 258
Less exports 248 292 235 208 39
Stock change -2 -2 3 7 4
Total 815 827 834 798 833
Increasing demand for poultry meat has seen year on year growth with UK
production holding its own.
However, imports have increased whilst exports have
declined and, although the proportions are much smaller than in the red meat
industry, there is no room for complacency. Poultry meat now accounts for almost
double the tonnage of beef and five times the amount of lamb consumed in the UK.
Table 4: UK Supplies of Poultry Meat, (000 tonnes) 1997-2001
1997 1998 1999 2000 2001 p
UK production 1, 520 1, 545 1, 525 1, 513 1, 568
Plus imports 277 316 349 355 335
Less exports 213 197 187 174 182
Stock change -24 -15 9 13 -8
Total 1, 560 1, 649 1, 696 1, 707 1, 713
Data source – DEFRA. Tables 1-4 reproduced from Key Note (2002 a)
p = provisional figures
Consumer expenditure on meat in 2001 amounted to lb 12. 15 bn, a drop of 1. 4% after
increases during 1999 and 2000.
Although this was partly attributable to a drop in
consumption, this was minimal at around 26, 000 tonnes. The most significant factor
was the drop in beef prices. Pork and lamb, on the other hand, saw increases in
price, (lamb by as much as 8%) because the drop in domestic production due to foot
and mouth disease was not matched by imports. Poultry prices have been relatively
stable.
Consumers appear to have been less sensitive to the various traumas that have
affected the meat market and other factors that might have affected their buying
patterns than might be expected. Over the past five years, there has been overall
growth in real terms in the value of the UK meat market, even allowing for the blip in
2001, although when figures for 2002 are available they will provide a more accurate
indication of how well the market has recovered from the effects of foot and mouth
disease.
Dietary intake has not changed greatly and although poultry shows the
most steady and constant increase in popularity, it appears to do so alongside
growth, albeit smaller growth, in the red meat sector, rather than totally at its
expense. Recommendations to cut down on red meat consumption therefore
appear to be going unheeded. The rise in vegetarianism seen during the 1980’s and
90’s has now levelled off although, according to Key Note (2001), as much as 25%
of the population regularly buy vegetarian foods (this figure includes those who also
eat meat).
A tendency has developed towards convenience when it comes to choosing fresh
meat, with quick to prepare and cook items such as ready sliced or diced fillets
taking preference over less lean or tender cuts requiring more time consuming and
skilful preparation.
Nonetheless, the most popular cuts of each type of meat remain
traditionally British – beef mince, lamb roasting joints, pork chops, bacon rashers and
whole chickens.
A Review of the UK Food Market 17
The most noticeable change in consumers’ meat buying and eating habits is in the
steady decline in sales of carcass meat and other unprocessed meat and a
corresponding increase in sales of ready prepared meals and meat products. Total
carcass meat sales for the third quarter of 2001, for example, were just over lb 800 m,
whereas ready meals containing meat and other convenient meat products for the
same period accounted for lb 500 m, and this figure does not include products such
as burgers, sausages and pies.
A factor that UK meat producers should bear in mind here is that consumers are
much less likely to question the origin of meat in processed products than carcass
meat. Processors therefore have little incentive to use UK produce whilst it remains
relatively high in price compared to imports.
There is also evidence of a move towards more sophisticated tastes in convenience
food. Household expenditure on products such as canned and corned meat and
even burgers is declining, whereas delicatessen products are becoming more
popular. Sausages did well in 2001, attracting sales valued at lb 450 m and this has
been attributed to the increasing range of varieties and interesting recipes now
available. Manufacturers have kept in step with consumer demands for
convenience alongside style and variety.
Packed, prepared and frozen meat and meat products are generally purchased from
the supermarket. Butchers’s hops are used mainly for fresh meat and poultry.
Supermarkets now account for over 75% of all retail meat sales.
Although most households buy meat, only 2. 6% spend more than lb 15 a week on
fresh meat. Over 25% of households do not buy any fresh meat at all and about
22% spend between lb 3 and lb 5 per week. This is, of course, as much to do with the
reduction in household size as it is to do with overall household meat consumption.
The market is forecast to grow between now and 2006 by about 9% at current prices
to about lb 13 bn.
Although the best growth will be in convenience and processed
products, some growth can be expected in the fresh meat market during this year
and next, providing there are no further disasters. Whether this growth is
accommodated by domestic production or imports depends largely on price, but also
on marketing and the ability of the industry to meet consumers’ needs.
A Review of the UK Food Market 18
3. 3 Fruit and Vegetables
The information in this section has been extracted from Key Note (2002 a) except
where stated otherwise.
3.
3. 1 Overview
Overall consumer expenditure on fruit and vegetables has increased over the past
five years. Total UK consumer spending on fruit and vegetables in 2001 amounted
to lb 12. 52 bn, with vegetables taking a 68% share of the market and fruit the
remaining 32%.
The biggest growth was in the ‘other vegetables’s ector, i. e.
all vegetables other
than potatoes, with growth of 18. 9% in sales over the five year period. Fruit sales
also did well, increasing by 10. 9%. Potatoes, on the other hand, showed little
significant growth in sales.
Sales increases are mainly due to price increases, with no real growth recorded
when expenditure is looked at in terms of constant 1995 prices.
Retail prices in
2001 alone increased well above inflation, with fresh fruit up almost 16% and fresh
vegetables up over 6%. Retail prices for all food increased by 2. 8% in the same
year.
Expenditure on processed fruit and vegetables rose much more significantly (by
almost 20%) over the five year period than expenditure on fresh fruit and vegetables
which rose by about 7%. Fresh fruit and vegetables still account for the greatest
share of the market at about lb 7. 5 bn, with processed fruit and vegetables taking just
over lb 5 bn.
Fruit takes a smaller proportion of the processed market at about 23%
compared with about 38% of the fresh market.
Over 13 million tonnes of fresh fruit and vegetables were consumed in 2001 in the
UK. The retail market accounted for an estimated 6. 9 million tonnes, with the
remainder going to food processing or catering operations.
The UK is almost self-sufficient in fresh potatoes; imports accounting for only about
10% of the market. However, early indications from DEFRA (2003) are that imports
of main crop potatoes reached their highest ever levels in 2001.
About 30% of other
fresh vegetables is imported, mostly from Spain; the main imports being tomatoes,
onions, cabbages and lettuces. Only 10% of fruit is home produced because many
of the popular fruits are not suited to the UK climate, and as a percentage of the
total fruit market, home produce is at almost half 1990 levels. The widening range
of fruits from other countries, and habits that demand year round availability of as
much variety as possible, have led to this change.
DEFRA (2003) figures show that the planted area in the UK has fallen from 234, 000
Ha in 1990 to 186, 000 Ha in 2000. The area on which both fruit and vegetables are
grown has declined, with the only increasing area being that allocated to fruit under
glass. In direct contrast to these figures, the area given over to ornamentals, i.
e.
non-food production, both under glass and in the field has steadily increased. The
market value of ornamentals has also steadily increased.
Table 5 below illustrates the extent to which home production of both fruit and
vegetables declined over the ten year period. The value of exports of both
increased, although the value of imports increased by a much larger amount.
A Review of the UK Food Market 19
Table 5: Comparison of Market Value of Fruit and Vegetables in the UK,
1990 and 2000
2000
lb
1990
lb
Vegetables Home produced Field 568 m 655 m
Protected 310 m 367 m
Total 877 m 1. 02 bn
Imports 961 m 572 m
Exports 30 m 16 m
Fruit Home Produced Open 210 m 268 m
Protected 13 m 380, 000
Total 222 m 268. 4 m
Imports 1. 4 bn 1.
07 bn
Exports 34 m 27 m
Compiled from DEFRA statistics. Figures may not total due to rounding
The number of UK vegetable growers is declining whilst the number of fruit growers
is increasing. Most fruit and vegetable growers remain small enterprises, with the
largest group consisting of those with a turnover of less than lb 50, 000. As in other
food sectors, the number of wholesalers is becoming smaller as the large players
who are able to meet the supermarkets’ needs capture the market. Almost 80% of
retail fruit and vegetable sales are through supermarkets, although greengrocers
and market stalls retained their market share in 2001.
Market penetration for fresh fruit and vegetables increases with age and lower social
class, as these are the sectors least likely to buy ready meals or pre-prepared
products.
There are no significant differences in buying habits between the different
areas of the UK. Females are much more likely to buy fresh fruit and vegetables
than males. Most female housewives spend less than lb 3 per week on fresh fruit
and vegetables.
The market for fruit and vegetables is predicted to continue along current lines,
although the growth in the processed sector is set to slow by about 2004.
3. 3. 2 Potatoes
It is estimated that processed potatoes now account for at least 40% of all potato
consumption in the UK. The oven chip has been a major factor in the demise of the
fresh potato; its convenience and health benefits over the fried chip being the key to
success. The market for frozen potato products is now worth nearly lb 450 m and
over half of all potato processors are now large enterprises with turnovers in excess
of lb 1 m. Fresh potatoes, once the UK staple, now account for less than 15% of the
fresh fruit and vegetables market, with a value of lb 1.
1 bn.
With the increase in consumption of processed potatoes, it makes sense to grow
varieties that are suitable for processing. However, data produced by DEFRA
(2003) shows that this need has been increasingly met by imports. The volume of
ready processed potatoes imported to the UK rose by almost 70% during the 1990’s
and continues to do so.
Whilst McCain have recently been promoting their own use
of Maris Pipe.