Despite great ads and successful NPD, frozen fish sales are down, as shoppers are hooked on deep-discount chilled promos. What can be done to bring value back, asks Richard Ford
A talking polar bear, a David Beckham tie-up and the launch of a microwaveable fish finger. No one could accuse the frozen fish market for want of innovation or investment over the past 18 months.
Yet value growth across frozen fish has fallen by 0.6% to £873m, and volume by 2.6%. The big guns in frozen have been hit hard, with Young's down 7.1% to £173.4m and Birds Eye sales falling 2.4% to £170.7m [SymphonyIRI, 52w/e 2 October 2010]. And the decline is all the more surprising because frozen food was expected to perform well in a tough economy. What's gone wrong? And what can be done to bring value and volume back to frozen fish?
The biggest casualty of the market is frozen fish ready meals, with sales crashing 38.1% by value, wiping £20m off the category [Kantar], and volumes down 42.3%.
This slump is a result of retailers offering fish ready meals for £1, claims David Orr, sales director at Simpson's Fish. The prevalence of such deals makes it difficult to convince shoppers to spend more than that. "No retailer wants to move first [on deals]," he says. "It's very difficult to get people to pay more or trade up."
Adam Bernard, managing director of seafood at Sco-Fro adds that to hit these round-pound price points, quality has suffered: "It's all about hitting price points to offer perceived value."
Nor should the impact of promotions in the chilled aisles be underestimated. Birds Eye and Young's invest heavily in trade investment. And Anne Murphy, Birds Eye general manager for UK and Ireland, reports that the award-winning Polar Bear commercial has been successful in increasing awareness of the high quality of its frozen fish, with a Milward Brown study showing shopper perceptions up from 48% to 78%. And Birds Eye "thinks it can drive bigger sales," she says.
But promotions on chilled lines have been unprecedented, adds Murphy, with promotional volume on chilled fish currently growing at nine times the level of frozen [Kantar].
"Over the summer, in particular, the depth of promotions on chilled in the supermarkets was such that frozen fish was sometimes more expensive."
A renewed bout of advertising in September to coincide with the start of the new school term has reversed the decline in frozen penetration, Murphy claims, and frozen sales are now flat, with Birds Eye penetration up 2.2 percentage points in the latest four-week period [Kantar, 4w/e 30 October].
And successful ongoing innovation also gives hope for the category in the coming year. Birds Eye Bake To Perfection, which has grown sales by 132% to £23.7m over the past year [Nielsen Scantrack MAT 2 October 2010], has boosted sales in the fish-in-sauce sub-category, which have risen 41.2% to £56m. And 80% of sales have been incremental, adds Murphy.
While sales for Young's It's in the Bag range, launched last September, were below expectations at £2.9m, and Young's microwaveable fish fingers have been delisted by both Asda and Sainsbury's, the launch of the Fishmonger's Choice range by Young's in September is "the start of an exciting continuum of additions, every six months, for the next three years, with a view to changing perceptions of frozen fish," says brand director Yvonne Adam.
Natural fillets
Also growing fast are natural fillets, which have risen 27.3% to £71.7m. Sales of natural fillets for Birds Eye were up 44%, says Murphy, in the latest four-week period.
But Young's has also been busy in the sub-sector, overhauling its natural range in the autumn following consumer research.
"The range makeover includes new packaging to help showcase the fillets and increase stand-out in the freezer," says Adam. "Further product improvements mean chunkier, flaky fillets and greater consistency of size, shape and weight." She adds that sales of Young's pink salmon are up 70% to £5.6m, while its basa fillets have risen 53% to £1.4m in the year to 3 October 2010 following promotional activity this summer.
Chilled natural fillets have fared less well, with a 5.4% decline in volume and 2.2% by value. This has been caused by a sharp rise in the price of salmon, which has jumped by 36% y-o-y [Fishpool ASA Week 40 2010]. As a result, volume sales of salmon have decreased by 5.8% over the past year, and its share of the total chilled fish market has shrunk from 25.3% to 23.7% [Kantar].
Salmon is not alone in experiencing inflation, with the wholesale price of prawns up by 20%, according to Will Hemmings, general marketing manager for fish at Birds Eye. The added cost has not filtered through to retail Birds Eye has managed to offset much of the raw product increases with other cost savings, he adds but it is causing concern. "On areas where you see that amount of inflation, it's fair not to expect either the trade or the manufacturer to absorb all of the cost."
Birds Eye is currently talking to retailers about the pricing situation, with the extension of the Birds Eye Bake To Perfection brand into prawns in September leaving the company particularly exposed to higher prawn prices.
And price rises across other fish species are now on the cards, warns Seachill sales and marketing director Simon Smith. "White fish is under significant pressure, mainly because of the quota reduction in Iceland (the biggest exporter of cod to the UK) and some of the salmon pressure has carried across. There's also increased demand from China and Russia," he adds.
Inflation has resulted in a slight decline in fish consumption (see box, p54), but Waitrose, which has recorded the highest sales growth [Kantar], attributes this, in part, to a 10% price discount on higher wastage fish, which reduced wastage by 15%.
Innovation and advertising are every bit as important, however, and the frozen players remain committed to both. As Birds Eye's Murphy says: "It's possible in this market to grow share at the expense of the bottom line; it's harder to do both. The fact we continue to invest in innovation and award-winning advertising has been an inspiration to many frozen players, and gives us the confidence to believe in a bright future."
Focus On Fish
A talking polar bear, a David Beckham tie-up and the launch of a microwaveable fish finger. No one could accuse the frozen fish market for want of innovation or investment over the past 18 months.
Yet value growth across frozen fish has fallen by 0.6% to £873m, and volume by 2.6%. The big guns in frozen have been hit hard, with Young's down 7.1% to £173.4m and Birds Eye sales falling 2.4% to £170.7m [SymphonyIRI, 52w/e 2 October 2010]. And the decline is all the more surprising because frozen food was expected to perform well in a tough economy. What's gone wrong? And what can be done to bring value and volume back to frozen fish?
The biggest casualty of the market is frozen fish ready meals, with sales crashing 38.1% by value, wiping £20m off the category [Kantar], and volumes down 42.3%.
This slump is a result of retailers offering fish ready meals for £1, claims David Orr, sales director at Simpson's Fish. The prevalence of such deals makes it difficult to convince shoppers to spend more than that. "No retailer wants to move first [on deals]," he says. "It's very difficult to get people to pay more or trade up."
Adam Bernard, managing director of seafood at Sco-Fro adds that to hit these round-pound price points, quality has suffered: "It's all about hitting price points to offer perceived value."
Nor should the impact of promotions in the chilled aisles be underestimated. Birds Eye and Young's invest heavily in trade investment. And Anne Murphy, Birds Eye general manager for UK and Ireland, reports that the award-winning Polar Bear commercial has been successful in increasing awareness of the high quality of its frozen fish, with a Milward Brown study showing shopper perceptions up from 48% to 78%. And Birds Eye "thinks it can drive bigger sales," she says.
But promotions on chilled lines have been unprecedented, adds Murphy, with promotional volume on chilled fish currently growing at nine times the level of frozen [Kantar].
"Over the summer, in particular, the depth of promotions on chilled in the supermarkets was such that frozen fish was sometimes more expensive."
A renewed bout of advertising in September to coincide with the start of the new school term has reversed the decline in frozen penetration, Murphy claims, and frozen sales are now flat, with Birds Eye penetration up 2.2 percentage points in the latest four-week period [Kantar, 4w/e 30 October].
And successful ongoing innovation also gives hope for the category in the coming year. Birds Eye Bake To Perfection, which has grown sales by 132% to £23.7m over the past year [Nielsen Scantrack MAT 2 October 2010], has boosted sales in the fish-in-sauce sub-category, which have risen 41.2% to £56m. And 80% of sales have been incremental, adds Murphy.
While sales for Young's It's in the Bag range, launched last September, were below expectations at £2.9m, and Young's microwaveable fish fingers have been delisted by both Asda and Sainsbury's, the launch of the Fishmonger's Choice range by Young's in September is "the start of an exciting continuum of additions, every six months, for the next three years, with a view to changing perceptions of frozen fish," says brand director Yvonne Adam.
Natural fillets
Also growing fast are natural fillets, which have risen 27.3% to £71.7m. Sales of natural fillets for Birds Eye were up 44%, says Murphy, in the latest four-week period.
But Young's has also been busy in the sub-sector, overhauling its natural range in the autumn following consumer research.
"The range makeover includes new packaging to help showcase the fillets and increase stand-out in the freezer," says Adam. "Further product improvements mean chunkier, flaky fillets and greater consistency of size, shape and weight." She adds that sales of Young's pink salmon are up 70% to £5.6m, while its basa fillets have risen 53% to £1.4m in the year to 3 October 2010 following promotional activity this summer.
Chilled natural fillets have fared less well, with a 5.4% decline in volume and 2.2% by value. This has been caused by a sharp rise in the price of salmon, which has jumped by 36% y-o-y [Fishpool ASA Week 40 2010]. As a result, volume sales of salmon have decreased by 5.8% over the past year, and its share of the total chilled fish market has shrunk from 25.3% to 23.7% [Kantar].
Salmon is not alone in experiencing inflation, with the wholesale price of prawns up by 20%, according to Will Hemmings, general marketing manager for fish at Birds Eye. The added cost has not filtered through to retail Birds Eye has managed to offset much of the raw product increases with other cost savings, he adds but it is causing concern. "On areas where you see that amount of inflation, it's fair not to expect either the trade or the manufacturer to absorb all of the cost."
Birds Eye is currently talking to retailers about the pricing situation, with the extension of the Birds Eye Bake To Perfection brand into prawns in September leaving the company particularly exposed to higher prawn prices.
And price rises across other fish species are now on the cards, warns Seachill sales and marketing director Simon Smith. "White fish is under significant pressure, mainly because of the quota reduction in Iceland (the biggest exporter of cod to the UK) and some of the salmon pressure has carried across. There's also increased demand from China and Russia," he adds.
Inflation has resulted in a slight decline in fish consumption (see box, p54), but Waitrose, which has recorded the highest sales growth [Kantar], attributes this, in part, to a 10% price discount on higher wastage fish, which reduced wastage by 15%.
Innovation and advertising are every bit as important, however, and the frozen players remain committed to both. As Birds Eye's Murphy says: "It's possible in this market to grow share at the expense of the bottom line; it's harder to do both. The fact we continue to invest in innovation and award-winning advertising has been an inspiration to many frozen players, and gives us the confidence to believe in a bright future."
Focus On Fish
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