Caterers and c-stores need access to a strong range of fresh and chilled produce to help them give their customers what they want. But with so much competition in the category, wholesalers need to be savvy about which products will make for the most profitable offer.
Amy Fisher, senior shopper marketing manager at Dairy Crest, believes that pricemarked packs (PMPs) have a big role to play. She says: “While consumer confidence is decreasing and shoppers are increasingly price-conscious, top-up shopping remains one of the key shopper missions, and therefore, fresh and chilled household staples, such as cheese, butters and spreads, shopped as part of a regular top-up, should be a core focus when considering PMP offerings.”
Fisher recommends that wholesalers focus on 250g and 500g packs of butters and spreads, and 200g and 350g cheese packs to meet consumer demand for top-up products, and to help them manage their cash outlay.
Worth more than £337m and used in a growing variety of meals, cheese is a major player in the chilled and fresh category, with cheddar dominating the market compared with other convenience cheeses.
Fisher notes that wholesalers should consider other trends when developing their range. An example she gives is that as more consumers seek quick meal solutions, they will look beyond traditional block cheese to convenient cheese products such as sliced, grated and spreadable, which are becoming increasingly popular.
Another trend of which wholesalers need to be mindful is the growth in cheese being consumed as a snack. Mondelēz International trade communications manager Susan Nash, says: “Snacking cheese equates to 19% of total cheese and is one of the main segments – along with continental cheeses – that are delivering growth within the category.”
Nash adds: “Importantly, snacking cheese shows headroom for growth, with 86% penetration, while soft white and processed cheese shows even greater potential.”
The snacking cheese category incorporates processed cheese, spreads and slices, on-the-go cheese snacks, plus soft white cheese products such as Philadelphia.
Snacking is on the up overall, as lifestyles change and the traditional three meals a day are replaced by snacks and smaller meals. It is believed that around 21% of UK households are currently buying into the micro-snacking category, which has enjoyed 3.7% growth year on year; Kepak, home of the UK’s best-selling micro-snacking brand Rustlers, hopes to grow the UK’s £156.4m micro-snacking market by £50m over the next four years.
To help the trade make the most of the opportunity, Kepak is encouraging wholesalers to educate retailers on the micro-snacking category.
Kepak Convenience Foods’ channel director, Angela Daulby, says: “Merchandising products together in the chilled room and in order books will ensure that retailers can find everything that they need quickly and easily. The simple introduction of PoS material can also have an instant impact on sales. It naturally draws retailers’ attention to the chiller.”
The butters, spreads and margarines market is worth around £140m in convenience, according to Partners for Growth.
“The market value is in slight decline but butter and cholesterol-lowering spreads are in growth,” says Nick Widdowson, Partners for Growth’s merchandising and creative controller. “Customers are willing to pay more for perceived health, taste or convenience. Sales of spreadable butters in particular are increasing.”
Another consideration for wholesalers is the growing free-from market. Dairy Crest’s Fisher says: “The free-from market, of which dairy-free is a significant contributor, has for some time been experiencing exceptional growth, and is predicted to increase by a further 43% by 2020. In a challenging spreads marketplace, dairy-free spreads, currently worth £12.9m, are experiencing 8.6% value growth, and within the convenience channel, dairy-free spreads’ growth stands at over 160%, both in value and volume.”
James Brennan, Flora marketing manager at Unilever UK, notes that consumers shopping for such products are looking for items that taste great, but also work as part of a balanced diet.
“The Flora Freedom dairy-free variant is a delicious tasting spread that ensures that those who have an intolerance or an allergy, or simply want to choose free-from products, can enjoy a great tasting spread,” he advises.
Consumer interest in home baking is another key sales driver
Caroline Jary, brand building director for spreads at Unilever UK, says: “Baking continues to be a huge opportunity. In fact, the in-home baking market is set to grow to a substantial £1.9bn between 2014 and 2019, as 30% of consumers continue to bake from scratch at least once a week.
“Stork with Butter is perfectly positioned to spearhead this growth. It’s also down to the retailer to ensure that they profile baking occasions in-store at pertinent times of the year to inspire usage and encourage sales.”
In addition to everyday items, the chiller is also home to treats, such as chocolate milk. The flavoured milk market is currently worth £293.9m, with chocolate milk still the category’s favourite flavour with a 31% share, followed by fruit flavoured milk at 24%, according to Michelle Frost, general manager for Mars Chocolate Drinks and Treats.
She says: “The specialised milk category continues to grow and now accounts for 22% or £65.5m of total value sales in the flavoured milk market. This reflects the continued demand and new product development within the milk drinks category of more innovative flavours and specialised milks.”
Capitalising on this growing trend, last year Mars Chocolate Drinks and Treats introduced to the category Mars High Protein and Snickers High Protein milk drinks, each containing 22g of protein, and Mars High Protein is currently showing a value sales growth of 57%.
Frost says: “Our 350ml milk drinks range is a huge category driver. By adding a no added sugar option to the Mars Milk line-up earlier this year, we hope to see even more category growth.”