Feeling the squeeze
When it comes to Italy, some of the first things that spring to mind are genuine Mediterranean produce, a food culture and traditional cuisine. However, Italian consumers drastically reshaped their food expenditures in 2013. They are now hunting for deals and shopping more often to satisfy their increasing desire for fresh produce/ingredients.
One of the sectors particularly hard hit by the shift in consumers’ spending habits is frozen foods. According to the third-quarter 2013 “IRI Pulse Report Frozen Food,” released by global research firm Information Resources Inc. (IRI) and covering the 52 weeks ending 29 September, 2013, the top losers in the sector were ice cream, fish and ready meals — the three largest frozen food categories, which together make up more than 70 per cent in terms of value in this market.
“The Italians are abandoning ready-made products, which they see as too expensive, in favour of more natural foods,” says Vittorio Gagliardi, president of the Italian Institute of Frozen Food. “This is why frozen vegetables have been able to break even.”
The good news, looking at the food industry in general, is that consumers’ spending changes are benefiting private labels, which are priced at an average of 22 per cent below equivalent national brands. In 2013, private labels increased their share of value sales by 0.8 points, to 18.4 per cent, while unit shares went up by 0.5 per cent to 22.4 per cent, according to IRI.
What makes things difficult for new players entering the ready meals category is the overwhelming strength of multinational brand Findus, from the Swedish-based frozen food company with the same name.
Although there are many different types of frozen ready meals, pasta and rice-based dishes are the most prominent in all large-scale Italian retailers’ freezers, and include a broad selection of Italian traditional recipes. Findus dominates the field with its cutting-edge “4 Salti in Padella” branded products, which continue to attract the majority of ready-made meal lovers.
But despite this fierce competition, private labels are beginning to do well. During our store visits, we noticed that Conad, a Bologna-based nationwide consortium of eight Italian cooperatives, offers own-brand ready meals ranging from noodles with mushrooms and Sorrento-style dumplings to a rice-based Spanish Paella in its stores.
Despar, with its Italian head office in Casalecchio di Renouch, is more cautious. Under the own-brand Era Ora, the Italian franchise of the Netherlands international retail chain SPAR limits itself to cannelloni and lasagna.
Spinea-based large-scale retailer Panorama, which owns 133 points of sale across the country, is even more prudent, currently offering only a fish soup under the private label Pam. However, the retailer recently announced the launch of new frozen ready meals that include Paella, chicken dishes and, in a riskier move, an Italian specialty fish baked in parchment paper. Findus’ premium range “A Regola d’Arte” already offers a unique selection of ready fish meals such as baked fillets of sea bream with capers and olives.
FROZEN FISH
Under its own brand, Conad also offers a limited variety of fish dishes such as squid rings in batter and ready-made fish soup. But what attracts consumers’ attention is the retailer’s surprising assortment of fish-based frozen sauces, which include exotic crustaceans such as tropical prawns, Indo-Pacific squid and shrimp borealis.
Under its Pam Brand, Panorama also has a wide-range of pre-cooked and frozen sauces, including a seafood mixture for pasta or risotto. Despar, meanwhile, generally gives more space to its selection of natural frozen fish that comes from the Atlantic or South Africa.
But the most “fashionable” fish product among big retailers’ private label offerings is, without a doubt, breaded fish sticks. The well-established product, created for the youngest segment of the population, benefits from the strong promotional campaigns carried out by the market leader, Findus.
While Conad and Panorama’s own brands offer similar versions, Despar has undertaken an innovative approach to fuel its sales. In addition to traditional fish sticks, children can now enjoy creatively shaped versions: stars, dolphins and anchors, as well as new breaded vegetable sticks under the retailer’s brand.
PIZZA, SNACKS
Italians love pizza ... and this passion is well reflected in the frozen aisles of big grocery retail stores.
The category’s leadership currently goes to Cameo, the Italian branch of German group Dr. Oetker. Despar’s self-titled private label has also made its mark in economy and premium ranges. The premium line is distinguished by the use of selective ingredients and traditional manufacturing processes. In the economy range, the retailer offers a trio of assorted pizzas — vegetarian, Margherita and Capricciosa. We noticed a “Margherita” pizza three-for-the price-of-two promotion, in line with the growing attention to price-pack deals.
To draw in unconvinced consumers, Conad’s key message is centred on quality. Pizza packages promote the naturally leavened dough and the quality of the ingredients, some of which are listed as PDO (Protected Designation of Origin), such as buffalo mozzarella. The consortium also developed a special range called “I Capricci”, which is dedicated to consumers who love to experiment with new combinations. One offering here is a tomato and mozzarella pizza topped with spicy salami.
Panorama, meanwhile, keeps things simple with its Pam brand. It offers two- or four-item multipacks containing pizzas topped with a limited selection of ingredients.
In terms of frozen snacks, Conad has developed a large private label range that includes ready-to-fry olives filled with meat, mini potato croquettes and various types of crispy pancakes.
Under its own brand, Panorama offers fanciful puff pastries such as vol-au-vent, mini pizzas and a tasty mix of puff pies. Despar, meanwhile, has a poor selection of snacks, but makes up for that shortcoming with a rich variety of frozen pancakes coated with breadcrumbs and containing diverse fillings.
ICE CREAM
According to the IRI Pulse Report, in September 2013, the ice cream sector experienced a sharp volume decline, equivalent to a 55-million euros loss in sales from 2012. In general, the ice cream and frozen novelty market is dominated by branded manufacturers.
In an effort to compete with strong national brands, Panorama offers not only an extraordinary variety of flavoured ice cream desserts, but also popsicles, cones and sticks under its own label. In contrast, Despar offers only a few of such products under its brand.
As for Conad, it has a large ice cream selection. Its label often leverages the celebrity of legendary ice creams launched by leading national brands such as Algida and Magnum. Examples are a cream and chocolate croissant and a vanilla and cherry ice cream whipped with chocolate and chopped hazelnuts. Conad’s “Mini Fantasie” is an assortment of chocolate and vanilla cones, sticks and biscuits with an eye-catching design and packaging that is very familiar to Italian consumers.
VEGETABLES
Of all the frozen categories outlined here, frozen vegetables fared the best in 2013, according to IRI. Although competitors such as Orogel, Findus and Buitoni account for the biggest market share, private labels cover the entire range of frozen vegetables as well.
All packages we observed stress the naturalness and freshness of the product, showing country scenes or agricultural harvest pictures. National brands and private labels alike also offer simple frozen vegetables dishes such as peas with ham, spinach with cheese, grilled vegetables and vegetable soups. Despar’s own brand Vital also has a range of functional products developed in collaboration with nutrition experts of Parma University.
WHAT’S NEXT?
Francesco Avanzini, sales manager for Conad, thinks the frozen industry still offers some growth opportunities.
“Consumers prefer to buy products they can customize,” Avanzini says. “This emerging trend will increasingly benefit semi-finished food products. It will be very interesting to see how frozen vegetables and frozen dough and bakery categories evolve.”