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Chilled Ready Meals: vast unmet potential in key developed markets

September 22nd, 2016 Chilled Food Market Trends

Discover the latest update on the Chilled Ready Meals sector by Euromonitor International.

Sales of chilled ready meals

Sales of chilled ready meals are strongly skewed towards developed markets, led by Japan, generating 56% of world sales in 2015, while Western Europe, led by the UK, accounted for another 29%. All of the five top global markets are developed markets, while China is the only emerging market among the 10 largest.

Despite this strong reliance on some of the developed markets recording the lowest growth across packaged food categories, chilled ready meals strongly outperformed ready meals at global level. This apparent paradox was largely the result of a high level of innovation in terms of recipes and packaging and was helped by favourable socio-demographic trends.

As a result, in large mature markets, notably Japan and the US, chilled ready meals sales still offer a high level of unmet market potential, as measured by the difference between the retail sales in 2015 and the growth that can be achieved before reaching full saturation. Ranked by the largest unmet market potential by 2020, the US stands out as the most promising global market, as per capita sales remained well below those of other developed markets in 2015 and could seemingly catch up. However, comparing growth drivers between Japan, the US and key Western European markets highlights how reaching this unmet potential in the US presents deep challenges.

Focus on convenience, health and premium recipes fuelling growth

The main growth axes for chilled ready meals in developed markets - convenience, health and premiumisation - were particularly strong drivers in the two largest global markets, Japan and the UK, between 2010 and 2015.

 

Chilled Ready Meals: Top Five Markets - Sizes 2015 and Sales Growth 2010-2015 

                                                            

                                                                                                Source: Euromonitor International

 

In Japan, the strong popularity of bento boxes in convenience stores and supermarkets, a key feature of Japan’s packaged food market, strongly contributed to putting the chilled ready meals category in a league of its own. Premium recipes featuring locally sourced ingredients derived from regional culinary traditions are often used by convenience store operators seeking to reduce their traditional reliance on younger age groups and appeal to health-conscious older consumers, notably through the Seven Gold range at 7-Eleven outlets. By contrast, in the UK, chilled ready meals sales benefited from retailers increasingly targeting a young audience by meeting the foodservice demand through sophisticated recipes, notably by mirroring popular country of origins for ethnic food, for example Thai and Vietnamese with the Asian Fusion range from the Waitrose grocery retail chain.

In contrast to their wide availability through convenience stores in Japan, only 2% of ready meals sales in the US were sold through this channel in 2015, as ready meals distribution in the US is mostly through supermarkets and hypermarkets. However, in both Japan and the US, chilled ready meals retail sales at convenience stores are challenged by the strong reach and the rising sales forecast for convenience store fast food, typically consisting of sandwiches, pizzas, pastries and soups.

 

Chilled Ready Meals Market Potential: Top Ten Markets - Sizes and Market Potential 2015-2020

                                                          

 

Foodservice and snacking-led demand

Japan, which shows the world’s third largest unmet growth potential for chilled ready meals behind the US and China, is also forecast to record stronger growth than the US between 2015 and 2020, and is set to achieve over half of the unmet market potential by 2020, while the US is expected to only “scratch the surface” of the unmet potential.

Competition from foodservice and from other types of ready meals is likely to remain a key obstacle for chilled ready meals in achieving the vast unmet market potential in the US. Between 2010 and 2015, Chilled ready meals sales in the US underperformed against two larger ready meals categories, chilled lunch kits and prepared salads. Snacking and on-the-go products that can be used as full meal solutions, such as Oscar Mayer P3 (portable protein pack) by Kraft Heinz succeeded in widening the audience of the chilled lunch kits category. Meanwhile, prepared salad’s growth was driven by product freshness and healthier ingredients helping to occupy the premium-led foodservice demand.

Focusing on both of these positioning would help chilled ready meal brands in the US meet a greater variety of consumption occasions, straddling convenience, health attributes and foodservice, and mirroring those more widely met in Japan and the UK.

 

Raphael Moreau, Food Analyst, Euromonitor International