The prepared fresh produce sector is buoyant. All the major UK multiples have seen growth this quarter, apart from Marks & Spencer which, considering its huge overtrade, is faring well at static.
Consumers are reaching out for lighter meals and making moves towards healthier options as summer approaches. Prepared stir fries have done particularly well at the multiples, with many pushing three-for-£2.50 offers on vegetable, meat and sauce combinations, and two-for-£3 offers on stir-fry bags. The wholehead spring green harvest took a hit at the beginning of the year, which hit availability in the marketplace in general and led to the prepared stir-fry alternative becoming more attractive.
“It’s looking good,” says a source. “Stir fries are consistently doing well, as are prepared vegetables, and bagged salads have seen an uplift in sales over the last couple of weeks as the weather has improved. For an established category, it is really showing some healthy signs of growth.
“But the Budget is going to hit people a little further and food household budgets may be cut.”
Another sector that stands to benefit from the improvement in the weather is prepared fruit, with mixes having performed well in the last couple of weeks and a number of companies reporting a jump in sales.
“Melon, pineapple, mango - they’ve all seen an uptake in sales,” says one fruit supplier to processors. “People are still looking for convenience and healthy eating. Supermarket sales continue to rise on basics like melon and pineapple - the products where the prepared aspect really adds value.”
Insiders maintain that customers are still very price conscious. Mixes are put in mind with the required price point of usually £1 and lesser varieties are used to keep costs down. “Prepared is on the road to recovery after a difficult two to three years through the credit crunch and the recession,” says one supplier. “Some fresh-cut fruits have been seen as a luxury item. People have been asking, do I really need this pot of melon? But it has become a real fixed feature, especially for the M&S lunchtime drive.
“However, supermarkets are still looking at price points, reducing weights and using cheaper varieties. It’s fair to say that we are coming out of that three-year or so decline.”
And as the weather improves, insiders are hedging their bets on what kind of quarter awaits them. Prepared potatoes certainly stirred up a storm over the last three months, but there are slight concerns that this may not translate to the new season.
“Potato wedges are the new chips,” says one prepared produce supplier from Lincolnshire. “We thought that the range would mainly attract the party or buffet food scene, but it’s the kids that are really buying into them. It’s become that easy 5pm after school dinner or snack that children are asking for.”
QV Foods’ Inspire Best of British range of prepared potato products launched just after Christmas and has made a good impression on the retail market.
“The concept has had great appeal and the Union Jack flag all over it helps,” says the company’s director Simon Martin. “There has been aggressive growth. It’s a simple approach but it works. The supermarkets are getting it and therefore consumers are taking it on. We have turned the recession around really by introducing products that make sense at that time. People have been keen to swap their ready meals for something that makes them feel they are making something. Our staple vegetables, like prepared carrots and vegetable medleys, are also doing very well.
“It’s the time for more new product development. Look at the cauliflower: we have a good product that needs to be innovated. There could be so many prepared variations. I think there will be a lot of growth in that area once it gets going.”
But money is always an issue and the industry is feeling the squeeze. “If importers can’t make money then it’s not worth it,” says one supplier. “Long gone are the days when companies could run a line for the sake of it. All costs have been taken out of the supply chain and we work as directly as possible, and deliver from the port to the processor.
“Probably up to 80 per cent of our sales go straight from the quay now, depending on the volumes.
“We take as much money out of the process as we can, but we still have to return a good income to our growers.”
HIGHS AND LOWS FOR POTFRESH AS LATEST VENTURE TAKES OFF
South West-based prepared produce company Potfresh underwent a substantial extension to its Wiltshire-based facility last August to accommodate new venture Southern Prepared Vegetables (SPV) Ltd, which has led to the business gaining Soil Association accreditation and offering organic prepared produce as well as conventional lines. Here, general manager David Bickerton looks back over what the company has learnt.
What were the business’s main aims and objectives in expanding?
When we decided to open a second branch outside of Cornwall, it was to develop new links with customers and suppliers in other parts of the country.
We are excited at the prospect of forging strong links with growers and suppliers in Wiltshire, Somerset and Lincolnshire in the same way that we have enjoyed great relationships with our Cornish suppliers over the past 20 years of trading. This venture will give us 12-month direct supply on a host of products by having direct links with the strongest growing regions in the UK.
What challenges did you face and how were they overcome?
The main products that we supply from Wiltshire are prepared onion lines. In hindsight, if we could have predicted the unbelievably difficult market ahead on this product then our plans may have been put on ice for the next 12 months.
Huge demand from numerous countries worldwide has meant that availability has been very short and prices for the raw product at an all-time high. We set up SPV at a time when unfortunately no English or Dutch onion growers or suppliers would entertain contract discussions to supply moving forward. To add to this, the Polish and Chinese suppliers reduced prices, which put further pressure on the onion market in the UK. Luckily, a lot of customers stipulate that they prefer to use UK-produced onions so this has not affected our growth too much.
How do you see the prepared market at the moment, regionally, nationally and globally?
The prepared market within the UK is probably as fierce as it has ever been since we commenced trading in 1990.
Countries such as China and Poland can offer very low prices that are normally unsustainable for UK businesses to compete with, mainly due to the reduced labour costs that these countries can benefit from.
While most UK prepared suppliers have been selling fresh whole peeled onions for around 60-80p a kilo on average over the past six months, Chinese suppliers have been touting prices of anywhere between 40-55p/kg delivered to the UK. General opinion is that the quality cannot compete with the standard supplied by the majority of UK suppliers, but the difference in price is enough of a sway to make some buyers switch.
What advice would you give other businesses that aim to expand in the same way your business has?
It is obviously important to do your research before entering into any new venture. Even though we have respectably traded in Cornwall for the past 20 years, we believe that the key to any successful business is always being open to new ideas to help the company evolve and develop. In saying that, in fresh produce you have to expect the unexpected.
After trying to expand in the onion market over the past 12 months, our previous trading experience in the onion market could not have prepared us for the unexpectedly high market prices that the industry has faced.
This has made it challenging in our first trading year at SPV, but one which we will learn from and strengthen the company moving forward.
