The salads sector has experienced a difficult run in the last three months, with imported lines taking a hit from various climatic shifts and political protests. At the same time supermarkets have been accused of paying “unmanageable returns”.
Demand-wise the picture has been encouraging, with 6.7 per cent value and 0.7 per cent volume increases [Kantar]. But trip volume, or number of purchases, has been in decline and has taken a £20m chunk out of the UK salads industry.
Niche or smaller retailers show a strong performance, indicating that it’s a certain demographic that continually purchases salads and remains loyal to the category. Consumers buy salads because they know they are healthy and sales peak in the warmer summer months, but there are many variables as to why volumes have not increased significantly while promotional activity continued from the likes of the British Leafy Salads Association (BLSA) and British Tomato Growers’ Association. Many will watch out for what will happen to demand now that the BLSA’s generic campaign has been mothballed after an appeal to growers for funding that amounted to 0.1 per cent of turnover was not met.
The constant battle against the weather has been a factor throughout the last 12 months, with conditions going from one extreme to the other. The summer of 2010 was a lot better than the previous three years, for example, but winter cold snaps have been extreme and consumers have reached for hearty comfort food instead of salads when cold temperatures strike.
Climatic conditions in Europe have seen tight availability on tomatoes over the winter months, with the absence of Jersey tomatoes being felt.
The political unrest in Egypt in mid-February has caused major problems for spring onion suppliers, who simply had to stop trading with the country and source from Mexico.
“The weather has increased raw material prices and pushed the price of prepared produce up,” says one insider. “Consumption of salads is definitely a demographic issue as Marks & Spencer and Waitrose don’t have to worry that their customers will check the price of a bag of salad, as it will be purchased anyway. But it doesn’t help that we’ve had a not so good summer and a dreadful winter.
“In Spain, it has been cold, but the previous year saw the lowest temperatures the country had seen for 20 years, so in comparison, it isn’t too bad. We come to expect it in the UK. Availability and pricing when it comes to Spain is an ongoing issue, but we still pull product out of the country. We are spreading our sourcing more now though and have been for a couple of years.”
Rising costs and challenging sales have got the industry looking forward to the summer and a change in the weather, but rates of returns from supermarkets continue to be an issue.
“We are getting paid less than last year,” says one source. “We have to compete and the supermarkets are looking for the best deal. The key price points are 50p and £1 and inflation is higher than ever. As the industry keeps saying, this will only last so long and something will have to give.
“Import prices are high and red diesel has taken another 20p per litre. We are getting paid less by the supermarkets and our input costs are higher. On top of that, our sales have not been good - for a number of reasons.”
The last quarter for the salads sector has been described by insiders as “tricky”. “Importing has been a major issue,” says one supplier. “The quality has been alright, but supply has been an issue. It will even out though - all the importers are in the same boat.”
Leaving a year of low demand behind, some believe that 2011 will be the year of innovation for the salads industry. With the aftermath of a recession playing itself out and innovation on the shelves a little lower than usual, the industry is gearing up to impress consumers this year.
An insider said: “We are continuously investing and innovating; becoming leaner and meaner. You need to add value to save money and I do think 2011 will be driven by innovation for the salads category. The biggest problem at the moment is the decline in the number of growers out there and investment.
“Businesses need to make sure that they don’t just keep their heads down and miss out.”
FLORETTE TARGETS GROWTH WITH FOR A FRESH NEW YOU CAMPAIGN
Leading bagged salad brand Florette is forging ahead with a new campaign to keep consumers interested. Elizabeth O’Keefe looks at how the company has kept its head above water during a period characterised by low demand.
Food sales might have been pretty flat in January, but Florette’s bagged salads have bucked the trend and enjoyed an 18 per cent uplift in sales, according to the company.
The brand attributes its healthy start to 2011 to a heavyweight investment in the category through the marketing campaign, For a Fresh New You.
Combining national press spend with online advertising and promotional activity, the initiative is designed to leverage the seasonal appetite for health and wellbeing.
As Tony Walsh, Florette’s category manager, puts it, the brand’s biggest January marketing spend to date has certainly stimulated growth.
“The prepared salad category saw a really fast start to the year with growth of 15 per cent against a poor January 2010,” he says. “As a brand, the last four weeks have helped us to deliver 18 per cent growth together with brand penetration growing by 14 per cent, equating to an extra 707,000 households buying Florette.
“These figures have very much been driven by our national marketing campaign to further raise awareness of the brand and quality of product.
“What really stands out in the figures is that 53 per cent of brand growth has come from frequency, as shoppers bought Florette more often in 2010.”
Florette’s successful start to 2011 comes off the back of the brand’s most successful December to date. “We bucked the category trend - and the challenging freezing weather conditions - to record a market share of 12 per cent,” continues Walsh. “Going forward, we believe there is much opportunity for continued sector growth despite further budget cuts and inflation rises.
“We have demonstrated our confidence in the market by kicking off the year with a powerful marketing campaign and we will be continuing to invest heavily in the brand in 2011 to drive growth throughout the year - come rain or shine.”
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