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Health Markets:
Market Assessment Publications Ltd.
Market Study September 2004
The vegetarian foods market, in value terms, continues to show a declining growth rate, which fell to 6% in 2003/2004. This represents a fall from a growth rate of 7.4% in 2002/2003, and from the market's major growth periods in 2000/2001 and 2001/2002 (which saw growth rates of 14.6% and 16.8%, respectively).
This situation has been attributed to apparent saturation in the numbers of vegetarians within the UK population, the fact that a growing proportion of the vegetarian foods market is represented by lower-priced retailer own-label products, and the low growth rate of the frozen sector. The much larger, and more strongly growing, chilled sector is dominated by sales of retailer own-label items, and these are also gaining share in the frozen market.
Although difficult to quantify, vegetarians are estimated to have accounted for 5.1% of the UK population in 2003, down from a peak of 5.4% in 1997. This comprises 6.1% of females and 3.9% of males — with the highest penetrations in the C1 and AB socio-economic groups.
However, a growth rate of 6% is still very creditable within the overall food market, and manufacturers of vegetarian brands, many of which also produce foods for the own-label market, continue to develop and promote their products. The most significant manufacturer in the vegetarian foods market is Marlow Foods, with its Quorn? range and now owned by Montagu Private Equity. Other important manufacturers and brands are Heinz, with the Linda McCartney range; the traditional frozen foods companies Findus (owned by the private-equity company EQT); Birds Eye (owned by Unilever); Cauldron Foods (part of The Rayner Food Group); Haldane Foods (owned by ADM); and Tivall (an Israeli manufacturer).
The vegetarian foods market now encompasses products specifically manufactured for vegetarians, such as equivalents of many meat-based foods made using soya or wheat protein, or the mycoprotein Quorn?, and those traditional products which are suitable for vegetarians, usually represented by meat-free ready meals and meal accompaniments. This represents an evolution in the market, which previously tended to consider vegetarian foods in terms of the former category only. This evolution has been driven by increasing consumption of vegetarian foods by the growing number of meat reducers and avoiders, rather than just by `true' vegetarians. In consequence, the market has become more mainstream in nature.
There are a number of segments within each of the chilled and frozen sectors of the market. In chilled vegetarian foods, almost all segments showed growth between 2002/2003 and 2003/2004. However, the slow growth in the frozen sector is attributed to a decline in the largest segment, and in several others.
Purchases of vegetarian foods are forecast to increase by 5.5% in value terms in 2004/2005, falling to an annual growth rate of 4.3% by 2007/2008 and rising to a growth rate of 4.6% in 2008/2009. The value share held by chilled products is predicted to increase to 73.8% by that date, up from 70.3% currently.
Executive Summary
1. Introduction
OVERVIEW 2
HISTORY OF VEGETARIANISM 2
DEFINITIONS WITHIN
VEGETARIANISM 3
‘HIDDEN’ ANIMAL PRODUCTS 4
REASONS FOR
BECOMING VEGETARIAN 4
Table 1: Land Areas Needed to
Supply Total UK Demand for
Selected Foods (million hectares
and hectares per tonne), 1999 5
2. Strategic Overview
MARKET DYNAMICS AND SEGMENTATION 6
Factors Driving or Affecting
the Market 6
Consumption of Meat and
Meat Products 6
Table 2: Average Per Capita Consumption of Meat and
Meat Products by Type
(grams per person per week),
1971-2002/2003 6
The Effects of BSE and the
Foot-and-Mouth Epidemic 7
Health Claims for
Vegetarian Foods 7
Table 3: Reduced Meat Eating
or Meat Avoidance
(% of adults), 1984-2001 9
Table 4: Non-Meat Eaters/
Red-Meat Avoiders by Sex
and Age (% of adults),
1984-2001 9
Consumption of Fruit
and Vegetables 10
Table 5: Average Per Capita Consumption of Vegetables
and Fruit (grams per person
per week), 1975-2002/2003 11
Table 6: Average Daily Fruit
and Vegetable Consumption
by Number of Portions
per Day by Sex and Age
(%), 2000/2001 12
Environmental and
Ethical Factors 12
Growth in Vegetarianism 13
Table 7: Number and
Percentage of Vegetarians
in the UK by Sex
(million and %), 1984-2003 13
Figure 1: Number of Vegetarians
in the UK (million), 1984-2003 15
Table 8: Vegetarians by
Socio-Economic Group
(% of adults), 1990-2001 16
Market Size, Sectors
and Growth 17
Table 9: The UK Vegetarian
Foods Market by Sector
by Value (£m at rsp),
1997/1998-2003/2004 18
Figure 2: The Total UK
Vegetarian Foods Market
by Value (£m at rsp),
1997/1998-2003/2004 19
DISTRIBUTION
19COMPETITIVE STRUCTURE 19
ADVERTISING 20
THE CONSUMER 20
MARKET FORECASTS 21
Table 10: Forecast Total UK Vegetarian Foods Market
by Value (£m at rsp),
2004/2005-2008/2009 21
3. Sector Analysis
INTRODUCTION 22
MARKET SIZE 22
Chilled Vegetarian Foods 22
Table 11: The UK Chilled
Vegetarian Foods Sector
by Value by Product
Segment (£m at rsp),
2002/2003-2003/2004 23
Table 12: Shares Held by Brands
and Own-Label Products Within
the UK Chilled Vegetarian Foods Sector by Value by Product
Segment (%), 2003/2004 24
Frozen Vegetarian Foods 24
Table 13: The UK Frozen
Vegetarian Foods Sector
by Value by Product
Segment (£m at rsp),
2002/2003 and 2003/2004 25
Table 14: Shares Held by Brands
and Own-Label Products Within
the UK Frozen Vegetarian
Foods Sector by Value
by Product Segment
(%), 2003/2004 26
CONSUMER TRENDS
26Chilled Vegetarian Foods 26
Frozen Vegetarian Foods 26
ADVERTISING AND
MARKETING ACTIVITY
Table 15: Main Media Advertising Expenditure on Vegetarian
Foods by Brand (£000),
Years Ending December
1998-2003 and March 2004 27
DISTRIBUTION
28Table 16: UK Sales of Vegetarian Foods by Major Retail Outlet
by Value (%),
2001/2002-2003/2004 29
Figure 3: UK Sales of Vegetarian
Foods by Major Retail Outlet
by Value (%), 2003/2004 30
4. A European Perspective
Table 17: Numbers of Vegetarians
in Selected European Countries
(000 and %), 2002 32
5. PEST Analysis
POLITICAL AND
ECONOMIC FACTORS 33
Government Encouragement
of Healthy Eating 33
Rising Levels of Obesity 33
SOCIAL FACTORS
33Meat Reduction
and Avoidance 33
TECHNOLOGICAL FACTORS
34Product Developments 34
The Internet 34
6. Consumer Dynamics
OVERVIEW
35Table 18: Summary Results
of Consumer Research — Vegetarianism and Purchasing
of Vegetarian Foods (number
and % of respondents), 2004 35
Table 19: Summary Results of Consumer Research — Reasons
for Vegetarianism and
Demand for Availability of
More Vegetarian Products
(% of vegetarian
respondents ), 2004 36
Table 20: Summary Results
of Consumer Research —
Types of Vegetarian Foods
Purchased (% of
respondents who buy
vegetarian foods), 2004 37
NON-VEGETARIANS
37Table 21: Those Who Are Not Vegetarians and Never Buy Vegetarian Foods, and Those
Who Are Not Vegetarians
But Sometimes Buy
Vegetarian Foods (% of all respondents), 2004 38
REDUCED MEAT EATING
OR CONSIDERING
VEGETARIANISM
Table 22: Those Who, Although
Not Vegetarians, Have Reduced
Their Meat Eating, and Those Who Are Thinking of Becoming
Vegetarian (% of all
non-vegetarian
respondents), 2004 41
TYPES OF VEGETARIAN
44Table 23: Those Who Do Not
Eat Meat or Fish, and Those
Who Do Not Eat Meat
But Do Eat Fish (% of all
vegetarian respondents), 2004 45
REASONS FOR
BEING VEGETARIAN
Table 24: Those Who Are
Vegetarian for Health Reasons,
and Those Who Are
Vegetarian Because They
Are Concerned About Animal
Cruelty or The Environment
(% of all vegetarian
respondents), 2004 49
DEMAND FOR
AVAILABILITY OF MORE VEGETARIAN FOODS
Table 25: Those Who Think
That More Vegetarian Products
Ought to be Offered
(% of all vegetarian
respondents), 2004 52
TYPES OF VEGETARIAN
FOODS PURCHASED
Chilled and Frozen
Vegetarian Ready Meals 55
Table 26: Purchasing of Chilled
and Frozen Vegetarian
Ready Meals (% of all
respondents who purchase
vegetarian foods), 2004 55
Vegetarian Sausages, Burgers
and Grills, and Pastry Products 58
Table 27: Purchasing of Chilled
or Frozen Vegetarian Sausages, Burgers or Grills, and of Chilled
or Frozen Vegetarian Pastry
Products (% of all respondents
who purchase vegetarian
foods), 2004 59
Vegetarian Ingredients and
‘Other Vegetarian Products’ 62
Table 28: Purchasing of
Vegetarian Ingredients and
Other Vegetarian Products
(% of all respondents who
purchase vegetarian
foods), 2004 62
7. Company Profiles
MARLOW FOODS LTD 66
Corporate Strategy 66
Products 66
Advertising 66
Market Share and Profitability 67
Table 29: Marlow Foods Ltd
— Turnover and Pre-Tax Profit
(£m and %), Years Ending
31st December 2001-2003 67
Recent Company
Developments 67
HJ HEINZ FROZEN
& CHILLED FOODS LTD
Corporate Strategy 68
Products 68
Advertising 68
Market Share and Profitability 68
Table 30: HJ Heinz Frozen
& Chilled Foods Ltd — Turnover
and Pre-Tax Profit (£m and %),
Years Ending 28th April 2001-
26th April 2003 69
Recent Company
Developments 69
CAULDRON FOODS LTD
69Corporate Strategy 69
Products 70
Advertising 70
Market Share and Profitability 70
Table 31: Cauldron Foods Ltd
— Turnover and Pre-Tax Profit
(£m and %), Years Ending
31st December 2000-2002 71
Recent Company
Developments 71
FINDUS LTD
71Corporate Strategy 71
Products 71
Advertising 72
Market Share and Profitability 72
Table 32: Findus Ltd — Turnover
and Pre-Tax Profit (£m and %),
Years Ending 31st December
2000-2002 72
Recent Company
Developments 72
DALEPAK FOODS PLC
73Corporate Strategy 73
Products 73
Advertising 73
Market Share and Profitability 73
Table 33: Northern Foods PLC
— Turnover and Pre-Tax Profit
(£m and %), Years Ending
31st March 2001-2003 74
Recent Company
Developments 74
HALDANE FOODS LTD
74Corporate Strategy 74
Products 74
Advertising 75
Market Share and Profitability 75
Table 34: Haldane Foods Ltd
— Turnover and Pre-Tax Profit
(£m and %), Years Ending
31st December 2001-2003 75
Recent Company
Developments 75
BIRDS EYE FOODS LTD
76Corporate Strategy 76
Products 76
Advertising 76
Market Share and Profitability 76
Table 35: Unilever PLC —
Turnover and Pre-Tax Profit
(
31st December 2001-2003 77
Recent Company
Developments 77
TIVALL
77Corporate Strategy 77
Products 78
Advertising 78
Recent Company
Developments 78
Profitability 78
GOODLIFE FOODS lTD
78Corporate Strategy 78
Products 78
Advertising 78
Market Share and Profitability 79
Table 36: Goodlife Foods Ltd
— Turnover and Pre-Tax Profit
(£m and %), Years Ending
31st December 2000-
29th December 2003 79
THE REDWOOD WHOLEFOOD COMPANY LTD
79Corporate Strategy 79
Products 79
Advertising 80
Market Share and Profitability 80
Recent Company
Developments 80
WICKEN FEN WHOLESOME
FOODS LTD
Corporate Strategy 80
Products 80
Advertising 80
Profitability 81
Recent Company
Developments 81
RETAILER OWN-LABEL
SUPPLIERS
8. The Future
FORECASTS 82
Table 37: Forecast UK
Vegetarian Foods Market by
Sector by Value (£m at rsp), 2004/2005-2008/2009 83
Figure 4: Forecast Total UK
Vegetarian Foods Market
by Value (£m at rsp),
2004/2005-2008/2009 84
9. Further Sources
Associations 85
Publications 85
General Sources 85
Government Publications 86
Other Sources 86
Bonnier Information Sources 86
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