Healthy Eating

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Market Assessment Publications Ltd.
Market Study July 2004

The healthiness (or otherwise) of the food we eat is very much in the news. The problem of obesity, blamed partly on sedentary lifestyles, and partly on the food we eat, is becoming more acute in the UK, and there are growing concerns about the effects of this. The Third Report — Obesity published in May 2004 by the Health Select Committee made a number of recommendations which affect the food industry, including a voluntary ban on those `junk food' advertisements on television aimed at children, the removal of sweets from supermarket checkouts, the introduction of `healthier options' at fast-food outlets, and a reduction in the cost of healthy foods compared with unhealthy ones.

The market for organic food saw a period of rapid growth in the late 1990s as it moved from being a niche to a mainstream sector. This period is now coming to an end, as the number of new organic consumers declines, although the market is still showing steady growth.

The vegetarian foods market has also grown from niche to mainstream status, although it did so earlier than organic food. In this case, the sales increase came about through an increase in the number of non-meat-eating consumers and through changing attitudes to meat among non-vegetarians, which have been particularly important to the market over the last 5 years. Recent growth in the market has been led by the chilled vegetarian sector.

Low-fat and low-sugar variants of mainstream foods, originally marketed on a slimming platform, have become more general in their appeal, with the marketing focus turning to the overall health benefits of cutting down on fats and sugar.

Key Note's original research, conducted in May 2004, showed that a large minority of consumers are confused and/or sceptical about the wide variety of health advice and information available today. Relatively few appreciate the efforts of high-street supermarkets to improve our eating habits by producing `healthy' own-label ranges. Despite this scepticism, 37% consider it worth paying more for healthier food and drink; however, only 11% would sacrifice taste in order to eat healthily.

25% say that they check food and drink labels to ascertain fat content; 24% check that the food does not contain any additives that they may wish to avoid.

A comparison of findings on vegetarianism with those from early Key Note surveys reveals that the number of vegetarian respondents has remained constant over the last 5 years, but there has been a decrease in the proportion of meat-eaters with vegetarians living in their household. This could indicate that the number of vegetarian children and young adolescents is falling.

The popularity of the Atkins diet may be partly responsible for the fact that 21% of respondents say that they try not to eat too many carbohydrates. However, 46% avoid fat (such as cheese or butter) in their diets.

Executive Summary

1. Introduction

REPORT FOCUS 2

DEFINITIONS 3

Organic 3

Vegetarian 3

Low Fat 3

Low Sugar 3

2. Strategic Overview

HEALTHY EATING IN THE SPOTLIGHT 4

THE CONSUMER 5

ADVERTISING AND MARKETING 6

ORGANISATIONS AND PRESSURE GROUPS 7

The Food Commission 7

The Food and Drink Federation 7

The Food Standards Agency 7

The Soil Association 8

The Vegetarian Society 8

3. Organic Food

BACKGROUND 9

MARKET SIZE 9

Table 1: The UK Organic Foods Market by Value (£m at rsp), Years Ending April 1999-2003 9

Figure 1: The UK Organic Foods Market by Value (£m at rsp),
Years Ending April 1999-2003 10

SEGMENTATION 10

Table 2: The UK Organic Foods Market by Retail Value by Sector (£m at rsp),
Years Ending April 2002
and 2003 10

Table 3: The UK Organic Foods Market by Market Share by Sector (%),
Years Ending April 2002
and 2003 11

Figure 2: The UK Organic Foods Market by Market Share by Sector (%), Year Ending April 2003 12

Fruit and Vegetables 12

Dairy Products 12

Cereals and Baked Goods 13

Hot and Cold Beverages
(including Wine) 13

Multi-Ingredient Items 13

Meat, Meat Products and Fish 13

Baby Foods 13

ORGANIC FARMING 13

Table 4: Number of Registered Organic Food Producers in the UK,
Years Ending April 1995-2003 14

Figure 3: Number of Registered Organic Food Producers in the UK,
Years Ending April 1995-2003 14

DISTRIBUTION 15

Table 5: UK Organic Foods Retail Sales by Type of Outlet by Market Share (%), Years Ending April
2001-2003 15

CONSUMER TRENDS 15

Table 6: Comparison of Attitudes Towards Organic Foods (% of respondents), June 2002 and
August 2003 16

MARKETING ACTIVITY 17

ADVERTISING 18

Table 7: Main Media Advertising Expenditure on Selected Organic Products (£000), Years Ending March 2003 and 2004 18

4. Vegetarian Food

BACKGROUND 19

MARKET SIZE 19

Table 8: The UK Market for Vegetarian Foods by Sector by Value (£m at rsp), Years Ending February/March 1999-2003 20

Figure 4: The UK Market for Vegetarian Foods by Sector by Value (£m at rsp), Years Ending February/March 1999-2003 20

SEGMENTATION 21

Table 9: The UK Market for Chilled Vegetarian Foods by Sector by Value
(£m at rsp), Years Ending February/March 2002 and 2003 21

Table 10: The UK Market for Frozen Vegetarian Foods by Sector by Value
(£m at rsp), Years Ending February/March 2002 and 2003 22

CONSUMER TRENDS 22

Table 11: Summary of Purchasing of Vegetarian Products (% of respondents), 2003 23

Table 12: Vegetarians and Vegetarian Households (% of respondents),
1998, 2001, 2002 and 2004 24

MARKETING ACTIVITY 24

ADVERTISING 25

Table 13: Main Media Advertising Expenditure on Selected Vegetarian Range (£000), Years Ending March 2003 and 2004 25

5. Low-Fat & Low-Sugar Foods

BACKGROUND 26

MARKET SIZE 26

Table 14: The Total UK Market for Low-Fat and Low-Sugar Products by Value (£m at rsp), 1999-2003 27

Figure 5: The Total UK Market for Low-Fat and Low-Sugar Products by Value (£m at rsp), 1999-2003 27

SEGMENTATION 28

Table 15: The UK Market for Low-Fat and Low-Sugar Products by Sector
by Value and Market Share (£m at rsp and %), 2002 and 2003 28

Table 16: Growth in the UK Market for Low-Fat and Low-Sugar Products by Sector (£m at rsp and %), 2002-2003 29

Table 17: The Low-Fat and Low-Sugar Foods Market by Subsector
(£m), 2003 29

Dairy and Alternatives 31

Snacks, Biscuits, Cakes and Cereals 31

Ready Meals 32

Grocery Items 32

DISTRIBUTION 32

CONSUMER TRENDS 32

Table 18: Regular, Occasional and Non-Purchasers of Low-Fat and
Low-Sugar Foods (% of respondents), 2003 33

MARKETING ACTIVITY 34

ADVERTISING 34

Table 19: Main Media Advertising Expenditure on Selected Low-Fat
and Low-Sugar Products (£000),
Years Ending March
2003 and 2004 35

6. An International Perspective

OBESITY AND DIET 36

FRUIT AND VEGETABLE
PROMOTION 37

The US 38

Europe 38

7. PEST Analysis

POLITICAL FACTORS 39

ECONOMIC FACTORS 39

SOCIAL FACTORS 40

TECHNOLOGICAL FACTORS 40

8. Consumer Dynamics

SUMMARY AND COMPaRISON OF CONSUMER RESEARCH 41

Table 20: Comparison of Consumer Attitudes Towards Healthy Eating
(% of respondents), 2002 and 2004 42

ATTITUDES TOWARDS HEALTH CLAIMS 44

I Don’t Always Believe What Food Manufacturers And Supermarkets Say About How Healthy Different Foods Are (S1) 44

High-Street Supermarkets With A Healthy Own-Label Range Of Foods Mean It Is Easy To Be Sure The Food You Are Buying Is Good For
You (S2) 44

Table 21: Attitudes Towards Supermarket Healthy Own-Label Ranges, and Manufacturers’/Retailers’ Claims (% of respondents), 2004 45

There Is So Much Conflicting Advice About Which Types Of Food And Drink Are Healthy And Unhealthy For You That You May As Well Just Eat What You Like (S3) 47

I Think Nowadays People Make Too Much Fuss About Whether Food And Drink Is Healthy Or Not (S4) 47

Table 22: Confusion Over and Scepticism About Health Claims (% of respondents), 2004 48

DO CONSUMERS READ FOOD LABELS? 50

When I Buy Food And Drink I Usually Check The Labels To Find Out The Fat Content (S5)/When I Buy Food And Drink I Usually Check The Labels In Case There Are Any Ingredients
I Wish To Avoid, e.g. Additives, Colourings, etc. (S6) 50

Table 23: Those Who Check Food Labels for Fat Content, and for Ingredients to Avoid (% of respondents), 2004 50

When I Buy Food And Drink I Never Check The Ingredients On The Label (S7) 52

Table 24: Those Who Do Not

Check Food Labels
(% of respondents), 2004 53

WHAT WILL CONSUMERS SACRIFICE? 55

I Think It Is Worth Purchasing Food And Drink Which Is Healthy Even Though It May Cost A Bit More

(S8) 55

I Think It Is Worth Purchasing Food And Drink Which Is Healthy Even If It
Doesn’t Taste As Good (S9) 55

Table 25: Those Who Think Healthy Food is Worth Purchasing if it Tastes Less Good, and Those Who Would Pay a Premium for Healthy Food (% of respondents), 2004 56

MEAT-FREE EATING 58

I Eat Meat, But Have At Least Four Meat-Free Main Meals Each Week (S10) 58

I Eat Meat, But There Is At Least One Other Person In My Household Who Does Not (S11) 58

Table 26: Non-Vegetarians Who Eat a High Proportion of Meat-Free Meals,
and Non-Vegetarians With at Least One Vegetarian in Their Household
(% of respondents), 2004 59

I Do Not Eat Meat But There Is At Least One Other Person In My Household Who Does (S12)/I Do Not Eat Meat, Nor Does Anyone Else In My Household (S13) 61

Table 27: Vegetarians in Vegetarian and Meat-Eating Households
(% of respondents), 2004 62

FOOD AVOIDANCE 64

I Try Not To Eat Too Many Carbohydrates (e.g. Bread, Potatoes, Cereals) (S14) 64

I Try Not To Each Too Much Fat (e.g. Butter, Cheese) (S15) 64

Table 28: Those Who Avoid Carbohydrates, and Those Who Avoid Fat (% of respondents), 2004 65

9. Company Profiles

OVERVIEW 67

COMPETITIVE STRUCTURE 67

Organic Food 67

Vegetarian Foods 68

Low-Fat and Low-Sugar Foods 68

RETAILER ACTIVITY 68

ASDA Group Ltd 68

Financial Results 69

Marks & Spencer PLC 70

Financial Results 70

J Sainsbury PLC 70

Financial Results 71

Tesco PLC 71

Financial Results 72

Waitrose Ltd 72

Financial Results 72

10. The Future

HELPING CONSUMERS TO EAT A HEALTHY DIET 73

ORGANIC FOOD 73

Table 29: The Forecast UK Organic Foods Market by Value (£m at rsp), 2004-2008 74

VEGETARIAN FOODS 74

Table 30: The Forecast UK Vegetarian Foods Market (£m at rsp),
2004-2008 75

LOW-FAT AND LOW-SUGAR PRODUCTS 75

Table 31: The Forecast Total UK Market for Low-Fat and Low-Sugar Foods (£m at rsp), 2004-2008 76

11. Further Sources

Associations 77

Publications 77

General Sources 78

Government Sources 78

Other Sources 78

Bonnier Information Sources 79

For full details, please email jenniferc@cmsinfo.com

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