Unilever’s decision to launch into the chilled ready meals category with existing brands Colman’s, Bertolli and Knorr (MW last week) will surprise few in the food industry. The Anglo-Dutch consumer goods giant has been expected to launch into the market for several years, although it has yet to give retailers a definite launch date.
Unilever has been criticised for the slow pace of its innovation in recent years and ramping up its new product development has been a key part of the company’s One Unilever Programme, led by chief executive Patrick Cescau. At the end of last year, it announced plans to create six food innovation "centres of excellence" that would launch market leading products (MW November 23, 2006).
Some industry observers believe its plans to launch into the chilled ready meals market signal the beginning of a less fragmented attitude to brand strategy. It has already launched into this area in the US, with its Country Crock brand, and in Italy with Quattro Salti in Padella.
But David Lang, food analyst at Investec, warns that the UK chilled ready meal category is dominated by private-label products. He says: "Unilever already has a chilled distribution arm in place through its margarine production but there is very low brand penetration in this market. The supply chain can be difficult to handle as it has got to be so carefully controlled."
But he also points out that Unilever has extended Bertolli into frozen foods with its Dinner for Two range, which it claims is inspired by professional chefs. The meals are "flash-frozen", which means they do not contain preservatives and are positioned as fresh foods. As such, the range also commands a premium price but has performed well since it was launched in 2005.
In the UK, Unilever has decided to go down the branded ingredients route using Colman’s as a launchpad for a range of traditional British food with the addition of Colman’s mustard, Bertolli for a range of Italian dishes and Knorr for Chinese and Indian meals.
According to one industry insider, it is a strategy that the food manufacturer looked at some years ago for its frozen ready meals under its Bird’s Eye brand. But the source claims it did not reach the development stage. It has used the same strategy to extend the reach of Marmite into the snacks category, with biscuits and crisps that feature the product as a branded flavouring.
A spokesman for Unilever says it will consider using branded ingredients wherever there is a strong brand fit, but he adds that the branded ingredient must have a "distinctive flavour or quality" so consumers can appreciate the benefit that it offers.
Paul Walton, chairman of branding consultancy The Value Engineers, says he expects the use of branded ingredients to increase. He explains: "We are living in an age of a smaller number of bigger brands. The other brands need to find a way of getting into the right distribution channels."
But he also believes the brand has to offer consumers a taste they enjoy in a new format. He cites Cadbury’s Dairy Milk, which has extended into chilled desserts and cakes, as an example.
Sector under pressure
According to Mintel, sales for chilled ready meals have slowed down during the past two years and sales rose by just 6% during that period. A rise in price competition and heavy discounting among retailers has been key to this decline.
Paul Cousins, founder of consultancy Catalyst Marketing Services, believes retailers will welcome this branded approach as it is expected to receive a major above-the-line spend. But he warns that consumers must feel the branded ingredient is adding value to a product or they will return to private label products.