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Reinvigorating The Frozen Desserts Category

Pioneering Foods Group Ltd recently announced that it is going all out to reinvigorate the frozen desserts category and put it firmly back on the UK retailer's agenda by injecting what it calls "some much needed innovation and creativity" into a "largely stagnant area." Based in Holt, Norfolk, Pioneering Foods Group Ltd is the holding company for two wholly owned subsidiaries - Icefresh Foods Ltd and Heaven Made Foods Ltd. The two business units have over 50 years' combined experience in the frozen sector and together they supply the UK retail and in-store bakery, foodservice and manufacturing sectors with a complementary range of high quality frozen and chilled products. Simon Spence, Managing Director of Pioneering Foods Groups Ltd, spoke to The Grocery Trader. The Grocery Trader - First question: who owns Pioneering Foods? What is your previous track record in this industry? Our holding company Pioneering Foods Group Limited (PFGL) is owned by myself and Matthew Margereson (Operations Director) and between us we have 23 years' combined frozen food industry experience. PFGL wholly owns two operating businesses, Icefresh Foods Ltd and Heaven Made Foods Ltd. GT - Who is with you in the management team? Supporting us are Mark Cobb (Head of Sales & Marketing), Matthew Dickens (Head of Operations), Simon Shaw (Head of Technical Services and Compliance) and Patrick Hilliard (Head of Finance). GT - Where are your products made? Icefresh products are made by overseas manufacturers under exclusive contracts. Heaven Made Foods make all their delicious desserts by hand in kitchens in Holt, Norfolk. GT - How big are Icefresh Foods and Heaven Made Foods in combined turnover? Group turnover is £20 million, with a further £4 million in commissioned sales. We have seen sales increase by anything between 15% and 40% year on year for the past 12 years. Within this frozen desserts amount to £12 million, with the balance split between ice cream and frozen savoury products. GT - I understand you also supply the foodservice and manufacturing sectors. How does that work? Our primary strategy is to work closely with key accounts on volume projects, whether they're retail or foodservice. You can't get a cigarette paper between foodservice and retail customers anymore, they are both highly efficient and tough to deal with. Foodservice is not an easy option, a lot of retail buyers have moved into foodservice roles over the last few years and taken with them a price-based agenda. We have dedicated account managers and supporting teams for both the foodservice and the retail accounts, who understand the nuances of each sector. GT - It's six months since you announced the merger of Icefresh Foods and Heaven Made Foods. What have you done so far to integrate the two companies and rationalise them into one business? Firstly, it was not a merger. Icefresh Foods and Heaven Made Foods are sister companies wholly owned by PFGL. Since the Heaven Made Foods acquisition, significant synergies have been found between the sister companies across all functions, leaving Heaven Made as a production unit with a small management team focusing on factory issues and quality assurance. All other functions are shared e.g. sales and marketing, innovation, operations, technical services and finance. GT - How much are you investing in taking them forward? We have spent close to £1 million modernising the Heaven Made fabric and shoring up the business. All our colleagues have worked very hard to turn the business round. GT - What are their respective frozen desert propositions in retail and their bestselling branded retail products? Do you produce retailer branded own label products? Heaven Made Foods is positioned within the frozen luxury desserts market. The desserts - Crème Brulee, Winter & Summer Puddings, Panna Cotta, and a variety of Cheesecakes are hand-made in small batches using the best ingredients available. Icefresh create private label core favourites such as éclairs, profiteroles, cream slices, bake at home 'morning goods' and premium ice cream and ice cream sticks as well as sweet and savoury party foods and ready recipes. - we supply every major retailer across the quality spectrum. GT - Is there a combined sales operation? Yes, we have a combined commercial operation of eight people including sales, marketing and NPD. GT - What kinds of products are included in the UK frozen desserts category as you define it? The category covers a range of desserts from gateaux's and cheesecakes to hot eats and cold eats, continental/small cakes and pastries and pastry/ice cream desserts. GT - You're on record as calling frozen desserts "a largely stagnant area." Can you put figures to that - how big is the market in value, and what rate is it growing at? The market was down 13% in sales value between 2001-2005 and not showing any significant sign of mass recovery. There are two categories that have grown however, Cheesecakes and Small Cakes & Slices, which suggests a continued increase in grazing habits amongst those enjoying a dessert after their meal GT - Why do you think it's in this state? The reasons for this are a combination of no innovation by manufacturers, unclear retailer strategy and chilled being seen as superior in quality to frozen. There has been no real innovation within the desserts market within the last five years, and only one emerging sub-category, the 'small cakes' and 'party ranges.' We've also lost two key suppliers, Sara Lee and Hibernia. Perception is poor among retailers and therefore shoppers too. Essentially, retailers aren't making time for frozen; it's been over-promoted as a sector and low prices lead consumers to believe this means lower quality. There is also poor point of sale and the priority of retailers is on short-term wins. GT - Why do you think there hasn't been more innovation or creativity in this market recently? The market is saturated with own label, and there are no brands doing anything new. Businesses do not have the money to spend on NPD, as traditionally private label is 25% cheaper than the brands, and private label manufacturers rely on the brands for me-too inspiration. There is no reason why private label should now be cheaper than the brands, as private label manufacturers do just as much innovation and contribute just as much in marketing as the brands do; however the retail buyers expect something different. Also, retailers have little confidence supporting new product innovation with first to market opportunities not being given enough time in store to prove themselves before the line gets the chop. GT - What proportion of your frozen dessert retail sales goes through the multiples - supermarkets, Co-ops and c-store chains? 100%. GT - What share of the UK frozen desserts market do your combined businesses have at present in retail, and what retailers do you supply? What are your bestselling frozen dessert products? Our market share is 7.5%, and we supply all major grocery retailers. Our best selling dessert product by far is the frozen éclair. We pioneered and developed the choux pastry market in conjunction with our Principal, Poppies in Belgium, and made the product our own building on this with the later introduction of sweet party. We are also known for our award-winning Summer and Winter Puddings. GT - What chilled and other non-frozen products do you supply? We supply luxury chilled jelly terrines with red wine and chilled summer and winter puddings. We also supply choux pastry products and sponge rolls to the in-store bakery sector. GT - What do we know about UK consumers' usage of, and attitudes to, frozen desserts? Which areas are growing in popularity? The main thing to state is that consumers search the category for promotions and there are not many areas within frozen that are increasing in popularity. GT - Are UK frozen dessert sales affected by consumer prejudice that frozen food generally isn't as good as chilled or fresh? The majority of consumers do not have as much freezer space as say 10 years ago as homes no longer have chest freezers - but because of retailers focus on promotions discounting and conveying an artificial sense of fresh through their chilled sales there is a perception by a minority that frozen is poorer than chilled or fresh. However the one point that needs to be made is that frozen can always be better than fresh, as there's no need to add artificial preservatives. This fact needs to be communicated to consumers before sales of frozen will increase. Its not that consumers don't want frozen as the boom in on-line quality frozen food retailing by Forman & Field, Cook, and Food, to name just three quality producers demonstrates. Quality overall has been dumbed down by retailers over the last 10 years hell-bent on getting dog food price RSP's and maximum promotional exposure, though it's very refreshing to see a new wave of development briefs emerging from the retailer think tanks in recent months GT - What new retail frozen dessert products are you introducing in 2006? What are your plans for advertising and consumer marketing support? At Icefresh we are pioneering an exciting NPD project with a top chef for 2006, the aim being to develop the frozen snacking market led by taste and quality, not just price. We anticipate that our activity will see our market share increase to 10% over the next 18months. With our innovation the frozen dessert category is developing into a quality category and will become a destination zone for shoppers GT - Talking now about the retailers, how do you plan to work with them to build their sales of frozen desserts? We need to convince retailers that there is still life in frozen by introducing some innovation to the category. We also need to improve the availability of product, however we can only get product to depot, and the last 50 yards is where the supply chain breaks down GT - By its very nature, the frozen section of the store is a frosty and unwelcoming place, unlike the chilled and fresh sections, which are degrees warmer. How do you plan to make the frozen desserts section warmer and more enticing? A big misconception is that frozen is colder than chilled - in fact, the chilled sector of a store is actually a few degrees colder than the frozen sector! The reason for it looking unexciting is there is poor POS and it always looks cold and uninviting with freezer doors often being frozen up and the freezers themselves left white. What we can do is to add bright creative POS, Iceland do a great job here plus add heated door handles and heated glass so cabinets don't freeze up, as well as warm floors and warmer lighting. You can also break up the frozen sector by putting frozen and chilled ready meals together - this way the customer has a true choice. The British Frozen Food Federation is very active in the promotion of frozen foods at a senior level within UK grocers and has written to them asking for a statement of their frozen strategies. GT - Staying in stock and managing the supply chain is crucial to success. How will you maintain availability in store? The problem is producers have little influence over in-store merchandising but on-shelf availability is an issue as noted previously. That said the BFFF colour coding initiative conceived by Tesco is helping those retailers that have adopted it as it's easy for shelf-stackers to identify products in areas that need to be replenished. Perhaps retailers should give their shelf-stackers battery powered heated gloves like the type worn by motor bikers so they aren't put off by the temperatures! GT - Finally, where do you see Pioneering Foods Group Ltd going from here? Our strategy is all about quality food - "To be the food industry's finest, most trusted and most imaginative provider of quality goods and services with distinction." It's that simple! Pioneers explore. We take delight in new discoveries. We love what we do and don't settle for second best. We will also be looking to make a further acquisition towards the end of 2007 - so watch this space. Tel: 01263 714700 - Web: www.pioneeringfoods.co.uk