Euromonitor International’s recently published figures look encouraging for the Fresh Food industry. Global sales remain strong, posting 2% volume growth to reach 2.2 billion tonnes in 2015. Overall growth was down from the 3% posted in the previous year, but still pretty much in line with a CAGR of 2.5% achieved over the 2010-2015 review period as a whole. The slowdown in China and the contraction of the Russian and Brazilian markets negatively influenced global growth in 2015.
Global market: A bag of mixed fortunes
Middle East and Africa led the regional growth with a near 4% volume increase in 2015. Growing disposable incomes and health awareness particularly boosted sales of fresh fruits, meat and eggs in Middle East and Africa. Fresh food sales were most dynamic in the United Arab Emirates (7% growth), Egypt (5%), Morocco and South Africa (3% each) in 2015.
Despite the decelerating Chinese market, Asia Pacific showed the second highest growth rate of 3%. The region has the highest absolute year-on-year population increase and the highest per capita consumption in the world. China and India contributed 73% of the absolute fresh food global volume gain of 43.4 million tonnes in 2015.
By contrast, the highly developed markets of Western Europe and North America remained sluggish, with volume growth under 1%, due to busy lifestyles, a high proportion of single living and stronger consumer preferences for the convenience and “added value” nature of packaged/processed food.
Decline in Russia affects Eastern European performance
A 5% decline in Eastern Europe was caused by falling population across the region and the negative performance of Russia, the largest regional market, accounting for over 40% of Eastern European consumption in 2015.
The Russian Fresh Food market contracted by 4% in volume and 2% in retail value terms in 2015 due to the import embargo on a great number of food products from the EU, North America, Australia and a few other markets. Fresh Food sales have been severely affected, despite the boost in domestic production as part of Russia’s long-term aspirations towards self-sufficiency. The situation was further compounded by the devaluation of the rouble, the country’s deepening economic recession and Russian consumers’ dwindling disposable incomes.
Sales of products heavily dependent on imports declined dramatically: crustaceans and molluscs and cephalopods volumes plummeted by 55% and 32%, respectively, cauliflowers and broccoli contracted by 41%, nuts by 29%, fruits by 20% and beef by 8%.
Pulses, fish/seafood and eggs are most dynamic
Globally, pulses was the best performer in 2015, having increased by 4% in volume terms. They provide an affordable source of protein and are particularly important across developing and emerging markets. The success of pulses is largely attributed to 5% growth in India, where some 360 million vegetarians rely heavily on pulses for dietary protein. India alone accounted for 56% of global fresh pulse volume sales, totalling 51 million tonnes in 2015.
A number of prominent health and wellness trends favour an increase in the consumption of pulses in the developed markets. Pulses contain significant quantities of vitamins, minerals, protein, complex carbohydrates and dietary fibre, and are ideal for those desiring a shift towards a diet high in vegetarian protein and low in refined carbohydrates. In addition, pulses are gluten-free, ticking another important box in modern diet trends.
Fish/seafood and eggs closely followed pulses with 3% overall volume growth each. These categories were particularly dynamic in Middle East and Africa, Asia Pacific and Latin America, where consumers were increasingly able to improve their protein intake and afford pricier fish and seafood in addition to the staple of eggs.
Despite only marginal growth of fish/seafood in Western Europe and decline in North America, health-conscious consumers are increasingly buying fish as a wellness choice, as the benefits of seafood consumption have been well highlighted. Fish and seafood is known as a good source of protein and a healthy alternative to meat, although many are still reluctant to handle and cook raw fish from scratch. Manufacturers and retailers are constantly improving packaging to the point of offering cook-in-bag solutions and provide detailed instructions to help consumers prepare their seafood meal.
Beef and veal continues to decline in most regional markets
On the global level, overall meat consumption grew by 2% in volume terms in 2015. Demand for meat has been driven by emerging markets, where increased prosperity and rising populations resulted in growing consumption of relatively expensive meat. The Middle East and Africa and Asia Pacific performed most dynamically, recording growth of 4% and 3%, respectively, and were the only two regions where beef and veal recorded growth.
At the same time, in Western Europe meat in general and beef and veal in particular continued to decline – by 0.3% and 1%, respectively – amidst mounting health concerns linking red meat to cardiovascular disorders and colon cancer. In the US beef and veal contracted by a further 3% as consumers switched to leaner types of meat – pork (8% growth) and poultry (5%).
Because of the spread of flexitarian diets and substitution of red meat with leaner meats, fish/seafood and plant proteins, an average American reduced intake of beef and veal by nearly 4kg between 2010 and 2015 and an average Western European by 1kg.
Consumers focus on provenance and ethical credentials
In the wake of scandals related to food contamination with pathogens and pesticides and counterfeit products, consumers increasingly scrutinise the origin and supply chain of products destined for their plates. Across the developed markets of Western Europe, North America and Australasia as well as a growing number of emerging markets, manufacturers and growers of fresh produce are recognising the fact that consumers want to know as much as possible about the food they buy. They are therefore supplying detailed information about products’ origin and producers as well as other special features that help consumers make an informed choice.
In addition to origin, ethical labelling features very prominently on fresh products in response to consumers looking for cleaner, sustainable and responsibly sourced products. Labels carrying such marks as MSC (Marine Stewardship Council), RSPCA Assured (Royal Society for the Prevention of Cruelty to Animals), Friend of the Sea, Dolphin Friendly, Wild caught (fish), Line caught (fish), Red Tractor, Grass fed cattle, Free range, Organic, Fairtrade, Local etc, to name but few, are not only important for ethical transparency, but also serve as a selling point. Consumers looking for certain ethical credentials are willing to pay a higher or premium price for such products and can afford the price tag.
The way forward for fresh food
According to Euromonitor International’s latest estimates, global fresh food sales are expected to grow by 13% over the 2015-2020 forecast period, adding some 280.5 million tonnes in absolute volume terms by 2020.
Most of this rise will be seen in the emerging markets of Asia Pacific, Middle East and Africa and Latin America, where growing populations will support volume growth.
A lacklustre performance in Western Europe can be offset by the return of home cooking observed in 2015 and growing demand for more natural and healthier nutrition. Retailers and manufacturers can succeed by tailoring products to certain consumer groups, such as singletons, working consumers and families, and by delivering a better variety of fresh produce at competitive prices.