Memorandum from the UK Association of
Frozen Food Producers
BACKGROUND TO
THE FROZEN
FOOD MARKET
The UKAFFP represents the major manufacturers
of frozen foods in the UK. The market is estimated at more than
£5 billion in consumer prices and the manufacturing industry
employs some 25,000 people. The frozen food market covers many
categories of foodstuffs, including meat, fish, vegetables, ready
meals, bakery products and desserts.
Burgers and grills account for about £170
million (down from £260 million pre-BSE) and prepared foods
(meals and snacks etc, many of which contain meat components)
some £1,800 million.
Our members are engaged in the manufacture of
added value products and are not generally involved in the sale
of frozen carcass meat or whole frozen poultry.
The industry uses some 50,000 tonnes of red
meat in burgers and grills and 35,000 tonnes in other meat products.
This is primarily beef, but includes increasingly lamb and pork.
THE BSE CRISIS
Prior to 1996, some burgers were made of beef
from animals over 30 months old. The precipitate introduction
of the Over Thirty Months Scheme made it impossible to sell any
such products, including those already in stock or on supermarket
shelves. Huge quantities of stocks were taken back and destroyed
at a cost to the industry of many millions of pounds without compensation
from either retailers or Government.
Sales of all our beef products were immediately
affected. Sales of burgers (made from new supplies of less than
30 month beef) were down to 25 per cent of previous levels, recovering
to only 50 per cent after many months. The cost to one company
alone of stock write-offs, additional factory and promotional
costs amounted to £40 million. Some companies went out of
business as a direct result of the crisis; all others faced major
cost and restructuring problems.
On our best estimates, sales of burgers and
grills are now about 65 per cent of their pre-BSE levels.
RESTORING CONSUMER
CONFIDENCE
The restoration of consumer confidence in beef
and beef products is essential to the survival of this part of
the frozen food industry. To this end, our members have supported
the general drive towards the promotion of British beef and have
invested heavily in quality improvement, price promotion and advertising.
SOURCING
Beef
To our knowledge, all our members' burgers and
grills are made of British meat and are positively promoted as
such.
Cuts are from forequarter and flank, the majority
of which is from steer beef. Quality specifications are given
to suppliers from British sources. Some members specify Scottish
beef, as this has a particularly stong brand image. The proportion
of Welsh beef is not known but is not thought to be high.
Beef for use in other meat products eg, pies
may be British or imported. Exports are required to be of non-British
origin and the increasingly stringent XAP rules for export make
it impossible to operate segregated production for home and export.
In cases where a part of production may be for export, the whole
production must therefore be made from imported beef.
A substantial amount of cooked beef for ready
meals is imported. This is a long established trade with known
and trusted quality suppliers and facilities to cook to the same
specifications do not exist in the UK. However, discussions are
going on with a view to the possible development of such facilities
in the UK and a positive outcome would be welcomed.
Lamb
All lamb for processing is imported from New
Zealand and has been for many years. New Zealand lamb gives the
best manufacturing performance, most consistent quality and advantageous
price. Our members would be happy to switch to UK sources if supplies
could match those from New Zealand in all aspects.
MARGINS
Net profit margins on burgers have suffered
badly since the BSE crisis. Firstly, the raw material specification
has changed dramatically, both because of the loss of the OTM
supply and the deliberate efforts made by members to improve and
promote quality. Secondly, selling prices have been reduced by
10 per cent to 20 per cent, depending on the incidence of specific
promotions. Thirdly, volumes have fallen dramatically and are
not expected to recover from their current levels of about two-thirds
of those prior to the BSE crisis. Factory and other overhead costs
have to be absorbed by a substantially smaller volume with consequentially
increased product costs.
SUMMARY
Our members have demonstrated their commitment
to the UK livestock industry during the BSE crisis at very considerable
cost. In the meantime, they are doing their utmost to restore
consumer confidence through quality improvement, product and price
promotion and advertising. Their success will be to the ultimate
benefit of the UK livestock industry.
USAGE OF RED MEAT IN FROZEN PRODUCTS: 1996
(EXCLUDING FAST FOOD OUTLETS)
|
| | |
Of which: |
| Sales | Red Meat Content
| Beef |
Lamb |
|
| Product | (000T Prod WT)
| (000T Boneless) | British
| Import | British
| Import | Other
|
|
| Burgers, Grills | 65 | 50
| 35 | 0 | 1 |
14 | |
| Meals1 | 213 |
22 | 6 | 7 | 0
| 5 | 42 |
| Pies, Flans, etc | 118 |
13 | 6 | 7 | 0
| 0 | |
|
| Total | | 85
| 47 | 14 | 1 |
19 | 42 |
|
Notes:
1 Excluding poultry, vegetable etc meats
2 Rest of Red Meat (4,000T) = pork
All Figures are UKAFFP Estimates.
| 
