Memorandum submitted by Asda (A 60)
INTRODUCTION
Asda welcomes this opportunity to contribute
to the Environment Food and Rural Affairs Select Committee enquiry
into the future of UK Farming. As a food retailer one of our key
interests along with food integrity and sustainable long-term
supplier relationships is the area of consumer food preferences
and trends and how they are met. We are therefore interested in
initiatives which bring the objectives of food production closer
to the requirements of the market and the choices of customers.
With this in mind, our evidence will focus on
consumer food trends, recent developments and our expectations
for the future. We hope this will provide a useful context for
the Committee's deliberations.
GENERAL POPULATION,
LIFESTYLE AND
RETAIL TRENDS
This section of the document will describe wider
trends in UK population structure, the changes in the structure
of households and the impact these have on consumers' food choices.
Any understanding of consumer trends has to
be underpinned by a clear understanding of who your customers
are and how they choose to live. This enables retailers to predict
food trends, driven by perceptions of the attitudes of consumers
as defined by these characteristics.
Demographic trends demonstrate that the age
structure of the UK will radically change by 2011 when there will
be 1.5 million more 60 to 75 year olds and 1.4 million fewer 30
to 44 year olds than in 2000. Evidence also suggests that the
60 to 75 group is increasingly diverse in terms of lifestyle as
a proportion will have retired earlier, be healthier and have
more disposable income than previous generations.
Census evidence suggests that households are
also changing—by 2010, single person households will account
for 35.5 per cent of the population and multi-person households
will increase by 30 per cent between 1996 and 2011. Even in more
traditional two person households, women are more likely to be
economically active and the age of motherhood for the first time
has increased from 24 in 1972 to 29 in 2000.
One of the results of these shifts is that there
has been an erosion of the "meal occasion" as individuals
with busy lifestyles find it harder to come together to eat. There
is a real sense of time pressure as more members of the household
are working—and working non-traditional hours as a result
of the growth in evening and weekend working. Members of the family
are eating at different times and, in some cases, different meals.
Current trends demonstrate a move for consumers
to "more convenience". This may be in food preparation
with the emergence of ready meals and other convenience foods,
or in purchasing food, whether this is over the internet or through
stores opening when consumers want to shop.
Research undertaken by the Henley Centre suggests
that 66 per cent of customers find food shopping a chore and are
looking for more convenient alternatives. The research also suggests
that, whilst consumers are becoming more affluent, their shopping
choices have resulted in a far smaller proportion of total disposable
income being spent on food overall, with the proportion being
spent in staples or basic ingredients falling at an even greater
rate.
STAPLES—BASIC
INGREDIENTS
Henley Centre research suggests that, generally,
consumers have become wealthier and are accordingly spending a
smaller and smaller proportion of their income on necessities.
Taylor Nelson Sofres market data research demonstrates
that in the late 1990's the amount households spent on leisure
goods and services moved closer to the amount they would have
traditionally spent on food and non-alcoholic drinks. The amount
being spent on food and drink has fallen from more than 25 per
cent to around 15 per cent.
Market data also demonstrates that, over this
period, convenience foods were the fastest growing food sector.
Whilst flours, bread and cereals experienced steady although comparatively
low growth, this period is characterised, as one where cooking
from scratch and eating together is more of an aspiration than
a reality. Consumers are also indicating that they wish to spend
less of their free time shopping for these types of staple products—with
consumers overwhelmingly characterising such shopping as a chore.
What is apparent, however, is that some consumers
are becoming more concerned with what can be termed as the "integrity"
of the post-farm gate, ingredient products they are buying. Characteristics
including where and how it was grown, whether it is a "farm
assured product" are increasingly being demanded by consumers
and being used by them to differentiate between products. Retailers
are responding to this requirement by providing more information
on products.
Asda believes that the future will be marked
by consumers spending less and less of their disposable income
on staples, matched with an increase in their desire to be able
to purchase such products as conveniently as possible. The purchase
of these products may, for example provide the impetus for further
growth of internet or digital TV based shopping where staples
are purchased on, for example, a standing order basis with personal
time and effort minimised.
This contrasts with an expected growth in consumer
interest in the seasons and varieties of products. Whilst basic
products will be stocked all year round, special emphasis will
be placed on particular products and varieties of products at
particular times of the year. For example, we would expect retailers
to be stocking many different varieties of a fruit at the time
when that fruit would be naturally harvested in the UK.
CONVENIENCE—READY
MEALS
Convenience foods are the consumer success story
of the past decade. Taylor Nelson Sofres market data research
shows that total sales of pre-packed ready meals are growing at
around 28 per cent year on year, compared with a 5 per cent growth
in basic ingredients, with the overall market for convenience
foods growing 43 per cent since 1990. This food trend is probably
best illustrated by Henley Centre research which suggests that
the average time taken to prepare a meal in 1980 was two hours,
this has now been reduced to 20 minutes.
The trend towards convenience foods encompasses
a range of products and food outlets. The increase in fast food
outlets is reflected by the fact that one in seven meals is eaten
outside of the home.
At Asda, we define "convenience foods"
as "ready to heat" meals like pizza, curry, "meals
made easy" and chilled and frozen meals; we also include
"ready to eat" food such as sandwiches, salad bars,
rotisseries and cafes. The market has been embraced by retailers
because of the significant growth achieved to date and because
of the belief that this trend will continue. In the UK, Taylor
Nelson Sofres Mealtrak data estimates that the takeaway market
for world foods alone is worth around £5 billion and that
this will continue to grow by around 12 per cent year on year.
The outlook for the short and medium term is
more growth. In "ready to prepare" and "ready to
make" lines this will tap into the desire to cook from scratch
and eat together. Retailers will provide, for example, vegetable
kits, meat kits and stir-fry ranges. Asda also expects a return
to familiar or traditional foods but presented in a new way.
The requirement for "integrity" of
foods will mean that customers will require higher quality ingredients
used to produce simpler, more familiar dishes, in a convenient
format—expect, for example, traditional "bangers and
mash" in ready meal form where the quality or "integrity"
of the base ingredients is highlighted in the packaging.
NUTRITION AND
HEALTH
Asda research suggests that that there is a
growth in customer demand for "healthier" foods. Fat
content is the number one issue for adults with 60 per cent claiming
that they are trying to cut down on fat intake.
Sugar is a secondary concern but a priority
for mothers with small children.
Product development has therefore tended to
focus directly on these issues. There has also been significant
pressure for companies to focus on salt levels found within processed
food products, as salt is associated with strokes and high blood
pressure. This prompted Asda to adopt a salt reduction campaign.
We reviewed all of our 4000 processed food products and reduced
the sodium contribution to customers' diet by an estimated 8 per
cent, based on a balanced diet.
As there is no universal definition for "healthy"
foods, customers can be easily confused. Independent customer
research conducted for Asda has shown that products labelled healthy
must meet the needs of committed and occasional (generally healthy
eating) dieters. For this group:
— food with an absolute fat claim such
as "less than 5 per cent fat" are wanted and expected
to be totally healthy (saturated fat, salt and sugar also taken
into account)
— foods with relative claims such as
"25 per cent less fat" are recognised as healthier treats,
compared to full fat norms. There is no desire from consumers
for these to be as controlled as those with absolute fat claims.
In the future, we expect the demand for "healthy"
and "healthier" options to continue to grow. Asda has
committed to the extension of our own "Good For You"
range that complies with the stricter expectations outlined above
with regard to levels of fat, sugar and salt.
Consumers are also demanding better information
on labelling of such products and we expect to see retailers adopting
a far more comprehensive approach. Labelling of our "Good
For You" products include a nutritional information panel;
the fat, salt and calories per serving are stated in a clear box
and other key nutritional claims are declared on the pack front.
LOCAL SOURCING
In response to both Government and consumer
demands for greater visibility of supermarket support for UK producers
at many different levels, Asda has a local sourcing initiative.
With an objective "to be Britain's leading supermarket for
local products" from a consumer, supplier and Government
perspective, Asda defines local products as:
— those which are made locally, grown
locally and reared locally;
— are a local taste or delicacy and
recognised by consumer as local; and
— for which there is significant customer
demand.
Products must satisfy at least one from each
of these groups of criteria.
Asda has prioritised the local sourcing programme
by focussing on one region at a time and, in parallel, on different
product areas where we know there is a strong potential consumer
demand. We then launch the products in a coherent and structured
manner with strong marketing support.
The Welsh local sourcing initiative, for example,
will be launched on St David's Day in order to maximise the marketing
impact and consumer awareness.
We will continue to develop this regional approach
throughout this year and expect every store to have at least one
local supplier by the end of the year. Asda will continue to support
the local products through local marketing support and Asda "best
of...." branding.
In many cases, Asda is supporting the commercial
development of smaller local suppliers to ensure that they can
deal with different requirements. These requirements are driven
essentially by regulatory requirements regarding food production,
packaging and transportation. Asda has worked closely with suppliers
to help them develop systems and process to comply with regulations.
We have also revised our own systems and processes, when appropriate,
to make these more workable for smaller suppliers. Suppliers will
also be invited to training days at Asda's head office on matters
like financial awareness, electronic ordering and local marketing.
The training is designed to assist them in their own business
development.
Key success factors for the future development
of local sourcing are the commercial success of the existing local
brand products brought into store and ability of potential new
suppliers to achieve the required regulatory production, packaging
and delivery standards. We expect there to be an increased consumer
demand for locally produced goods but to be commercially viable
the product offering must be right in terms of cost and quality,
as well as "localness".
CONCLUSIONS
Asda recognises that there are challenges facing
all participants in the food chain if we are to meet the changing
consumer trends outlined in this paper.
The Policy Commission on Food and Farming recommended
that a permanent Food Chain Centre be established to bring people
together from across different functions. The Food Chain Centre
would act as a forum for challenging existing practice across
the chain and for parties to work together to develop new, effective
approaches.
With this in mind, Asda has already established
a project which has been developed to shorten supply chains in
order to bring greater integration between parties. The project
is initially focussing on the fragmented livestock sector and
we hope that this will provide a model for wider application in
the near future. We expect the Centre to develop projects of this
type and we look forward to participating on both a strategic
and practical level with this type of development.
Asda endorses the establishment of the Food
Chain Centre as we believe that consumer requirements will only
be met if parties along the food chain develop better relationships
that can then be more responsive to consumer demands. All reform
should be driven by the objectives of bringing food production
closer to the requirements of the market and the choices of customers.
Asda
February 2002
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