This is marketing research on the convenience foods industry and can include information on the background, market structure, definitions, competitors, trends and developments of convenience foods and is related to other topics such as food, snacks, chips, candy and beverages.

Table of Contents

Table of Contents

1 Background 
2 Market Structure 
3 Industry Definitions 
4 Market Metrics 
5 Key Players 
6 Trends and Recent Developments 
7 Sources

Background

Globalization in the processed food and beverage markets - including convenience foods - is increasing at a tremendous rate as most developed countries face mature domestic markets. Food and beverage companies are becoming more aware of the excellent opportunities resulting from exporting or making foreign direct investment. The U.S. processed food and beverage industry is a major participant in this global economy. Almost half the world’s top 50 food processing firms are headquartered in the United States.

Convenience foods are essentially pre-prepared foods, which have already been put together and cooked and have then been packaged to save time and labor for the purchasing and consuming user. Convenience foods generally contain some level of preservatives to prevent spoilage and thus last longer "on the shelf" and thus have the advantage of a longer shelf life, and thereby contains its costs further. There are also significant economies of scale with convenience foods, since the value propostion is that they can be prepared with minimal effort – often only by simple re-heating – thus translating into the further benefit that a bulk quantity can often be stocked. Many convenience foods are available in cans or other special plastic packaging, allowing them to be frozen or chilled.

The preservation, or canning, of fruits and vegetable in the early 1900s was the predecessor to the convenience food market. Large quantities of food could be stocked in cans and used only as required and the convenience food market emerged as a major industry by the early 1960's. There is now available a broad range of convenience foods including breakfast, lunch and dinner offerings as well as snacks. Additional social trends accelerated the expansion of convenience foods. The rise of the two-earner family in the latter part of the 20th century as well as the move to the city and suburb has contributed to the acceptance of convenience foods. Advances in both food processing and packaging have also shaped further growth. Acceptance by high population emerging markets such as India and China will also help drive the convenience food market.

Market Structure

The market for convenience food is continually being extended with new companies and solutions entering the field many small firms adding niche brands and products. At the same time, large food corporations are constantly expanding their own product lines and packaging. In terms of packaging, the range is very broad. A convenience food snack item could be sold as a single item, packaged as a dozen or more or even sold in bulk form in ‘big-box’ stores such as Costco or BJs. Large supermarket and hypermarket chains also continue to add new products and focus continually on testing for new trends. The recent move toward green, natural or environmentally friendly foods has greatly advanced the advent of the organic food marketplace - or at least those with essentially organic ingredients. Conversely, these products may likely also have a reduced shelf life. Again, though the market contains many large corporations, there are also thousands of niche providers.

New products are continually introduced. The following estimate was made for new product introductions in 1999 for example:

Product Type                         New Product Introductions
                         
<pre>Sweeteners/sugars                            83     
Weight control products                           48     
Breakfast cereals                                114     
Beverages       				 1,576  
Confectionery             			 1,273  
Desserts & ice cream      			   450    
Dairy                     			   544 
Snacks                     			   710
Processed meat/seafood     			   646    
Soup                       			   254    
Spreads                    			   295    
Condiments/seasonings      			 1,298  
Meals & entrees            			   543    
Bakery                     			 1,126  
Side dishes                			   421    
Fruits & vegetables        			   254    
Baby food                  			    21

Industry Definitions

• Enzymes - the chemicals that are naturally present in food. They can spoil the food by decomposing the elements.

• Pasteurization - a type of mild temperature treatment which destroys the activities of pathogens and other few enzymes.

• Pathogenic Microorganisms - microorganisms that can cause diseases. They are normally formed in infected food.

• Psychrophilic Microorganisms - microorganisms that grow in foods saved in cold temperature.

• Solutes - basic chemicals in solid form. It dissolves in the liquids.

• Conduction - a heat transmission event. As a heat wave moves from a hot material to a cold material, it is an example of conduction.

• Ionizing Radiation - breaks down molecules in food.

• Loss Factor - a measurement of the amount of microwave energy absorbed by few foods. The loss factor and the microwave energy are equivalently related.

• Non-Ionizing Radiation - a typical radiation process of various microwave machines. By this radiation the atoms and molecules of the materials are not ionized.

• Penetration Depth – the measurement of how deep a microwave enters into food.

Market Metrics

The convenience food market is a very stable and profitable industry. From a financial standpoint, on average, returns on equity exceed many other industries.

The convenience foods market by 2010 in the United States has been estimated by industy observers at approximately US $45 billion: fresh foods at US $27 billion and frozen foods at US $18 billion. Although the industry is relatively fragmented, it is also of strong margins, especially at the premium brand level.

Some sample statistics from typical large industry participants are as follows:

Company			       Revenues	        Operating Margin            Return on Equity

Kraft				$35.4 B		     14.5%			9.6%
Heinz				$ 9.1 B		     16.2%			39.9%
Campbell                             $ 7.7 B                16.4%                          50.2%
General Mills			$12.4 B		     17.0%			20.6%

Key Players

Some representative players in sample sub-categories are as follows:

• Adult lunch packages - StarKist Foods & Campbell Soup

• Crockery foods - Golden Grain, Unilever Foods

• Prepared, micro-wavable and frozen food - Deli Express, Jimmy Dean Foods

• Prepared lunch and snacks – Kraft, Reichel Foods

• Prepared cereals, drink and desserts - Kellogg's, General Mills, Keebler

• Ready-to-use food - Breakaway Foods

• Prepared salads - Fresh Express Farms, Dole Food.

• Other global key players - Nestle (Switz), Unilever, Heinz, Cadbury (UK), Wessanen (Netherlands), Kamps (Germany), Talosto (Russia)

Trends and Recent Developments

Since 1992, the world snack food market has grown over 25 percent, and it is projected to reach almost $55 billion by the year 2000. The United States continues to be the largest market, accounting for about a third of the world total; Japan and the United Kingdom together account for another quarter of the world total.

The spread of western eating habits to other parts of the world continues as lifestyles in those parts of the world become busier and traditional family mealtimes become a thing of the past. Asa result, the demand for snack foods continues to increase, especially for healthier types that are lower in fat. Many manufacturers around the world are responding to this trend.

In 1990, a major portion of the standard diet of the US and UK household was comprised of convenience food. Almost every U.S. household was estimated to use convenience food in some form or the other.

There is growing controversy on the value of convenience foods and the dangers of preservatives, etc. The growing green movement and rapid rise or the organic food market continues to fuel the debate. There is the constant question about general or childhood obesity and the impact of convenience and snack foods on that. How much if a negative impact is there from a key preservative, salt, on children? What is the impact of fast foodss in general – which may indirectly negatively impact convenience foods as well.

At the same time, many communities have initiatives to remove convenience foods from schools, including vending machines. The most significant impact, however, is likely to come from the increased trend towards environmentally friendly or organic foods. This trend is growing very rapidly. The conundrum is that by their own implied value proposition, convenience foods are intended to be stored and consumed - quickly. What will be the long term impact on the growth of the convenience food market?

Almost all foods, including convenience foods have faced a drop-off in early 2009. There has been a surprising fall in the sales of almost all foods in late 2008 due to the growing economic recession. It is unclear what the impact will be on sales for all of 2009, but at least the U.S. market is off to a poor start to the year.

Sources

U.S. Census Bureau

U.S. Department of Commerce