Modern and dynamic, with an alert lifestyle and with less and less spare time, but carefully with what he eats. That could translate into few words the type of consumer for which frozen semi-cooked products can be the ideal solution.
Who does not want a tasty lunch or dinner, quickly prepared and with reduced costs?
It is precisely the type of consumer which Carrefour wants to satisfy launching under his own brand four recipes of frozen semi-cooked products made with chicken meat and produced in Romania:
All four recipes, produced by Agroalim S.A., contain only chicken breast meat and carefully selected ingredients.
Frozen semi-cooked products - a growing category
The category of frozen products has grown slowly in post December period, "helped" by the liberalization of imports but (especially) by extension of modern trade. Basically, modern stores had been offering their support for exposure and storage of frozen products in modern refrigerated showcases. And keeping them frozen throughout the supply chain was essential.
There was a parallel increase that had as a result the dependence of the category towards modern trade. So great that at present moment it is difficult to conceive the category in other locations than those of modern commerce. And for many producers/importers most of their volumes (even 80% in some cases) are achieved today in modern trade.
How we have got here? For a modern store most of the investment (up to 70% for hypermarkets) is reflected in refrigerated spaces. This is a huge percentage for traditional shops, an investment that they can not afford. Few are those who shyly try to cope with modern retail roller and to allocate deposit spaces for frozen products. Even though, in absence of some volumes they became unattractive as outlets for distributors.
It is interesting to watch how in some small urban or rural communities, opening a discounter brings not only new products but also new categories. And one of them is the category of frozen semi-cooked products.
However this category has growth potential and association with modern trade has led to major changes in consumer's behavior. In addition we have to mention an asset that is worth being taken into account: the schedule of modern people, who continuously is in lack of time. So, there is the demand.
But do we have a supply to match this?
We might say yes. There are products made in Romania but also many imports covering a various range of prices under different brands. From international to national ones. And even private brands in a small proportion. Because in what concerns the latter, assortment is not so various either for products with high turnover or based on price criteria.
There are opportunities and developing new projects mainly depends on commercial strategy of retail chains but also on the courage of the buyers.
But the development of private brands can be seen as an opportunity for Romanian producers?
Theoretically, the category is limited as exposure space in stores but also as a storage space in refrigerated cases from their deposits. Any new listed brand (even a private brand) does nothing but reducing the exhibition or/and storage space for the existing ones. And that may negatively affect the sale of existing brands and increase the out of stock risk.
What would be the solution? Disposal of articles with low rotation or placement of small and frequent orders.
In case of a supplier that has no private brands in its portfolio, removing some articles will decrease the value of future orders and thus it will generate an increase in costs of transport. After a while, deliveries to some stores or retail chains become sources of losses, forcing the provider to either give up to certain items or to cease collaboration with that retailer.
At the opposite pole, the existence of private brands in one producer portfolio can be a source of increased volumes and a (possible) securitization of the agreement with the concerned retailer.
Yet in the long run there might appear a concentration of production around some producers or producers groups. And too much dependency between a producer and a retailer is a potential risk factor.
However things do not look quite so pessimistic.
Once we access the European Union, for Romanian producers today market is no longer a 20 millions consumers market, but a market of over 500 millions of potential consumers. Collaborating with a retailer on his own private brands can be the oxygen bubble or the engine to pull the business at a higher level. It depends only on how fast he will adapt his commercial strategy to market requirements.
Florin Frasineanu
