Poultry and Game Meat July 2010

Issues in the market Key themes The poultry market saw volume sales decline under pressure from bird flu and rapidly rising inflation. It regained momentum in the recession thanks to its perception as easy to cook, versatile and better value for money than red meat. Value sales have enjoyed ongoing growth on the back of an earlier premiumisation trend and high cost inflation in 2008, and are expected to reach £2.9 billion in 2010, up by 18% against 2005. The chicken segment has fuelled the market’s strong performance, with turkey capturing just 12p per £1 spent on poultry. Key themes How has the poultry sector as a whole and the various segments performed in the recession? What role does animal welfare play in the poultry market, and how are the different welfare labels faring? What are the key drivers of poultry choice for consumers? How do these differ between demographic groups? © 2010 Mintel International Group. All rights reserved. Confidential to Mintel.

Keen cooks benefit poultry market More than half of adults say they really enjoy cooking. This is good news for scratch-cooking, including poultry, and could open new opportunities for game. Nearly one in three adults are trying to lose weight most of the time, a sizable minority potentially interested in low-fat meat like poultry. The value image of poultry has benefited from lower retail price inflation than seen by competing products like red meat. A range of green and ethical issues have impacted the food sector, free-range becoming a focus area in poultry following media coverage of chicken farming. Enhancing awareness about the various poultry assurance schemes and the tangible benefits they entail could help to encourage consumer interest. © 2010 Mintel International Group. All rights reserved. Confidential to Mintel.

Demographic trends to support value growth ABs & 25-34s to support value growth One-person households are the least likely group to eat most types of poultry. The expected rapid growth in their numbers to 35% of all households poses a challenge for the sector. The expected rapid growth in the numbers of 25- 34-year-olds and over-55s by 2015 is set to benefit higher welfare and British poultry. The AB population is projected to grow faster than other socio-economic groups between 2010 and 2015, boding well for poultry value growth. Challenges ahead in 2011? One in five people see their financial situation as healthy, and consumer budgets look set to come under pressure in 2011. Poultry has benefited in the recession, thanks to its strong value image, and is well-placed to continue to see strong demand. © 2010 Mintel International Group. All rights reserved. Confidential to Mintel.

Strengths & Weaknesses Poultry enjoys a strong value image, boding well if incomes come under pressure in 2011. The view of chicken as versatile supports high usage frequency and demand across various cuisines. Health looks to remain on the nation's long-term food agenda, benefiting chicken which is seen as healthier than red meat. The projected growth of ABs looks set to support demand for higher animal welfare poultry. The higher usage of prepared poultry products among younger users has potential to support long-term demand and value growth. More than nine in ten adults buy poultry, leaving practically no room to grow penetration. A sizable minority see turkey as a Christmas food and less tasty than chicken, hampering growth. With only a few brands present, the market relies heavily on retailers and industry bodies for marketing. Price is the top choice factor for poultry, hampering short-term growth potential through added-value. The relatively low usage of most poultry products among rapidly growing one-person households could pose a challenge for the market. © 2010 Mintel International Group. All rights reserved. Confidential to Mintel.

Private label dominates NPD Private label dominates new product launches, reflecting the small number of brands present. M&S held the lead in new product launches in 2007 and 2008, Tesco ramping up activity in 2009 to account for one in five new launches in the segment. The absence of additives and preservatives, green packaging and low transfat content are the most common claims in new poultry products, reflecting earlier media focus on these concerns. Economy launches have leaped ahead in the recession, halal-certified launches also gaining, though both remain niche. Individual launches suggest developments in areas like convenience, snacking and imitating the fast food restaurant experience at home. © 2010 Mintel International Group. All rights reserved. Confidential to Mintel.

Growth to £3.3 billion forecast by 2015 UK retail value sales of poultry, and index of growth, 2005-15 Source: Mintel Expected to reach £2.9 billion in 2010, the poultry market is estimated to have grown by 18% since 2005, despite several years of falling volumes reflecting the impact of bird flu and high price inflation. Growth of 17% to £3.3 billion is forecast for the market over the period from 2010 to 2015. Rising value is expected to drive the growth, as volume sales are forecast to remain broadly stagnant. This mainly reflects the projected slow growth in the dominant chicken segment, partly offset by declining sales of turkey. © 2010 Mintel International Group. All rights reserved. Confidential to Mintel.

Chicken rules the roost in poultry Chicken continues to dominate the market, with sales in 2009 of £2.4 billion, benefiting in the recession as a better value alternative to red meat. Growth of 17% to £2.9 billion is forecast for the chicken segment over 2010-15. The mature market is expected to only see modest volume growth of 1% over the period. With sales of £340 million in 2009, turkey holds a niche position in the market, sales declining in recent years as it is seen increasingly as a Christmas food and a less tasty alternative to chicken. Decline of 5% to £318 million is forecast for the turkey market over the 2010-15 period, on the back of a 12% fall in volume sales, unless marketing campaigns launched in 2010 can re-energise the segment. Duck and goose have enjoyed several years of steady growth, but with sales of just £66 million in 2009 they hold a niche position. Growth of 19% to £84 million is forecast for the sector over the 2010-15 period in value terms, driven by volume growth of 16%, reflecting the strong potential for growth of the still small market. © 2010 Mintel International Group. All rights reserved. Confidential to Mintel.

Game forecast to reach £111 in 2015 UK retail value sales of game, and index of growth, 2005-15 Source: Mintel Expected to reach £80 million in 2010, the game market is estimated to have grown by 63% since 2005. Recent pressures on consumers budgets have seen growth slow. Growth of 39% to £111 million is forecast for the market over the period 2010-15, indicating growth well ahead of the poultry sector. Game is well-placed to continue to see robust growth, as it taps into a number of longer term trends, such as the interest in food origin, animal welfare and adventurous and authentic food. Educating consumers about game and enhancing accessibility will be key to fuelling growth, both through expanding distribution and continuing to develop convenient, easy to cook products at different price points. © 2010 Mintel International Group. All rights reserved. Confidential to Mintel.

Venison dominates game Venison dominates the market, enjoying an established supermarket presence, farmed deer ensuring predictable year-round availability. The availability of products at various price points from sausages to fillets helps venison cater for a wide range of budgets and occasions. The relaxation of game trade licensing laws in 2007 has paved the way for growing trade in game birds. Game birds have benefited from support by celebrity chefs and expanding distribution, increasingly stocked by many of the major grocers. The growing interest in more adventurous food has also benefited wild boar, appearing both on restaurant menus and the mass retail channels. Market segments in the game market, by type, 2009 Source: Mintel © 2010 Mintel International Group. All rights reserved. Confidential to Mintel.

Everybody eats poultry More than nine in ten adults have bought poultry, leaving little room for growth. The popularity of fresh chicken reflects versatility, healthiness and value for money as key positive qualities associated to poultry. Women are more likely than men to have bought most types of poultry, the exceptions being frozen chicken and duck. The usage of most types of poultry rises with age to peak among the over-44s. 25-44-year-olds are the most likely users of prepared chicken. One-person households are the least likely to eat most poultry types. Poultry products bought to eat/serve at home, April 2010 Base: 1,000 Internet users aged 16+ Source: Toluna/Mintel © 2010 Mintel International Group. All rights reserved. Confidential to Mintel.

Standard chicken rules a price-led market Standard own-label chicken is the most popular choice across age and income groups, reflecting price as top choice factor. ‘Discovered’ by heavier users, value own-label lags behind premium and free range overall, but comes second in weekly and monthly usage. Free range outperforms organic and freedom food by a strong margin, likely due to its tangible proposition. As expected, higher income households are the most likely to buy added-value variants. The youngest consumers are the most likely to buy higher welfare chicken, but also the value variants. Frequency of buying fresh chicken, by type, April 2010 Base: 861 internet users aged 16+ who buy fresh chicken Source: Toluna/Mintel © 2010 Mintel International Group. All rights reserved. Confidential to Mintel.

The legacy of the £2 chicken Prices consumers would pay for different types of fresh chicken, April 2010 Base: 861 internet users aged 16+ who buy fresh chicken Following the media debate over the £2 chicken, half of poultry shoppers see £2-4 as the “right” opening price. One in three claim they would never buy a value own-label bird. The organic, corn-fed and freedom food labels could benefit from educating people about bird welfare and quality, given high share saying they “would never buy”. The willingness to pay tends to rise with the ability to do so. Top income households are above average willing to pay the highest prices for any type of chicken. Premium own-label chicken has the most potential to attract users. Of those who currently do not buy it, just 56% say they never would. Source: Toluna/Mintel © 2010 Mintel International Group. All rights reserved. Confidential to Mintel.

Price is top choice factor Factors influencing the purchase choice in poultry products, April 2010 Base: 942 internet users aged 16+ who eat poultry Price is the top choice factor, reflecting the pressure that household budgets remain under. Turkey could leverage this price focus in its advantage. British origin scores well, particularly among over-45s, suggesting considerable leverage to differentiate products. Regional origin is seen as neither important nor unimportant by most people, indicating confusion over what it stands for or offers. Welfare issues are important to only a minority of poultry buyers, though this may partly reflect a neutral stance and low awareness. Other welfare labels could take cues from the tangible proposition of free range to boost demand. Source: Toluna/Mintel © 2010 Mintel International Group. All rights reserved. Confidential to Mintel.

Versatility, value, health Attitudes to poultry, April 2010 Base: 942 internet users aged 16+ who eat poultry Seen as healthier and better value than red meat, poultry is well positioned in the health and price-oriented consumer climate. Chicken is seen as versatile by most poultry eaters, potentially supporting high usage frequency. Turkey divides the nation over its taste, value and year-round credentials, with younger people tending to be more negative. Higher welfare poultry enjoys robust minority interest. However, confusion lingers over the health implications of such products. That nearly two in five neither agree nor disagree on the value credentials of game indicates lack of awareness about the category. Source: Toluna/Mintel © 2010 Mintel International Group. All rights reserved. Confidential to Mintel.

Ethical considerations key to largest target group Target groups, April 2010 Base: 1,000 Internet users aged 16+ British origin is the key factor in the poultry choice of one in five adults, their relatively high engagement to poultry making this a valuable group. One in three people are focused on ethical factors in their poultry choice, making such credentials central in appealing to the group. Marketing based around convenient meal solutions could chime with the one in four people focused on practical issues with respect to poultry. Price is the main factor in the poultry choice of one in nine adults, an interest frozen poultry could look to leverage. One in eight people are largely unengaged to poultry, with potential to interest them by showing poultry in a more exciting light. Source: Toluna/Mintel © 2010 Mintel International Group. All rights reserved. Confidential to Mintel.

Kiti Soininen Your contact Senior Food Analyst mintel.com fax: +44 20 7606 5932 email: ksoininen@mintel.com mintel.com