1. © 2005 CCFRA 1 Prepared for: Symposium ‘Functionalities of Hot Red Pepper and Hot Sauces’ July 1 st 2005 Korea University, Seoul, Korea Prepared by: Peter Burgess, Head of Dept Consumer & Sensory Sciences, CCFRA ‘Emerging Cuisines: Drivers of UK Consumer Choice and Preference’

2. © 2005 CCFRA 2 Introduction l The focus of the presentation is the retail market for ethnic foods covering a broad range of products from Asia, the Far East and the Americas. l Specifically considered are the sales of ethnic foods through the major retailer multiples. l Western European ethnic foods market (including rice) is estimated at £5bn at retail selling prices - the UK at £1.29bn is the largest ethnic retail food market in Western Europe. l Meaningful cross-country comparisons of ethnic foods markets difficult due to differences in market definitions - this presentation therefore focuses on UK market given its size relative to other European countries.

3. © 2005 CCFRA 3 The UK Market l Strong growth over the past 25 years, starting with cans of tikka masala sauce. l Main ethnic foods include Indian and Chinese but consumer interest has moved to include Thai, Japanese, Caribbean and North African cuisines.

4. © 2005 CCFRA 4 The UK Market - Ethnic foods excluding rice l Although the total market grew by 3.2% in 2004, sales of ethnic food slowed considerably between 2000 and 2004. l The slowdown in growth suggests that sector is reaching maturity.

5. © 2005 CCFRA 5 The UK Market - Rice sector l The sector increased by 2.4% in 2004 - growth came from: l Specific rice varieties e.g. basmati; l Combination products with added flavourings; l Frozen rice; l Off-the-shelf microwaveable pouches.

6. © 2005 CCFRA 6 Consumer Drivers in the UK Ethnic Foods Market - Expanding Cultural Influences l Mass immigration since the 1950’s: l Authentic ethnic products l Restaurants l Take-aways l Restaurants: l Crucial link with the retail trade l Exposure to other cultures: l Travels overseas l Exotic holiday locations

7. © 2005 CCFRA 7 Consumer Drivers in the UK Ethnic Foods Market - Convenience l Changes in working patterns & UK family life: l More women working; l ‘Long hours culture’; l Personal disposable income. l Cultural shift in food preparation: l Ready meals; l Cooking sauces; l Microwaveable rice; l Prepacked vegetables; l Other authentic accompaniments.

8. © 2005 CCFRA 8 Consumer Drivers in the UK Ethnic Foods Market - Flavour Trends l Culinary experimentation: l Greater variety & choice; l New eating trends; l Celebrity chefs; l Spicier foods. l Flavour as part of the marketing platform: l Flavour name can be more relevant than an authentic name for a dish.

9. © 2005 CCFRA 9 The UK Ethnic Foods Market - Product Type l In 2004 ready meals (chilled & frozen) accounted for 58% of sales. l Cooking sauces accounted for 17.4% of the market: l Sales fell by 4% in 2004 - lack of product innovation would seem the reason for the decline.

10. © 2005 CCFRA 10 The UK Ethnic Foods Market - Cuisine Type l Indian and Chinese foods represent by far the largest sectors in the UK ethnic foods market - rate of growth has slowed. Change in value at current prices (£m retail selling prices) of key sectors in the UK Ethnic foods market (excluding rice).

11. © 2005 CCFRA 11 The UK Ethnic Foods Market Cuisine Type - Indian l Indian cuisine accounts for 47% of the UK ethnic foods market in 2004. l Ready meals accounts for 54% of the sector’s total value: l Variety of chilled ready meals; l Ease of preparation. l Accompaniments are also performing well; l e.g. Samosas, mini naans etc l Although the sector grew by 3.7% in 2004 sales have slowed over the last four years.

12. © 2005 CCFRA 12 The UK Ethnic Foods Market Cuisine Type - Indian l More authentic dishes: l Specialist brands, e.g. Pudina Tikka from Geeta’s l More regional dishes: l Ranges of regional Indian meals from Goa, Punjab, Madras and Hyderabad l Broader range of mealtime occasions: l Light, quick and easy foods from Sharwood’s and Patak’s

13. © 2005 CCFRA 13 The UK Ethnic Foods Market Cuisine Type - Chinese l Chinese cuisine accounts for 30% of the UK ethnic foods market in 2004. l Slowdown in sales growth: l Lack of innovation especially in sauces, however... l Suppliers have been growing their ranges: l Amoy introduced a new range of 7 stir-fry sauces in 2003 l Blue Dragon added new varieties in 2004 l More authentic tastes: l Regional dishes from e.g. Canton & Szechuan.

14. © 2005 CCFRA 14 The UK Ethnic Foods Market Cuisine Type - Thai l Thai cuisine: 5% of the UK ethnic foods market in 2004. l Rapid growth over the past 10 years: l Thailand holiday destination l Thai restaurants l Slowdown in sales growth over the past 2 years: l Difficulty of translating Thai cuisine into the ethnic food format in the UK. l Ready meals limited to red and green curry.

15. © 2005 CCFRA 15 The UK Ethnic Foods Market Cuisine Type - Far Eastern/Oriental l Limit on growth: l Concentration of restaurants in the London area. l Stir-fry, cooking sauces and accompaniments rather than ready meals. l Korean cuisine: l Very limited presence in the UK. l A few specialist retail outlets. l Japanese cuisine: l Interest in sushi l Sushi bars l ‘Good for you’ l Retail trade with sushi

16. © 2005 CCFRA 16 The UK Ethnic Foods Market Cuisine Type - Tex/Mex l Tex/Mex cuisine accounts for around 15% of the UK ethnic foods market in 2004. l Slowdown in growth: l Product availability. l Currently mainly as a party treat but suppliers extending eating occasions e.g. snacking sector leading brands also providing complete ‘instore’ ingredient sections.

17. © 2005 CCFRA 17 The UK Ethnic Foods Market - Future development l Sales growth has slowed down: l Consumers tiring of ‘staple’ Indian and Chinese dishes, l Lack of innovation. l Consumers receptivity to variety, choice and culinary experimentation: l Regional Indian and Chinese dishes; l Premium products; l ‘Healthy’ meals: Sainsbury’s ‘Be Good to Yourself’, Tesco ‘Healthy Eating/Healthy Living’, Marks & Spencer’s ‘Count on Us’ l Functional foods: Aloe Farm from Korea Foods, 2005

18. © 2005 CCFRA 18 The UK Ethnic Foods Market Future Development l Consumer base for ethnic foods is varied: l Some will actively experiment with new cuisines - others will explore new areas occasionally. l Merchandising is key to addressing these different consumer groups: l Understandable sections l ‘Heat indicators’ l ‘Healthy’ ranges l Flavours South-East Asia: chicken with coconut noodles China: sweet and spicy with tomato and ginger (Medium spicy)

19. © 2005 CCFRA 19 The UK Ethnic Foods Market Future Development l Greater authenticity, regionalisation and healthier eating options it is envisaged that the UK ethnic foods market will continue to grow at an annual growth of around 3% over the next five years.

20. © 2005 CCFRA 20 In summary l Established brands operating in the UK such as Amoy, Blue Dragon, Kikkoman, Sharwoods, etc along with effective merchandising: l Crucial role in the future adoption of new flavours and cuisines; l These and emerging brands will require effective new product development programmes to stimulate market growth. l Encouragingly consumers’ palates continue to change: l More adventurous tastes; l Spicier food. l These changes point to significant opportunities for the development of hot red pepper sauces within the UK market.