Frozen food sector to demand relief from price cutting

The British Frozen Food Federation (BFFF) is holding crisis talks with trading directors at the UK's leading food retailers over concerns that relentless discounting risks destroying all profit in the £4bn a year retail frozen food sector.

BFFF director general Alf Carr, who was awarded an OBE for his services to the food industry in the New Year honours this year, said: "I've arranged meetings with all of the key players to discuss their strategies for frozen in the coming weeks. Typically we're meeting the trading director or the senior buyer in the category."

Some buyers had already indicated that they would like to get off the discounting merry go-round, he claimed, but as the category wasn't growing, "the only way they can make headway is by stealing share from each other through an even more intense price war"

Some suppliers were now "existing entirely on 'buy-one-get-one-free' offers", he added. "There is going to have to be a major range rationalisation process before long."

While there was no reliable data on profit margins across the sector, the latest figures from market analyst TNS Worldpanel showed that the value of the retail frozen food market had dropped 2.5% in the last 12 months to £4.06bn, while volumes had held fairly steady, Carr added.

While there had been some growth in meat substitutes, ice cream, snacks and multi-packs, there were sharp falls in ready meals (down 9.7% to £533.9m), poultry (down 7.2% to £345.5m) and red meat (down 15.4% to £125.9m) over the period.

The second round of bidding for Heinz's European frozen food operation has now closed, with a deal now expected to be announced before the end of February. An update on the future of Unilever's European frozen food business is also expected by the end of March.