Welcome to the latest instalment in our THINK SMARTER SERIES, where Drayton asks an expert to share their insights, predictions or commentary on a subject close to our hearts. Or in this case, stomachs and wallets…
Serena Philipson has spent over a decade at the cutting edge of global food innovation, latterly as one of Marks & Spencer’s industry-leading Product Developers. Serena is a true expert in the prepared food arena, having developed some of the UK’s most innovative and successful ready meals and desserts whilst at M&S.
Here are Serena's thoughts on the future of premium prepared food...
It is well documented that “The Discounter's”, Aldi and Lidl, have delivered their match for everyday brands at a fraction of the cost. It’s this model that’s driven their phenomenal growth in recent years, seeing Aldi overtake Co-op to become the fifth largest retailer by share, with Lidl nipping at the heels of Waitrose for the seventh spot (Kantar Worldpanel).
The Discounters’ ability to offer quality products in the luxury area, primarily at peak seasonal times such as Christmas, is also no new-news. In a previous guise as a Product Developer for a premium retailer, my team uncomfortably reviewed Aldi and Lidl Christmas lines pitched against our top-tier ranges, albeit at scarily low prices. The Buying team uncomfortably shifted in their seats whilst trying to justify their 50% price premium. It was clear to everyone that we might have to get used to a new favourite in the eyes of the Food critics… Scores aside, the Discounters are pumping these products out there; a leg of Spanish air-dried ham, British Beef Wellingtons, Brie with Truffle, Golden Topped Christmas Puddings. And people are buying them.
And in 2018, the competition will really heat up. It’s not just Christmas the discounters want to take a bite out of; the opportunity is far greater than that. The eve of year-round, premium quality prepared food from the discounters has well and truly dawned.
Which ranges are we talking about?
I could list many good examples but it’s Aldi that is really driving the change here, under their ‘Specially Selected’ brand. Take their autumn launch of Charlie Bigham style meals. A rip-off in style, if not price, the range includes dishes such as Tuscan Sausage Pasta, Beef Bourguignon and Lasagne. The meals retail from £3.99, in sharp contrast to Charlie Bigham’s £7.50. And do they deliver? Certainly, the Tuscan Sausage Pasta didn’t fail to disappoint. The Lasagne isn’t quite there yet and won’t threaten the likes of M&S, but might stand up to others.
Their Specially Selected Soup range retailing at £1.49 per pack is another gem. The recipes and ingredients are becoming more interesting - try the Sri Lankan Chicken. A well-known premium supermarket sells their fresh soup at £2.50. The quality difference is minimal - certainly nothing that justifies that price difference! How about the Specially Selected fresh filled pasta range which includes Wild Porcini Mushroom & Truffle Triangoli and Spinach & Ricotta Girasoli. Retailing at £1.59, rather than the £2.50 price point the old-guard seem stuck with. And taste? I’ve eaten 90% of supermarket fresh filled pasta ranges, and there’s not much I’d go back for. These I would, again and again.
So how disruptive will these ranges really be?
Is M&S, the king of quality prepared foods really worried? Will Tesco fight back with yet another re-brand of ‘Finest’? The fascinating thing is that the discounters are getting more things right than the supermarkets would like to admit. Product and packaging are now delivering as well as price. The threat is real. And here to stay - Aldi and Lidl take a long-term view when it comes to permanently winning share.
How will the supermarkets fight back?
Innovation is key to their survival, but not purely through product. The discounters will replicate this, and at a much lower price. The innovation must be in how they’re selling, how they connect with their customers. It’s about creating an experience. M&S, for example, are trying a few new tricks – a meal delivery service in London and Reading, a new partnership with the sushi chain Wasabi. Areas that Aldi and Lidl are very unlikely to stray into. Yet. The big supermarkets are trying frantically to tap into “higher growth markets”, such as wholesale, as demonstrated by Tesco’s successful acquisition of Booker. This should help protect their margins. But let’s be honest, this won’t help maintain their market share of top tier prepared food. Meanwhile, the discounters will continue their attack, learning all the time.
But from where I sit, it’s the consumer that will be the ultimate winner.