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Lukewarm year for chilled potatoes

Monday, 7 October 2019

Sales of chilled potato products went into decline this year, driven by baby/new potatoes and bakes/gratins.

Chilled potato products account for 3% of the total potato market by volume but 8% by value (Kantar, year ending 11 August 2019). While, in previous years, we have seen growth in the category, in the latest year, both value and volume declined by 6%.

The term ‘chilled potatoes’ covers a range of convenience products that are partially prepared and found in the chilled aisle; mash is the largest group of products, followed by baby/new potatoes and slices. Consumers choose these products because they are quick and easy to prepare, though many just like the taste (AHDB/YouGov).

Most types of chilled potatoes saw growth slow in the last year. Overall, volumes were down by 4,000 tonnes (-6%) in the year to 11 August 2019, to 69,000 tonnes. Losses mostly came from baby/new potatoes (-1,100 tonnes) and bakes/gratins (-1,400 tonnes). However, mash, which suffered in last year’s heatwave, returned to growth this year, selling 26,000 tonnes in the year to August (+3%) (Kantar).

Bakes and gratins have been in sustained volume decline since the spring of 2018. Spend in the last year was down by 22.7%, mostly driven by a fall in the share of households buying into the category, down to 10.6% from last year’s high of 13.8%. This is despite the average price of such products remaining static at £3.88/kg.

Bakes and gratins (which includes dauphinoise) have quite seasonal demand as they feature heavily in Valentine’s Day meal deals when consumers are looking for indulgence and convenience. This year, Valentine’s Day meal deals struggled and volume demand for bakes/gratins was down 15% in the 12 weeks to 24 February 2019, compared with the same period last year.

The weather has affected the sales and year-on-year performance of two major groups of chilled potato products. Last year’s heatwave saw consumers choosing lighter meals and salads, which helped to boost chilled baby/new potato volumes to a 5-year high of 2,346 tonnes in the 12 weeks ending July 2018. However, sales this year have been poor, with volumes 10% below the average of the three previous years, despite lower prices. Losses have mostly been driven by a fall in household penetration: 18.3% of households bought chilled baby/new potatoes in the year ending August 2018. This year, only 16.3% of households bought into the category.

The weather had the opposite effect on chilled mash, which features in heartier meals. Last year’s heat caused chilled mash to struggle, with volumes falling by 1% in the year to August 2018. This year’s cooler summer has helped chilled mash recover sales to 26,020 tonnes, the highest sales in at least five years. However, this wasn’t enough to outweigh losses in baby/new potatoes and bakes/gratins.

There are other pockets of strong growth in the chilled potato category. Chips and fries together account for 11.5% of chilled potato sales by volume, growing by over 600 tonnes since last year. Chilled potato slices (typically battered) have also seen consistent growth for the last four years, now making up 9% of chilled potato sales by volume. Their growth has come from increased purchase frequency and household penetration – 10% of households now buy chilled potato slices at least once over the course of a year.

Chilled jacket potato sales have declined steadily over the last five years. In the year to August 2019, 2,667 tonnes of chilled jackets were sold, a decline of 45% compared with the same period in 2015. Over the same period, these products saw a price rise of 21%, now costing an average of £4.31/kg. Consumers, who have re-embraced scratch cooking in recent years, may be looking for more cost-effective ways to feed the family: fresh baking potatoes cost an average of 83p/kg and have seen volumes rise by 12.4% over the year to August 2019.

We’ve recently seen a resurgence in scratch cooking, which, combined with financial worries, may put pressure on chilled potato products in the future. Innovations in format and flavour may help to maintain engagement in the category, fitting in with our ever-growing appetite for world cuisines.

For more retail data on fresh and processed potatoes, click here.