Private Label Magazine Featured Article

Standard jams and spreads have been declining in sales over recent years, but premium brands are growing rapidly.

The UK market for jams and sweet spreads reflects many of the changes in peoples' lifestyles and habits. Afternoon "tea" as the meal between lunch and dinner disappeared some decades ago and now even breakfast is coming under pressure as people lead ever more hectic lives. Coupled with growing concerns over foods with high-sugar content, then it is easy to see why the market for sweet spreads has been in decline.

Above: Tesco's regular brand of Blackcurrant jam, shown. In recent years, there has been a steady decline in sales for standard brands of jam, while premium and specialist brands have consistently grown, according to both TNS and retailers.

Sweet spreads, which include jams, marmalades and honeys, decreased year on year by 5% by volume according to TNS Superpanel research. Given that "snacking" at home is a growing market, the decline in the volume of sweet spread consumption is surprising. What it does show is that consumers, or even families, see less appeal or are less able to stop for the "traditional tea" which included bread or buns or scones taken with a selection of jams.

Above: Standard jams are keeping traditional flavors, while the premium brands are branching out into new innovative flavors. Shown are Sainsbury's strawberry jam and apricot jam, both from the retailer's regular line.

Marmalade, the traditionally favoured sweet spread at breakfast, has seen stagnant market growth and is now being overtaken by consumption of honey. Research by consumer group Mintel has shown that this is due to the shift away from breakfast as a formal meal with many people preferring to take snacks on the move or on the way to work.

However, it would be wrong to see this sector as one in complete decline. TNS's estimates the total value of the market in 2004 to be £205 million with jams making up the largest proportion of that at £89 million. This represented an annual increase for jams of 6% with honey growing year on year by an incredible 12%. According to TNS and to retailers in this category, the reason is that there has been consistent growth over recent years in the premium and specialist end of the market and by contrast a steady decline in standard jams.

Buyers from all the leading supermarket chains confirm that they are putting increasing emphasis on product innovation and higher quality in order to appeal to consumers' changing tastes. This is both about quality and healthier ingredients, particularly less sugar.

Premium brands have led the growth in the market, with private label seeing its dominant share of the market coming under pressure. Of the branded jams, Hartleys, is number one by value, followed by Robertson's, Streamline, Bonne Maman, Tiptree, and St Dalfour. The continental style jams as represented by Bonne Maman and St Dalfour have helped lead the way with the push towards premium and value added products. These focus on higher fruit content and no added sugar, no preservatives, and no colourings. Streamline's reduced sugar jams position their products as healthier options.

The consequence of these newer, higher quality products is that their market share has grown dramatically. Bonne Maman saw its share of the market by value grow by 50% to £9 million from 2000 to 2002. Tiptree saw a 33% growth in its market share in the same period. By contrast, retailers' own label declined 15% from 2000-2002, representing a fall from 46% share to 41%.

Above: Tesco's premium own label brand, Finest, offers fresh fruit jams in orange marmalade and raspberry conserve.

This is translated in-store where branded jams are given prominence over own brand. Retailers are merchandising this category with an own brand alternative in each price point, from value to standard to premium. Premium jams have grown by value by 7% in the year to the end of November 2004 and retailers have clearly followed this lead. Both Tesco and Sainsbury's have used their premium own label, Finest and Taste the Difference, to establish strong alternatives in the premium jam market. The emphasis is particularly on product innovation such as in different fruit combinations, to help differentiate their premium lines. Sainsbury's Taste the Difference jams include, for example, fig and orange flower water conserve, yellow plum and greengage conserve, and ginger conserve.

The success of Tesco and Sainsbury's premium jams, in line with growing demand, can also be seen in their market shares. Tesco accounts for just over 47% of the private label premium jam sales in the UK by value for the 52 weeks to the end of February 2005, according to TNS Superpanel. Asda follows with 25% and Sainsbury's takes just under 10%.

Above: Own label peanut butter accounted for 42% of the market in 2002, and the growing demand for chocolate spreads have given own labels 31% of the current market share. Shown are Sainsbury's Smooth Peanut Butter and Belgian Milk Chocolate Spread.

This trend towards private label premium jams has been strengthening for the last few years. Retailers confirm that in managing the category they have deliberately been moving away from value and standard ranges. Many buyers say that this move aimed to reverse the slide in category sales, bring some clarity to the ranges, and avoid much of the duplication with branded products. The success of this strategy explains the greater buoyancy in the market.

A similar story can be seen in the market share figures for marmalade and the growth in premium lines. In a stagnant market, own label marmalade declined nearly 14% between 2000 and 2002 from 32% to 29% by value. Even the branded market leaders, Robertson's and Chivers Hartley, have seen their market share fall. The only brands increasing their share of the marmalade market were the premium brands such as Frank Coopers or the healthier, reduced sugar ones such as Streamline.

The 12% value growth in the honey market looks very strong compared to marmalade and has now surpassed sales of that category according to TNS's Superpanel research up to the end of November 2004. Much of this can be attributed to the fall-out from the crisis over Chinese honey in 2002 when small quantities of a banned antibiotic were discovered in the product. This led to many lines that used Chinese honey being withdrawn from sale. Many of these lines were own label honeys. Between 2000 and 2002, own label market share fell by 39% to 48%.

The dramatic recovery of the honey market can be explained by the rush towards premium products which also increased sales by value. Demand has moved away from many of the clear honeys in favour of specialist ones. Own brand is also benefiting from this trend with both Tesco's Finest and Sainsbury's Taste the Difference introducing premium ranges.

In the market for peanut butter, own label accounted for 42% of the £28 million sector in 2002 by value, according to Mintel. However, the picture is one of decline for own label as consumers prefer to move towards premium products. Sun Pat remains the biggest brand, but brands such as Whole Earth, which is promoted as a healthy, more wholesome product, are increasing their market share. Retailers continue to give strong prominence to own brand however, and predominantly just in the two varieties of smooth and crunchy.

Chocolate brands have focused on the move towards snacking and the demand for more innovative products by consumers and have launched chocolate spreads around brand names such as Snickers, Milky Way, and Galaxy. Own brands have been quick to follow into both the value and premium sectors and now account for nearly 31%.

The UK market for pickles, chutneys, and relishes was worth £143.5 million in 2002 and saw growth of 2%. It is a polarised demand market, with the traditional sour pickles being favoured by the greying population whilst the market for specialist chutneys and relishes growing in response to a growing demand for different foods such as Indian cuisine. Relishes are growing due to the continued popularity of barbecues.

Sweet pickles remain dominated by brands with Branston the clear market leader, taking 82%.

Own brand sweet pickles have declined dramatically in market share, falling from 12 to 8% in 2001-3, according to Mintel.

The market for chutneys, which is driven by the popularity of Indian and other eastern foods, has increased across the traditional mango chutneys to fruit chutneys. Sharwoods continues to dominate this category with 68% market share, but own label has succeeded in growing its market share by value 13% from 2001-3. TNS's Superpanel gives private label chutney 32% market share.

Huge levels of product innovation have been stimulated by the growth in summer barbecues in the UK. The Bicks brand remains the market leader with its barbecue relishes that include barbecue, sweetcorn, Mexican chili and spicy tomato. This has helped give them a 52% market share and £3.5 million of this £6.8 million sector. Retailers have also innovated their ranges, and now take £2.8 million from the sector, or 41.2%.

Across all sectors of the UK market for spreads, there can be seen the effects of changing lifestyles and demographics, which have been marked and dramatic. What they have also helped to underline is that product innovation can help revive and even rebuild categories that had looked to be in terminal decline.