Frozen Value

Two quite striking pieces of news today show that in the world of food retailing, the value end is really back in business. Today’s Kantar data shows little movement among the big boys of grocery, but record market shares for both Aldi and Lidl, while results from Companies House for secretive frozen specialist Farmfoods show a 30% rise in profits and 20% rise in sales.

Interestingly Kantar’s view is that the growth at Aldi and Lidl is being driven by existing shoppers spending more there, rather than new ones being attracted. There’s a lot of logic to this argument. Unless they’re really down on their luck, not many people are going to be doing all their shopping with a hard discounter. But for week-to-week top-up shops, shopping in small stores or with discounters is a great form of self-discipline in tough times. It’s much harder to be tempted into impulse buys in stores with such limited assortments. They’re not generally much cheaper than Asda or Tesco, but it’s harder to spend a lot of money in their stores.

Frozen food also comes into its own in tough times. Iceland has been doing well for a while and although many of its locations aren’t the greatest, the big grocers are eyeing its stores ahead of the sale of the business. But below Iceland there are a raft of ultra low-profile frozen food retailers, focused on the north and Scotland, which all appear to have done OK during the recession, admittedly based on the very limited information they choose to make public.

There’s Frozen Value, which is based in Yorkshire and trades as Jack Fulton, and Heron Frozen Foods, which is based Hull way and really took advantage of Woolworths collapse to grow its store portfolio. And then Farmfoods, the name of which sounds rather pastoral and fresh, but in fact nearly all the product is frozen. I’ve never visited a Fulton’s, but in my experience, and from what I’m told, both Farmfoods and Heron are very basic, no-frills affairs but offering great value in relatively small stores.

Those in the frozen food world - notably Iceland founder Malcolm Walker - argue strongly that frozen is in many cases a much healthier option than fresh. Not everyone agrees, but what is for sure is that the frozen specialists, like the hard discounters, offer genuine value for money, with the added benefit that with frozen food hard-pressed mums don’t risk the level of waste that you get when fresh products go off.