MARKET GROWTH

Why Australians are falling in love with ready-to-eat meals

The COVID-19 pandemic has had a positive impact on the ready-meals market.

The ready-to-eat meals market has experienced rapid growth in the last two years and Total Construction continues to be well poised to help companies expand operations. Food & Beverage Industry News explains.

The ready-to-eat meal sector has experienced strong growth over the past two years due to several external and internal factors and Total Construction has been at the contracting forefront of the boom.

“Our owner likes to say we are a 10-year overnight success,” said Rob Blythman, general manager, engineering construction group at Total Construction.

“The UK basically has a shop on every corner and a lot of people pick up their ready-to-eat meal and head home.

“For the longest time Australia had the mentality they were the equivalent of a TV dinner, which is not what ready-to-eat is.

“That might have been the biggest hurdle to get over; the past perceptions of what ready-to-eat meals can be and now are.”

Some time ago Total Construction was able to employ the services of ready-to-eat sector expert, Tony Tate, who had observed the sector’s growth in the United Kingdom.

“Tony is our general manager of the food and beverage division,” said Blythman.

“He worked in the United Kingdom when the ready-to-eat sector was going gangbusters but at the time it never seemed to gain and traction in Australia.”

Tate now provides Total Construction with his expertise, including his insights into the readymeals market.

“We have been on top of it for the last eight to 10 years and we got Tony in for his expertise in the area. We have just been waiting for it to take off and it finally has,” said Blythman.

Tate was up to the challenge of helping Total Construction build its presence in the ready meals market.

“I came over to Australia 21 years ago to mirror the ready meals format from the UK,” said Tate.

“At the time Australia was using more of an American model, which is more about frozen food, mainly because of the logistical challenges presented by Australia’s large size.

“Frozen meals were hard to market so the concept was to produce fresh ready meals. The only downside is the price to produce the ready meals at the time was pretty high in comparison to going out for an occasion.”

Tate said the UK’s ready meals market had remained strong because of the ease with which the products could be transported around the country and within a short window of time.

“The UK market follows the fresh food model, so no more than a seven-day shelf life and the logistics arm could reach any part of England within five hours total. We could also reach Europe the following morning,” said Tate.

“It is a small footprint in the UK, but the ready meals market was, and is, a big one.”

Despite its long-term popularity in the UK, Australia only started to experience some noticeable market growth over the past two years, said Blythman.

Advancements in ready-meals packaging and manufacturing technology have also helped the sector grow.

“Whether that is a result of people not wanting to go out and buy food or go wandering around the shops, we don’t know for sure,” he said.

Total Construction has been contracted to build ready-to-eat manufacturing facilities in the past and learned quickly what the critical requirements were, putting them in a good position to take advantage of the growth.

“We did one a few years ago and they weren’t doing anywhere near the volume the market is facing now,” said Blythman.

“A lot of people had tried to enter the ready-to-eat sector but historically, it just wasn’t taking off in the market.”

The capital investment that goes into developing a ready meals facility was also another hurdle for many manufacturers, but one Total Construction knows how to navigate.

“You need a fairly bespoke facility to do this because you aren’t just making one product,” said Blythman. “You are making multiple SKUs and that has complexity of its own, just in the amount of different equipment you need to buy.

“This sector spends a lot of money on equipment.”

One of the most important developments to help the growth of the sector was advancements in packaging technology, extending the shelf life of fresh products, something that was holding the sector back.

“That is the key for these operators because you can get a lot of wastage,” said Blythman.

“Supermarkets will just send it back when it hits the expiry date, and they don’t pay for it. Extending shelf life is critical.”

Blythman said achieving that goal was a long process but had been achieved recently with successful results.

“The hope was seven to 14 days and now it is exceeding that which is great in Australia because at times it could take three days to get the product to certain areas,” he said.

Tate said exposure was a key driver behind the growth of the ready meals market, which was suffering from a misconception in Australia.

“It has been growing steadily so a lot of the retailers have piggy backed on the success of things like MasterChef.

“They have been working with a lot of chefs to assist in getting into the fresh ready meals market,” he said.

Tate also attributed the growth of the market to the impacts of the COVID-19 pandemic.

“That growth is also being experienced across multiple brands, showing the popularity of ready meals already,” added Tate.

“The young up and coming 20 to 30 years olds are wanting high protein meals, quick, easy, and fast. Companies in that space are doing multi-million-dollar turnovers.”

Tate echoed Blythman’s comments about how critical extending the shelf life of ready meals was for the growth of the sector.

“Coles and Woolworths were also wanting to extend the shelf life of the product and retain the quality,” he said.

“The maximum now is 10 days and a lot of companies have pasteurised in the pack to achieve 30-day shelf life, so a lot of the products must be value engineered to take that additional re-heating.”

Tate said those in the ready meals sector were anticipating continued growth, with one Total Construction client, who can’t be named, looking to develop a facility that can manufacture one million meals every week.

“They will likely be at capacity within the next six to 10 months,” said Tate.

“Coles and Woolworths are already capable of doing that at their own facilities.”

Tate said the major supermarkets were also looking at models for satellite facilities in the western regions of the eastern states and in north Queensland. The idea behind the satellite facilities is twofold – to reduce the cost of freight and to reach further across the country with the product.

“The meals would be 60 per cent made up and then the satellite facilities would finish them off before hitting the market,” said Tate.

Both Blythman and Tate said innovations to processes, like the satellite facilities, would continue to help drive the ready meals space forward and Total Construction were well positioned to make sure its potential is reached. F