Brand Health Check: Findus

Being stocked in the freezer aisles of supermarkets is not helping; the
area has been so badly hit by negative consumer perceptions that big
players in the sector such as Heinz and Unilever have been attempting to
sell off parts of their European frozen-food businesses.

Findus has been further hindered by being bandied around between owners
over the past few years. In 1962 the then-20-year-old Swedish company
was bought by Nestle. It grew Findus into a major international
frozen-food brand before selling it to Swedish private equity firm EQT
in 2000.

Between 2000 and 2005, EQT squeezed a higher profit from Findus; its
profits increased nearly 18% to EUR66m (£45m), even though sales
fell 27% to EUR445m (£306m).

In April 2005, EQT sold Findus' UK operations to Geir Frantzen,
previously a senior manager at Findus' Swedish parent company, and in
January this year EQT agreed to sell off Findus' remaining European
operations, apart from those in Italy where it is owned by Unilever, to
private equity firm CapVest Equity Partners.

Like nine of the top 10 frozen ready-meal brands in the UK, Findus has
seen its sales fall, but it has suffered more than its peers. In the
year to October 2005 sales of its ready meals slumped by 40%, compared
with a sector decline of 13%, according to ACNielsen.

One of the main challenges for frozen-food brands is to allay a consumer
perception that chilled meals are healthier.

The general response to this has been to discount, cheapening the
sector's image further. Findus' rival Birds Eye, though, has taken
another approach, running a campaign focusing on the fact that freezing
locks in freshness without the need for preservatives (Marketing, 4
May).

So, how should Findus tackle its problems? We asked Martin Hall, general
manger for convenience business at Premier Foods, who worked on the
launch of Branston Beans, and Gerrie Hawes, managing director of frozen
organic babyfood brand Fresh Daisy.

VITAL SIGNS - Frozen ready-meal manufacturers by value (£000)



Brand 2005 2004 % chng

1 Birds Eye 66,478 71,224 -6.7

2 Weight Watchers 53,505 65,176 -17.9

3 Menu Master 45,136 50,160 -10.0

4 Young's 27,595 29,144 -5.3

5 Oriental Express 16,959 19,066 -11.1

6 Patak's 8029 8696 -7.7

7 Findus 7111 11,835 -39.9



Source: ACNielsen Figures are for year to October

DIAGNOSIS 1 - MARTIN HALL, GENERAL MANAGER FOR CONVENIENCE BUSINESS,
PREMIER FOODS

TV is littered with programmes dedicated to how we eat, where our food
comes from and what it contains. The result of this media attention has
been a shift from aspirational health to action.

Health is, quite rightly, firmly on the consumer agenda. The growth of
chilled foods with its promise of fresh ingredients reflects this,
relegating frozen to the role of staples and ice cream.

While brands in the chilled sector might call a meal Moroccan Chicken
with Pine Nuts, Findus would label it Chicken Curry. Herein lies the
problem: Findus may pay lip-service to the health trend, but there are
seven E numbers in a single crispy pancake, and no romance to its
food.

Why would consumers spend time browsing in the frozen-food cabinets at
the supermarket when the oasis of chilled food beckons? Findus needs to
banish the additives and other nasties in its food and focus on
romancing the senses.

There is an interesting battle on the horizon, as chilled food is
challenged.

Frozen food has a chance, but Findus must position itself to take
advantage.

REMEDY

- Let Birds Eye drive the category challenge to 'fresh is best', but
ride its coat-tails by banishing E numbers and artificial additives.

- Bring romance back to frozen food by taking the lead from fresh ready
meals.

- Hiding behind the freezer door is no good. Find display solutions to
get the message across to passing shoppers.

- Be bold. If something does not fit the brand, remove it or change
it.

DIAGNOSIS 2 - GERRIE HAWES MANAGING DIRECTOR, FRESH DAISY ORGANIC

I'm having a flashback. It's 1978, I'm in my Charlie's Angels jumpsuit
and I've just had my first ride on a Chopper.

I'm having a good time pestering my mum about the latest groovy products
on TV: Smash, Vesta meals and the 'out of this world' Findus Crispy
Pancakes, with their half moons of pale brown crispiness stuffed with a
pale, sort of cheesy goo, which oozed from the sides. The idea was
exciting. The experience? Well, let's just say it was once in a
lifetime.

Back from my flashback, I venture onto the brand's website expecting to
find my preconceptions now wildly out of touch, but it seems that Findus
has been stuck in a timewarp. Its familiar flag-like logo remains, and
so do the products.

Even though it may have lost its raison d'etre, all is not lost; mass
brand recognition is not to be sniffed at. But work needs to be done to
turn recognition into a brand with which today's health-conscious, busy
families want to be associated. This means developing contemporary
products.

REMEDY

- Obesity in UK kids is at an all-time high and getting worse, so create
more modern brand values to tap into health concerns.

- Spend some serious time, skill and money innovating products in line
with current food trends.

- Use retailer relationships to help reinvent the company.

- Work together with all innovators in frozen food to bring it into the
premium sector, where it deserves to be.