Greencore hoping to foster appetite for chilled food

Greencore is seeing evidence of more eating at home during these recessionary times, writes Laura Slattery

CHANNEL SWITCHING is one of the benefits of recession for a convenience food company.

The term is attractive jargon for the phenomenon by which hard-pressed consumers who might previously have booked a table at their local Italian, pop into Tesco and buy something vaguely enticing and affordable instead.

With a 28 per cent share of Britain's chilled, prepared branded meals market, the chances are that it is Greencore, the food group that evolved from Irish Sugar, that will have produced whatever comes inside the box.

And if the economic gloom gets too much, why not have a shot or two of Scottish whisky: that too will line the pockets of Greencore through its spirits-lifting malt business.

"We're seeing very demonstrable evidence now of people eating at home instead of eating out," chief executive Patrick Coveney said yesterday.

But when Greencore talks about channel switching it is not only targeting cash-conscious British and Irish consumers. It is also launching an ambitious plan to exploit a change in long-ingrained consumer habits on the other side of the Atlantic.

Anyone who has wandered through a convenience store in the US will notice that the chilled foods cabinet, if there is one, will be more modest in size, with a distinct absence of anything that might be considered a ready-meal.

Spend any time at all in the country and the ubiquity of eat-out and take-out culture will soon become apparent.

Manufacturers such as Greencore and retailers such as Tesco, which is still advancing its Fresh 'n' Easy concept in California, are hoping to change all that. The appropriate jargon here is "category creation".

After "talking about it on and off" for three years, Greencore finally embarked on its US project in April with the purchase of Boston-based company Home Made Brand Foods.

So far sales have increased 24 per cent.

With its balance sheet in good order and plans to double US sales every year for the next five years, further US acquisitions are likely.

Interestingly, while Tesco is its biggest customer in Britain, Greencore's bid to convince Americans of the joys of chilled prepared foods is independent of the rolling out of Fresh 'n' Easy.

While the market is still clearly "testing" back in the UK, Greencore will be a beneficiary of the VAT-cutting fiscal stimulus package announced by the British government on Monday.

Food companies are sometimes said to be recession-proof as everyone has to eat. But no one has it completely their way. The big catch for Greencore has been sterling. Its weakening has slashed operating profits to the tune of over €8 million.

And like most people, Mr Coveney is not counting his Chicken Caesar Wraps on an economic recovery anytime soon.