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THE BACKGROUND

Curries have become as much of a British institution as fish and chips, but there is no room for complacency among Indian food companies. The rise in long-haul travel has broadened the palates of many Britons, and Indian food brands now face competition in the supermarket aisles from meal options from such far-flung countries as Mexico, Thailand and China. Manufacturers need to innovate more with their products and raise their adspend to re-energise the sector. In particular, they need to move into new eating occasions such as lighter meals and snacks.

Curry houses have long since established themselves as a fixture on the UK's high streets, so it should be no surprise that Indian dishes successfully made the transition into supermarkets.

Last year retail sales of Indian-style ready meals and other foods were worth £491m, according to Mintel.

But is our love affair with the curry on the wane? While the market has grown by 7% since 2000, it has dipped by 1% in real terms. And retail sales have slipped by more than £8m since the sector's peak in 2003, as Indian food has faced increased competition from other exotic styles of cooking.

Indian food is still the fourth-most popular cuisine in the UK, and Mintel predicts it will bounce back if manufacturers focus more closely on consumer eating habits and develop products for consumption outside the main evening meal. In particular, they must respond to the demand for convenience and the desire by some to cook more dishes from scratch.

The leading Indian food brands have already begun to launch products designed to broaden the sector's offering. Centura Foods division Sharwood's, the market leader in the non-ready meal Indian food category, relaunched its ambient products last September with a range of Balanced Living sauces that are low in fat, sugar and salt to respond to concerns that curry is not healthy.

Regular innovation

Sharwood's, which is the category's biggest spender on advertising, is also set to promote its Grill, BBQ or Bake instant marinades as an option for barbecues. A £1.5m TV drive in July and August will help 'unlock the trend toward lighter eating in the summer', according to Helen Williams, brand manager for Sharwood's Indian range.

The company is to run product development initiatives every six months, aiming to grow the Asian food market by £100m in the next three years.

Williams promises significant product development for the Indian market later this year.

Similarly, Patak's, which trades heavily on the authenticity of its dishes, is looking to provide 'lighter choices and convenience', according to group marketing director Fiona Mannion.

Last year it launched Curry Break ambient meals, Spice Express low-fat sauces and Indian wraps. This year it is introducing an Indian Banquet for One range of frozen ready meals, and this summer it will promote products such as recipe pastes for use in outdoor eating. Its expansion appears to be paying off - sales of its non-ready meal lines jumped by 26% between 2002 and 2004.

Advertising boost

Elsewhere, manufacturer Geest announced a joint venture with Rannoch Food Group last October to sell prepared raw ingredients for Indian dishes.

This is designed to cater for consumers who want to cook their own curries.

According to Mintel, one factor that has contributed to the recent decline in sales is a lack of awareness. Above-the-line support for the category was low at just £2m in 2004, a mere 0.4% of sales generated by all Indian food products. Instead, manufacturers have relied on multi-buys and other price promotions.

There are signs, however, that this may change. Sharwood's is raising its total marketing spend, including below-the-line and trade promotions, to £6.5m this year (up from £5m), while Patak's is in the process of looking for a new ad agency following the closure of its incumbent Mitchell Patterson Grime Mitchell last year. The family-owned business is looking at 'a whole new approach to advertising', according to a spokeswoman.

Market dominance

Sharwood's and Patak's combined account for more than half of the non-ready meal category by value. This comprises meal accompaniments, which make up 4% of the total Indian food market, side dishes and starters (23%) and cooking aids (17%).

Aside from the two leading brands, much of the rest of the non-ready meal category is supplied by retailers' own-label products, with a small share claimed by mega-brands that span more than just the Indian market, such as the Masterfoods-owned Uncle Ben's range of sauces.

Ready meals make up more than half of the Indian food market (56%), but these have been hit by heavy price promotions by branded and own-label products. Sales fell by 6.5% to £275m between 2001 and 2004, and sales of frozen varieties, which account for 41% of the ready meal category, tumbled 13% over the same period.

The fact that these constituent parts of an Indian meal are scattered across the various aisles of a supermarket remains a problem. Mintel believes there is a major opportunity in clustering such items together - from fresh herbs and spices through to desserts and beer to drink with the meal. This has worked with own-label 'takeaways' - entire Indian meals sold in bags in the chiller cabinet - which have performed well.

Light options

Another opportunity lies in offering lighter alternatives to curry, as Sharwood's is doing. Healthier options have carved an 8% share of the Indian foods market, while sides and starters - such as samosas and naan bread - are the fastest-growing category, with sales up 46% since 2000 to £115m. Within this category, snacks have grown 45% since 2001. The number of flatbread recipes in Indian culture means this area has clear potential.

An example of the growth of Indian snacks is the two-year-old London Tiffin Company, which provides a choice of more than 100 lunchtime Indian foods in its five stores and is reportedly in talks to supply its products to the multiples.

Despite these opportunities, the maturity of the market means growth will be slow. Mintel predicts that the sector's value will rise to £544.4m in 2010, a real-term increase of just 2%.

UK RETAIL SALES OF INDIAN READY MEALS BY FORMAT

2004 2003 2002 2001 01-04

pounds m % pounds m % pounds m % pounds m % %chng

1 Chilled 163 59 166 58 164 57 165 56 -1.2

2 Frozen 112 41 122 42 126 43 129 44 -13.2

Total 275 100 288 100 290 100 294 100 -6.5

Source: Mintel

UK RETAIL SALES OF INDIAN FOOD EXCLUDING READY MEALS BY MANUFACTURER

2004 2002 02-04

pounds m % pounds m % % chng

1 Sharwood's 74.8 34.6 70.5 35.9 6.1

2 Patak's 48.6 22.5 38.7 19.7 25.6

3 Unilever Bestfoods 8.9 4.1 14.3 7.3 -37.8

4 Masterfoods 6.3 2.9 6.9 3.5 -8.7

5 Campbell's 3.9 1.8 4.5 2.3 -13.3

6 Schwartz 3.2 1.5 2.8 1.4 14.3

7 Tilda 3.1 1.4 2.2 1.1 40.9

Other brands 17.5 8.1 10.6 5.4 65.1

Own-label 49.7 23.0 46.0 23.4 8.0

Total 216.1 100.0 196.5 100.0 10.0

Source: Mintel Data may not equal totals due to rounding

UK RETAIL SALES OF INDIAN FROZEN READY MEALS BY MANUFACTURER

2004 2002 02-04

pounds m % pounds m % % chng

1 Birds Eye Wall's 14.5 13 25.2 20 -42.5

2 Heinz 7.8 7 10.0 8 -22.0

3 Patak's 6.7 6 3.8 3 76.3

4 Sharwood's 2.2 2 2.5 2 -12.0

Other brands 13.5 12 15.2 12 -11.2

Own-label 67.2 60 69.3 55 -3.0

Total 112.0 100 126.0 100 -11.1

Source: Mintel Data may not equal totals due to rounding

ANALYST COMMENT - IAN BELL, SENIOR RESEARCH ANALYST, EUROMONITOR INTERNATIONAL

Sales of ethnic food in the UK reached £1bn in 2004, with Indian cuisine the most popular, taking a 46% share, according to Euromonitor International.

Britons fell in love with Indian cooking when merchants and soldiers returned from the East, leading to the first commercially available curry powders in the 1780s. More than 200 years later, Indian food has made it to the top of many people's culinary wish list, with chicken tikka masala widely regarded as the UK's favourite dish.

Yet at the moment the industry is struggling to re-establish credibility after the Sudan 1 food scare, which disproportionately affected Eastern-influenced foods.

Notwithstanding that crisis, there have been signs of trouble since 2000 - in particular a fall in sales of cooking sauces. The Indian cooking sauce market is worth £40m, but there has been little development or consumer education to widen the segment beyond a staple of tikka masala, korma, balti, madras and rogan josh - these recipes account for 80% of sales between them.

At the same time, smaller producers complain that most shelf space is reserved for Sharwood's and Patak's, further limiting sector development.

It is notable, however, that the chilled ready meal category has performed solidly, suggesting that, for many consumers, Indian cooking sauces have become too much trouble. Although launches such as Sharwood's Balanced Living range and Patak's Spice Express suggest a sector willing to modernise, the demand for authenticity, plus stiff competition from ready meals and other ethnic cuisine, such as Thai, may signal rapid contraction for Indian packaged foods.