Growth by invention

If you wanted to be harsh you could say that new product development (NPD) in the desserts category is characterised by a lot of bluster, but not much substance.

The figures speak for themselves. According to Elzane Neethling, business insight director at market analyst IRI, in the 52 weeks to October 4: "The total dessert market is more than £1bn and growing at 4% in the latest year in value, but no volume growth is seen. So people are not eating more desserts, but are paying a bit more for the dessert they are eating." So value growth is occurring simply as a result of price increases, says Neethling.

That's one argument, but consider what the market has to contend with, such as the strong drive to eat more healthily, tightening purse strings and the maturity of the category. Given these aspects, the industry's ability to hold on to value growth may be down to more than just rising prices. Perhaps NPD is continuing to grab consumers, then.

Neethling certainly recognises that the persistent attraction of premium products is also driving value growth. The big question is whether that will continue as shoppers rein in their spending. Processors and researchers have mixed opinions. Referring to dairy desserts in particular, Food Manufacture's market report on yoghurt, desserts and milk drinks, for example, argues that until fairly recently, disposable income levels made it easy for added value products to succeed. But the study, compiled by RTS Resource, says: "If the economic squeeze continues it could lead to less frequent purchasing of added value dairy, down-trading into more economy lines (or discount retailers) or consumers dropping out of added value altogether."

In the short term, retailers' own-label manufacturers, for years the poor cousins to branded food and drink players, could finally find that their day has come and benefit from such a development. In chilled desserts, which overall is growing more slowly in value this year than last year according to IRI, this is already an emerging trend, says Neethling: "In chilled desserts, almost all growth is driven by retailer own label - specifically, new products launched by the retailers in this sector."

Retailers' own labels are also strong in frozen desserts, another market where value growth is slowing, according to Neethling.

Loyalty will out

However, Charlotte Marriott, development chef at Noble Foods Desserts, which aspires to restaurant-standard food for top supermarkets, believes it will take a lot for consumers to abandon premium-priced indulgent products; it's just that they may seek them from different channels, she says. "There are people who still want to treat themselves, but instead of going out, they're eating in at home."

Mintel's Chilled Desserts market report, published in July, states: "Premiumisation in this category is expected to continue despite the current economic squeeze."

Good news, then, for firms chasing higher margins. Shoppers may be reining in their spending, but they are still seduced by high quality ingredients, says Julie Zalesny, director at Vittles Foods, which supplies indulgent, premium desserts to the foodservice sector: "People are prepared to pay extra for something that has got [for example] proper Belgian chocolate."

Old favourites executed well are something Vittles prides itself on and there will always be a place for chocolate as a core ingredient, especially something with the cachet of Belgian chocolate. One example of a recently launched product is its Belgian chocolate tart, which has a homemade feel and is made with fresh cream and Belgian chocolate, says Zalesny. Classic desserts, such as Black Forest gateau, are also strong sellers for the company at the moment.

'Classic with a contemporary edge' is certainly where it's at as far as Marriott is concerned as well: "Consumers like what they know. Tiramisu, creme brûlée, trifle, but with a change to make them more modern, such as a different serving format with different serving textures." Zalesny cites the example of Vittles' lemon meringue, made with traditional lemon curd, but also another layer of lemon mousse, providing contrasting flavour and texture.

One way to pep up a traditional category and add value at the same time is through cross-category fertilisation, particularly the use of alcohol as an ingredient, says Thomas Lowndes, and one of the best times to do this is the Christmas period. Accordingly, the branded alcohol ingredients supplier has teamed up with retailers and top brands to sex up festive desserts.

For example, it has contributed to the launch of Tesco Finest Mince Pies with Courvoisier Cognac, which offers a unique selling point. Meanwhile, it has worked closely with Noble Foods Desserts to produce a contemporary take on Christmas pudding - its Christmas Melt in The Middle, also containing Courvoisier.

In ambient desserts, Heinz is fusing the appetite for classic puddings with the healthy eating trend, resulting in the latest extensions to its Heinz Taste of Home lines, Delicious Light Rice Pudding and Gorgeous Light Classic Custard. In fact, consumers pursuing healthy diets are fuelling a lot of NPD for Heinz in the ambient category. There's Heinz Fruit, another recent addition to its ambient portfolio in three varieties: Peaches in Juice, Fruit Cocktail in Juice and Tropical Fruit Cocktail in Banana Purée and Passion Fruit Juice. All these come in single serve fruit pots, a category which Heinz claims has enjoyed 46% value growth in three years and which is especially suited to children's lunchboxes or as a quick, convenient snack for adults. "Heinz fruit pots are handy portions of fruit that give consumers more choice and dessert ideas as well as providing one of the recommended five-a-day portions of fruit and vegetables," says Christina Honigfort, senior brand manager, Heinz Desserts.

Classic allure

The ambient dessert category performed better in the year to October 4 compared to the same period last year, says Neethling, with a turnaround in volume sales decline and individual desserts showing 10% year-on-year growth.

Heinz holds a major attraction for healthy eaters, not only in ambient desserts but also in frozen, in the form of its Weight Watchers brand. That Heinz sees much mileage here is amply demonstrated by the extension of its Taste Temptations range this autumn to include Chocolate Mini Tortes, Chocolate Profiterole Dessert and Vanilla Raspberry Panacotta.

There's little doubt that most shoppers will be forced to spend less on food and drink in the coming year. However, it's also clear that despite this people are still prepared to fork out for true quality, especially for traditional, classic products they can trust. And if they do trade down, retailers' own labels can offer them similar delights at more affordable rates. So there's room for more innovation and business yet in desserts! FM