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Sandwich market still has room to grow

23 November 2004
Sandwich market still has room to grow

The great British sandwich is fighting back, according to its supporters, who believe the British public's love affair with sandwiches isn't over yet.

There might be more competition, fad diets and even shorter lunch breaks, but this hasn't stopped the UK sandwich market growing in value. According to the British Sandwich Association (BSA) it is now worth £3.5b, compared with £1b in 1990.

But while the numbers who eat sandwiches at lunch is falling - July's Lunchtime Report from caterers Eurest shows it dropped from 65% in 2002 to 54% in 2003 - consumers are spending more than ever on the humble sarnie.

In short, the death of the sandwich - forecast with the advent of young pretenders to the lunchtime crown, like sushi - has failed to materialise.

The already competitive UK market, stoked by retail chains such as Boots and the proliferation of mini-supermarkets such as Tesco Metro and Marks & Spencer's Simply Food, is set to both grow and become even more cut-throat.

Fast-food chain McDonald's is poised to enter the sandwich market; London-based budget chain Benjy's aims to grow its stores from 62 to 200 by the end of 2006, augmented by a fleet of more than 500 retail vans; and bakery chain Greggs has outlined plans to grow from 1,255 to 1,700 by 2010. But the award for most aggressive expansion plan has to go to US chain Subway, which aims to grow from 400 stores in the UK and Ireland to 2,010 outlets by 2010.

It is not hard to explain their interest. While the annual growth of the market has slowed to 3-4%, BSA director Jim Winship expects this to increase to 5-8% in the next few years, fuelled by the popularity of sandwiches among younger consumers.

Winship points out that most sandwiches are still prepared at home, and the commercial sandwich market represents only about 20% of the total. And the general trend towards eating out more frequently extends into the snack market. "The market has inbuilt growth for as long as I can see," he says.

As well as having a fairly healthy image, other factors, such as shrinking lunch breaks with more workers eating "on the go" or at their desks, are helping sandwiches maintain their popularity.

Eurest's Lunchtime Report found that the length of the average lunch had shrunk to just 27 minutes in the UK, with an average spend of just £2 - bad news for caterers but good news for panini pedlars.

While restaurant chains such as the Restaurant Group are reacting to these trends by adapting their formats to the "grab and go" model, sandwich sellers have been in that game for years.

The market has also matured. The floppy white sarnie of years ago has been transformed, with more varied and exotic fillings, breads such as focaccia and ciabatta, different formats such as wraps and bagels, and more hot offerings.

Mirroring the trend in other industries for tailored offerings, operators such as Subway make their sandwiches on the premises to customers' specifications.

About 30% of the market is now made up of what Winship calls "innovative" or "exotic" products, such as wraps, a lot of which prove short-lived. UK consumers are inherently conservative in their tastes and often end up plumping for an old favourite like cheese and pickle, but operators need to have exotic options to bring customers in, Winship explains.

In their bid to attract more customers, operators are approaching the market from new angles. Benjy's uses mobile sandwich vans to target industrial parks, while Subway, according to its chairman of development for UK and Ireland Neil Black, has started an assault on the kebab market.

Sandwiches and nightclubbers are not traditional bedfellows, but Black says the market offers "great, great business" with its hot sandwiches, such as steak and cheeses, seen as healthy alternatives to other fast foods.

However, although operators are exploring new revenue streams, Mike Greene, chief executive of Harris International Marketing (HIM), believes the industry is still not taking the market that comes to it.

The cost of lost sales is "huge", says Greene, with about 30-50% of consumers who intend to buy a sandwich leaving empty-handed. As well as a lack of availability and choice, a common mistake made by operators is to gear business around traditional mealtimes.

All-day grazing A survey of 8,000 consumers conducted by HIM last month found that two-thirds (62%) were eating or "grazing" throughout the day rather than at traditional mealtimes such as lunch and dinner.

Another common misconception, says Winship, is that UK sandwich consumers are driven by price. In fact, they are driven by perceived value for money and will pay more for a product they believe delivers that rather than shop around for cheaper offerings.

Greene agrees. "If you get the quality and service right, consumers will pay a premium - Pret A Manger is a great example of that," he says.

As the market continues to become more competitive, some operators are resorting to ever more cunning and desperate means to defend their share. Witness the rise of the "sandwich saboteur" who, for a fee, will employ tactics such as buying up the stock in a rival's outlet in a bid to change customer buying patterns.

While Greene calls this "a bit extreme and crazy", it is all perfectly legal, if perfectly ungentlemanly. n

Sandwich facts - The commercial sandwich market in the UK is worth about £3.5b, equating to some 2,432 million sandwiches.

  • While cheese is the most popular filling in home-made sandwiches, since 1999 chicken has been the most popular filling for bought sandwiches.
  • Sales of healthy-eating sandwiches are up by about 11% year-on-year and now account for some 8.2% of sales.
  • 80% of sandwiches are still made at home.
  • It is estimated that UK consumers eat about 12,160 million sandwiches each year.
  • Males account for 57% of all commercially made sandwich sales.
  • More than 62% of all sandwich buyers are aged 20-44.
  • About a million consumers buy sandwiches five days a week.
  • The UK sandwich industry employs about 300,000 people.

Source:The British Sandwich Association/Taylor Nelson Sofres (TNS) SandwichTrak programme, which interviews 2,000 consumers monthly about their sandwich purchases; and the TNS Family Food Panel out-of-home research programme

Eurest Lunchtime Report - Sandwiches and baguettes are still the most popular lunchtime option (52% in the UK; 66% in Ireland)

  • Younger workers are more likely than older workers to choose sandwiches.
  • In Ireland, 18% of workers buy lunch in a local sandwich shop or caf‚, compared with 14% in the UK.
  • The average lunch break is 27 minutes in the UK and 33 minutes in Ireland.
  • Just over one in three workers (38%) brings in a packed lunch from home - most of these are aged over 55 (45%) and married (41%).
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