Taste for affordable luxury fuels gourmet ready meal business

Two years ago Charlie Bigham, founder of the upmarket ready meals company that bears his name, considered insuring his taste buds for £12m with a policy that would have barred him from licking food from a knife or eating extra-hot chillies. "It was slightly tongue in cheek," he says.

But the former management consultant has used his sense of taste to build a business that commands gourmet prices for ready meals and which has flourished despite years of economic hardship and the rise of discount supermarket chains.

The company's success illustrates how the groceries sector has become polarised since the onset of the financial crisis. On the one hand, consumers have been drawn to the likes of Aldi and Lidl, which have stolen market share from the big four supermarkets and sparked an intense price war.

At the other end, says Mr Bigham, "people are focused on value for money and value for money often does not mean the very cheapest".

Joe & Seph's, a popcorn start-up, has taken a similar approach to Charlie Bigham ready meals: producing high-end versions of foods that have typically been mass-produced at a relatively low quality.

Joseph Sopher, who started the business with his wife and son in 2010, went beyond the decades-old sweet-or-salted choice available to cinema-goers with a range of almost 40 popcorns including caramel, macchiato & whisky, and Thai-style peanut satay. The company, whose popcorn is made by pastry chefs in a kitchen rather than factory-produced and is "air-popped" rather than fried, has won 15 Great Taste awards.

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Although the company launched in the midst of a recession, the bags of popcorn then priced at £2.99 were a hit, says Mr Sopher. It was pricey enough to qualify as a treat but cheap enough to still be affordable for consumers at Selfridges, the first shop that stocked their popcorn.

Joe & Seph's, which is forecast to double its sales to £3.5m this year, is an unashamedly premium product found in the likes of Harrods, Claridges and in first class on British Airways flights. "We don't aim to compete in the mass market," says Mr Sopher.

Darren Shirley, an analyst at Shore Capital, notes that not all consumers were caught up in the economic crisis and that even those that have traded down to discounters have also been willing to spend a little more on certain items.

"You've had a barbell effect," he says. "People have gone to the discounters for their staple products, but the money they've saved on the staples they have spent on an affordable treat."

Premium products also give retailers and food manufacturers the opportunity for higher mark-ups than can be added to middle-market or discount brands. "You'll have higher quality ingredients with better provenance, but it is fair to say you'll look for higher margins, too."

Charlie Bigham's ready meals, which range from lasagne and steak and ale pie to salmon en croute and chicken tikka masala, typically sell for £7 and are handmade at its headquarters in Park Royal, London. "If we make it on a Monday, you will be able to buy it on a Tuesday," he says. Launched in 1996, the company forecasts that it will grow sales by 53 per cent to £40m this year.

<>Concerns over the provenance of cheaper ready meals, sparked by the horsemeat scandal in 2013, has also boosted the business. The controversy forced consumers to question "the true price of cheap food", says Mr Bigham, who dislikes the description of his products as ready meals. "I'd like to think we take more care and pride in the food we make," he says.

The company has benefited from the resilience of grocery spending at supermarkets such as Waitrose, which has stocked Charlie Bigham products since the 1990s. Waitrose has had an unbroken run of sales growth since March 2009, according to Kantar Worldpanel, the market research company.

Overseas expansion has proven difficult, however. "We can't get the fresh food logistics to work sensibly beyond the UK," Mr Bigham said.

Both entrepreneurs have taken a steady approach to maintain profits and quality. "Effectively I've held back the growth because I've wanted to remain profitable and funding the business ourselves," says Mr Sopher.

Even in a downturn, he adds, "people will always look for that little affordable luxury".

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