Hot Spots in the Cold Case

Despite flat sales over the past five years, there are pockets of strong growth in the $53 billion U.S. frozen food sector, and paying strict attention to emerging consumer demands just might turn things around. Frozen entrees/meals remain the largest frozen food category, per Nielsen, with sales of $10.3 billion for the year ended (Y/E) Oct. 29, 2016. Shrimp, side dishes, sweet goods, meat substitutes, fruit, and breakfast entrées were among the fastest-growing frozen categories for the 12 weeks ending Oct. 2, 2016, according to IRI.

Greater use of fresh foods and negative perceptions of the healthfulness of frozen are the top reasons that consumers purchase fewer frozen items, per Schwan’s 2016 Reinvigorating Frozen Foods report. Not surprisingly, claims that convey freshness or real food (e.g., “baked from scratch” or “made with real Wisconsin cheese”) are popping up on frozen labels. Frozen Michael Angelo’s Lasagna with Meat Sauce is “made daily with 100% natural ingredients” in “small batches from scratch.”

Cleaner labels and free-from claims are driving explosive growth and affect the frozen food purchase decision for 55% of adults, reports Deloitte’s 2016 Capitalizing on the Shifting Consumer Food Value Equation. Sales of frozen foods carrying a claim of free from artificial colors/flavors topped $5.3 billion, +5.5% for Y/E April 30, 2016; for all-natural frozen foods, it was $4.3 billion, +7.9%; free of genetically modified ingredients, $1.4 billion, +20.5%; and organic, $969 million, +22.6%, per Nielsen.

Protein, fiber, whole grains, low sodium, and a reasonable calorie level are the most sought after nutrition claims for frozen meals/snacks, per Mintel’s 2016 Frozen Breakfast Foods—U.S. report. Schwan’s Freschetta Artisan Crust Pizza has three tomatoes in every pie, a natural rising, preservative-free crust, and 21 g of whole grains. Bellisio Foods’ Eat! frozen meals each contain half a cup of vegetables.

Forty-three percent of adults would buy more frozen meals, breakfast entrées, and on-the-go items if they offered more restaurant-quality options; 40% seek internationally inspired flavors, and 37% want gourmet options, per Mintel. In fact, gourmet frozen meals/entrées is the seventh-best-selling specialty food category, with sales of $1.9 billion, +21.4% over the past two years, according to the Specialty Food Assoc.’s 2016 State-of-the-Industry Report.

Half of consumers have eaten frozen snacks for a meal in the past six months—47% for lunch, 45% for dinner, and 30% for breakfast—per Mintel’s 2016 Frozen Snacks—U.S. report. One-quarter of Millennials and Gen Zers eat frozen snacks away from home; one in five in transit, per Mintel. Fajita Cups from Evol Foods and Boomerang’s handheld Aussie Meat Pies are among the new grab-and-go frozens. Bigger multiserve snack packages and larger-portioned items like El Monterey’s Bigger! Bolder! Taquitos represent a strong market opportunity. Handheld frozen breakfast sandwiches and burritos now account for half of the $3 billion in frozen breakfast sales, per IRI.

With 27% of consumers eating fish/seafood for dinner at least once a week and 25% having it two or three times weekly, per FMI’s 2016 Power of Meat report, frozen seafood meals are a missed opportunity for marketers.

Although multiserve frozen dinner sales are flat, there is increasing demand for larger serving sizes, meals that serve five-plus, family-sized non-skillet Chinese meals, and more upscale party-sized options (eight-plus servings).

Core frozen pizza users are leaving the category, and frozen pizza household penetration has fallen 4.5% over the past few years, so it’s not surprising that premium and gourmet recipes are driving frozen pizza sales, per Nielsen.

With Millennials starting to have families and 48% of these young parents buying specialty foods for their kids, according to the Specialty Food Assoc., the time for healthy and gourmet foods for kids and babies has come, per NRA.

Manufacturers also report a trend toward traditional comfort foods, many of which are finding renewed success by touting real, simple ingredients. Frozen pot pies from Blake’s All Natural Foods are made with antibiotic-/hormone-free chicken, and organic frozen potato lines from Alexia Foods are Non GMO Project Verified.

Half of Millennials and Baby Boomers say they want some level of involvement in cooking and 30% feel guilty about serving frozen food to their families, per a Schwan’s survey, so it’s clear that frozen food kits, meal starters, and crockpot meals are a very good idea. Moreover, products that are truly innovative (e.g., Birds Eye Riced Cauliflower) will always find a welcome market.

According to Ask Your Target Market’s 2016 Frozen Food Survey, only 42% of U.S. adults eat frozen foods a few times per week and merely 9.5% do so every day. This suggests that there is plenty of room to grow the market.

A. Elizabeth Sloan, PhD,
Contributing Editor
President, Sloan Trends Inc.,
Escondido, Calif.
[email protected]