The Big Chill

In a year when the movie “Frozen” became ubiquitous after breaking box office records, frozen foods are performing better than expected at the supermarket freezer box. Bucking a trend of declining to flat sales in recent years, the category has revealed a few bright spots, aided by collaborative marketing efforts to achieve greater consumer interest and sales.

According to Rockville, Md.-based market research publisher Packaged Facts, sales of frozen foods, spanning entrées/pizzas, sides and appetizers/snacks, are expected to grow from $22 billion in 2014 to $23 billion in 2015. Chicago-based market research firm IRI reports increased sales over the past year across several categories, including frozen breakfast foods, side dishes, pizza, ice cream, cookies and “other” frozen foods.

The uptick in some frozen food sectors may be tied to a still-recovering economy, but renewed interest has also been attributed to shopper interest in other aspects of frozen foods. In its recent report, “Frozen Foods in the U.S.: Hot Meals, Sides and Snacks,” Packaged Facts found that consumers are warming up to frozen foods again because of the convenience of such foods, a greater awareness of the freezing process, and the addition of more natural and organic options.

To that end, the company has pegged organic and better-for-you frozen foods as particular segments to watch. As noted in its report, shopper concerns about the freshness and/or ingredients in frozen foods are alleviated by the perception that natural or organic frozen offerings are healthier and prepared and packaged in a quality way.

“This has been the segment defying the frozen food decline and the one pointing the way toward revitalizing frozen,” notes Howard Waxman, a Packaged Facts analyst who worked on the report.

Still, Waxman cautions that more work is needed for a long-term overall category upswing. “Yes, there is a new dynamic in the frozen food sector, but it is still mostly in the form of potential, and very early on in any foreseeable turnaround,” he stresses. “Frozen foods face a tough climb.”

Waxman points to tough competition across the retail sector, including fresh natural and organic areas. “They are not competing in a neutral environment where all the sector has to do is get better, and the steps being taken by retailers to provide more convenience to shoppers has not really helped the frozen foods sector,” he points out. “So frozens not only have to get better, they have to do so rapidly in order to catch up to these other modes and even find ways to exceed the improvements in the alternative food categories.”

Information, Please

Amanda Topper, food analyst for Chicago-based market research firm Mintel, agrees that success in frozen foods hinges on the pace and scope of new product offerings. “I really think there is growth potential in general, but it’s at the mercy of manufacturers’ ability to meet changing consumer needs, whether that’s for better-for-you or natural products, or something else,” she observes.

Ensuring that consumers know more about the way frozen foods are made is also key to overcoming any hurdles in the freezer section. “I believe that educating the consumer is a critical factor,” says Waxman. “Marketers need to stress important information such as that the products are fresh at the moment of freezing. They need to create for themselves the opportunity to say, ‘A frozen organic is better for you than a refrigerated ‘fresh’ product full of artificial or genetically modified ingredients.’”

Efforts are continuing to expand educational efforts and new product development. Last May, the McLean, Va.-based American Frozen Foods Institute (AFFI), with the support and insight of its major manufacturer members, rolled out a national category education and promotion initiative, “Frozen. How Fresh Stays Fresh,” now a third of the way through a three-year, $30 million program to reach consumers across a variety of channels with messages about frozen foods.

“There is growth potential in general, but it’s at the mercy of manufacturers’ ability to meet changing consumer needs, whether that’s for better-for-you or natural products, or something else.”
—Amanda Topper, Mintel