Cold War

Lynn Petrak

2/7/2016

If TV dinners defined one era of frozen food consumption, today’s version might be called the “iMeal.”

Just as technology has changed over the years to deliver a more personal experience, so too, has the way shoppers choose, buy and prepare frozen foods from their local grocer. A quick scan of the retail freezer case shows that there are frozen food solutions for all kinds of preferences, with choices for every daypart, and foods that are indulgent, healthy, organic/natural, gluten-free, boldly flavored, globally inspired and kid-friendly, among other attributes.

Accordingly, the pace of new product development, product line overhauls and even new brand startups has picked up in recent years as manufacturers and grocers seek to reinvigorate the mature frozen food aisle, which has posted flat or declining sales in an era of strong competition from foodservice and from within a supermarket’s own prepared food area/hot-food bar.

A cornerstone of this reinvigoration, in both product mix and merchandising, is the move to provide true and often tailored meal solutions.

“Convenience and quality are two of the top trends influencing the frozen category. Consumers have increasingly hectic lifestyles and want quick, high-quality meals that they are proud to serve their family. Frozen meals offer the perfect solution, and consumers continue to take notice and appreciate all of the recent innovations that help frozen meal solutions to even better meet their needs,” observes David Koehler, associate brand manager for the Healthy Choice brand from Omaha, Neb.-based ConAgra Foods.

Other manufacturers echo the dual mantras of convenience and quality, and note that frozen foods, by their very nature, are a solution to both issues.

“Families have increasingly hectic lives, and because of that, they are continually looking for easy and quick meal solutions without compromising on quality or flavor. Freezing food is an incredible way to preserve it at the highest level of freshness and ensure that it retains its nutrients,” affirms Dimitrios Smyrnios, CEO of The Schwan Food Co., based in Marshall, Minn.

Julie Henderson, VP of communications for the National Frozen & Refrigerated Foods Association (NFRA), in Harrisburg, Pa., says that the diversified marketplace reflects the potential of this category among time-crunched, quality-seeking shoppers. “Product innovation and development in the freezer aisle over the past few years has been truly unprecedented, and consumers have taken notice,” she observes, adding that the range of offerings underscores the category’s dynamism. “Brands like Luvo and Evol are new to the scene and serve as examples of the direction we are seeing the freezer aisle headed [in], and brands like Kellogg’s continue to explore and implement new sustainable processes, packaging and more.”

Adrienne Seiling, VP of communications for the American Frozen Foods Institute (AFFI), in McLean, Va., likewise zeroes in on the assortment that’s leading to a potentially different type of category management for frozen.

“Today’s frozen food aisle offers consumers a more diverse selection of vegetables, fruits and prepared meals than ever before,” Seiling says. “Frozen foods are often lower in cost per serving and have a much greater shelf life than refrigerated foods, by their very nature. Frozen fruits and vegetables can also be more easily portioned and stored for later use, which reduces spoilage and food waste, further increasing consumer value.”

Frozen Figures

Market research confirms the eclectic, consumer-driven nature of the grocery frozen food section. A 2015 report on the category from Rockville, Md.-based Packaged Facts projected that the outlook for frozen foods is “encouraging” after several years of sluggish sales and challenges, predicting that sales of frozen foods (counting entrées, pizzas, sides and snacks/appetizers, but not desserts) will reach $23 billion by 2019, a full $1 billion more than in 2014.

A deeper dive into the frozen food sector reveals that some categories are now comfortably in the black, while others are only slightly in the red.

According to data from Chicago-based Information Resources Inc. (IRI), sales of frozen entrées reached $8.6 billion for the last 52 weeks ending Dec. 27, 2015, a modest decrease of 0.57 percent from the previous time period. During the same period, sales of frozen sides climbed more than 24 percent, frozen breakfast foods increased 2.23 percent and frozen appetizers edged up more than 1.9 percent. Frozen desserts, meanwhile, dipped 1.82 percent.

Still, the fact that entrées remain an area of focus and innovation, yet overall sales of those items remain flat, supports the point that there are opportunities to educate consumers about the benefits of frozen foods.

To that end, industry organizations are working on various educational programs. NFRA, for example, continues its Real Food. Frozen marketing campaign aimed at generating excitement about frozen foods. According to the association’s 2015 annual benchmark study, frozen food discussion increased overall by nearly 250 percent, with convenience and nutrition emerging as prominent themes, notes Henderson.

For National Frozen Food Month in March, she says that NFRA will focus on content that showcases the convenience, quality and variety of real foods in the freezer aisle, with topics to include eliminating food waste, reinventing kitchen preparation with food “hacks,” going beyond the recipe with a meal assembly concept and addressing a nation of snackers.

AFFI, meanwhile, is building on its consumer education and program campaign, Frozen. How Fresh Stays Fresh, to share the message about the freshness and quality of frozen foods. Launched in 2014, the campaign engages consumers through national television, digital and print advertising; online engagement; influencer outreach; and in-store and out-of-store retail promotion activities. More recently, the institute released a white paper showing that a weekly menu consisting primarily of frozen foods meets the 2015 Dietary Guidelines for Americans.

Meanwhile, manufacturers, especially those in categories with potential and demonstrated growth, also are working to get the word out about the quality and locked-in freshness of frozen foods. “Convenience has always been one of the biggest benefits of frozen food, and we don’t see that changing. What we would like to see is frozen food develop a stronger perception with consumers for healthy and flavorful meals,” remarks Scott Corey, director of marketing, innovation and R&D for Kahiki Foods Inc., in Columbus, Ohio.

Jason Jackowiak, natural product research expert for SPINS, a Chicago-based provider of retail consumer insights, analytics and consulting for the natural, organic and specialty products industry, concurs that messaging in regard to better-for-you products is crucial, given shoppers’ understanding of those items. “Consumers are becoming smarter and more educated as to what is considered a ‘healthier’ option in the frozen food aisle, by comparing quality standards found in other grocery aisles, such as natural/organic, non-GMO, vegan and clean-ingredient profiles. Consumers now expect the same level of attribution from the frozen aisle [that] they’ve come to expect in other categories throughout the store,” he says.

Natural Evolution

Offerings from brands like Kahiki are widening as the subcategory of healthy frozen foods grows to encompass organic, natural, gluten-free and other types of better-for-you or diet-related meal solutions.

According to recent information from SPINS, sales of natural/specialty frozen and refrigerated meats, poultry and seafood increased 18.8 percent for the last 52-week period ending Dec. 27, 2015. Natural/specialty frozen breakfast foods rose 12.9 percent; natural/specialty frozen fruits and vegetables climbed 20.1 percent; natural/specialty frozen appetizers/snacks went up 26.1 percent; and natural/specialty frozen lunch and dinner entrées moved up 14.6 percent.

Industry observers agree that these types of products represent a bright spot, both in terms of product innovation and of the success of smaller or niche manufacturers. “Natural and organic will have tremendous growth — it can easily double in the next seven to 10 years,” says Burt Flickinger, managing partner of New York-based Strategic Resource Group.

Adds AFFI’s Seiling, “Sales of organic appear to be on the rise, due to their perceived healthfulness, which has played a large part in attracting younger and more health-conscious consumers also seeking the convenience of frozen products.”

Top frozen food companies have taken notice and acted on marketplace interest in natural and organic frozen foods. Last year, for example, ConAgra acquired Blake’s All Natural Foods, a growing family-owned company specializing in organic and natural frozen meals such as casseroles, pasta dishes and pot pies.

As part of the clamor for natural and organic items, shoppers have shown a desire for fewer or more recognizable ingredients. “Consumers are looking for options with improved nutritional profiles and simplified ingredient statements,” says Koehler, of ConAgra’s Healthy Choice brand, which recently introduced a line of Simply Café Steamers made with 100 percent natural chicken or meatballs and no artificial ingredients.

Schwan’s is another example of a company that has heeded that trend, announcing last fall that it was eliminating four ingredient groups. “Consumers are increasingly focused on providing foods to their families containing ingredients familiar to them. Meeting their expectations on this front has become table stakes for the food industry. We have been working on simplifying ingredients for several years, so we are in a very good position to deliver on consumer expectations,” explains Stacey Fowler Meittunen, Schwan’s SVP innovation and development.

Meittunen also cites continued interest in gluten-free frozen foods. “The gluten-free pizza category continues to grow, as gluten-free offerings have been found to be highly incremental — 64 percent incremental to the pizza category and 24 percent incremental to stores,” she notes, pointing out that Schwan’s added two single-serve gluten-free varieties to its Freschetta line last year.

In addition to product development, there has been a focus on packaging to help refresh frozen foods and educate consumers about the quality of frozen items.

“A typical supermarket shopper passes about 500 to 800 items per minute. It’s easy to understand that one of the ways to get that shopper to notice your product is through effective packaging,” asserts Rachel Cullen, president and CEO of Ruiz Foods, in Dinuba, Calif. “It’s Marketing 101 — packaging serves to communicate quality, convenience, affordability. It’s how a manufacturer communicates directly to the consumer during the time of purchase.”

On the Case of Category Management

In addition to carrying a greater and more eye-catching assortment of products, grocers should make it easier for consumers to find meal solutions in the frozen food aisle, advise some industry experts. “Instead of looking at frozen food equipment as an expense, retailer CEOs and chief merchandising officers need to get involved in adding frozen food equipment as an investment to profitably drive sales and increase consumer loyalty and continuity,” suggests Flickinger.

As greater innovation changes the face of the freezer case, Flickinger says that retailers can attract consumers to that part of the store in other ways. “Leading frozen food companies and retailers can invest capital to put new equipment in the front end of the store, as well as other locations and departments, to create an opportunity to cross-merchandise,” he notes.

Some manufacturers are already working to cross-promote their frozen offerings with other grocery products, especially those companies that have other brands in their portfolios. “We’ve done a lot of work-around occasions and dinner to better understand what goes together. Our goal is to help our customers create solutions for consumers,” explains Matt Stejskal, brand manager for the Marie Callender’s line from ConAgra.

Among other things, according to Stejskal, ConAgra has suggested pairing Marie Callender’s lasagna with Alexia brand garlic bread or a salad, to make a meal. “They are then buying solutions, not items,” he notes.

In another example, the company “recently paired Marie Callender’s [pies] from the frozen department with Reddi-wip,” he remarks. “It’s a great example of us reaching across different departments to create a customer solution that wouldn’t have existed in solely one department or the other.”

NFRA’s Henderson says that such efforts are another way that frozen foods help can lift store sales. “The freezer aisle has a lot of opportunity for expanding category management by pairing frozen items with other foods and beverages in the store. To this end, the concept of meal assembly using frozen ingredients and full meals is one that NFRA has brought into a majority of its content development and outreach,” she explains. “By starting in the freezer aisle, consumers can create easy, delicious full meals in a flash.”

One of NFRA’s Cool Food Panel bloggers, for instance, showed how to make a simple meal by using frozen pizza, frozen cubed butternut squash, shredded cheese and fresh sage to create a Harvest Appetizer Pizza.

“Product innovation and development in the freezer aisle over the past few years has been truly unprecedented, and consumers have taken notice.”
—Julie Henderson, National Frozen & Refrigerated Foods Association

“Convenience has always been one of the biggest benefits of frozen food, and we don’t see that hanging. What we would like to see is frozen food develop a stronger perception with consumers for healthy and flavorful meals.”
—Scott Corey, Kahiki Foods Inc.