Frigid Future
Performance divided for frozen meals versus snacks, according to Mintel.
The U.S. market for frozen meals gradually declined between 2007 and 2012, with 2012 sales around $8.1 billion.
That’s according to London-based market researcher Mintel, which estimates that sales will drop further into 2017, as buying power returns and many consumers increase their restaurant spending or maintain home-cooking routines.
While frozen meals will continue to appeal more to certain demographics — namely households with kids, black households and elderly households — brands will have to step up their healthy and flavorful offerings to recapture interest in the market, Mintel advises. Overall household consumption of frozen meals has begun to decline, due to the processed nature of many frozen foods and the perception that these foods are high in fat and sodium.
Mintel notes that the U.S. child population isn’t expected to grow significantly between 2013 and 2017, indicating that brands must rely on other marketing means to target households with kids.
The growing senior population should continue to be a lucrative market for frozen meals, however.
Some 37 percent of respondents surveyed by Mintel said they would buy more frozen meals if they were less expensive, and nearly half noted that they would like to see a wider selection of healthy frozen meals. More than half agreed that there should be more kid-friendly frozen meals, and half agreed that frozen meals for kids aren’t healthy enough. In addition, nearly a quarter of respondents would like to see more vegetarian meals available.
Segment Performance
Looking at segment performance within the frozen meal category, Mintel finds that single-serve frozen meals dominate the landscape, with $5 billion in sales and 61.3 percent market share. While sales of single-serve products declined 1.1 percent between 2010 and 2012, sales of multiserve frozen meals dropped more substantially, by 7.1 percent.
Frozen pot pies — a perennial key performer in the category — grew in sales by 21.9 percent between 2010 and 2012, reaching $507 million. Meanwhile, frozen side dishes declined 2.7 percent, for sales of $362 million.
Hot Growth for Frozen Snacks
Frozen snacks have continued to perform relatively well, thanks to Americans’ love of snacking, convenience and affordable food options. Total U.S. retail sales of frozen snacks hit $4.5 billion in 2012 — representing a 13 percent lift since 2007, according to Mintel.
Some 59 percent of consumers surveyed by Mintel in February 2013 indicated that frozen snacks were an affordable snack option, while 81 percent said the products are convenient for at-home eating, and 66 percent find them well suited to on-the-go snacking.
Increased consumer health consciousness will likely continue to limit category performance, however, as frozen snacks are viewed as too processed and high in calories, fat and sodium.
The good news for suppliers and retailers is that frozen snacks are expected to continue growing in sales through 2017, according to Mintel’s estimates.
Snack Segments
Frozen handheld entrées make up 56.4 percent, or $2.5 billion, of total U.S. retail sales of frozen snacks, Mintel finds. This represents a 2.6 percent increase from 2010 to 2012. Despite the growth, the segment lost share to frozen appetizers/snack rolls, which posted a 9.6 percent gain during the same period, reaching $1.9 billion. In addition to having vast offerings, the appetizer/snack roll segment plays host to a number of strong-performing companies, with no single brand accounting for more than 27 percent of sales.
Frozen pretzels represent the smallest segment in the category, accounting for just 1.6 percent of sales. Slightly more than one-quarter of households consume these items, with the highest consumption seen among households with children.
Channel Blurring
While supermarkets offer the widest selection of frozen snacks, consumer food shopping trends and expanding options at retail allowed other retail channels to claim category dominance in 2012, according to Mintel. Those other channels include supercenters, warehouse clubs, natural food stores, convenience stores, dollar stores and non-store retailers. They grew sales by 8.7 percent from 2010 to 2012, representing just more than half of total U.S. retail sales in the category.
Luckily for all retailers, product innovation in the frozen snack segment has soared in the past few years: Product launches were up 18 percent from 2011 to 2012, and health-and-wellness-related innovations, such as those with reduced sodium and fat, or extra protein and fiber, helped boost sales. Perhaps not surprisingly, “microwavable” led product claims from 2008 to 2012.
Mintel’s custom consumer research finds that frozen snacks are purchased by 82 percent of households. This is a strong showing for the category and points to a widespread appeal and varied consumer base. The category sparks the greatest interest among young consumers, with respondents age 18–24 overindexing in consumption.
Mintel predicts further sales growth for frozen snacks through 2017. However, such growth will depend on the ability of category players to meet the growing consumer desire for healthy food offerings.