Your grocer's frozen food locker is beginning to resemble Davy Jones' locker, with a dwindling shopper base a cause for concern.
The steady sales descent of major categories in the frozen aisle hardly rates as a fresh observation. With the exception of ice cream, slippage in unit sales, dollar sales or both are continuing, with frozen entrees hemorrhaging the most.
For the 52 weeks ending September 8, sales of today's TV dinners were off more than 3 percent by both measures, according to scanner data from multi-unit retailers compiled by IRI, a Chicago-based market research firm. Frozen pizza limped through the year with a 1-point loss in dollar volume. As grim as that is, it's an improvement from the prior year, when unit sales slid more than 3 percent, according to "Cold Facts about Frozen Foods," an October 2012 report from AMG Strategic Advisors. "In 2011, frozen food unit sales dropped to 2008 levels," the report observes.
Trying to reverse the slide, a coalition of major manufacturers, including ConAgra, Nestle USA and H.J. Heinz, plans to spend up to $50 million on a frozen-is-fresh message campaign, according to Advertising Age. The effort to overcome frozen's negative health perception takes particular aim at millennials, who are giving a cold shoulder to these processed foods.
"In particular, younger shoppers are seeking options they perceive as both a better value and a healthier option," writes AMG analysts. The number of buyers under the age of 35 has plummeted 37 percent in five years, according to AMG. The bulk of the remaining shoppers are closer to getting their meals from a nursing-home commissary than a supermarket.
There are glimmers of hope, however. Seafood is poised to supplant pizza as the fourth largest category at retail, and architectural/engineering/construction (AEC) companies report brisk business in helping seafood processors expand their capacities.
The foodservice supply chain may be the greatest cause for optimism. With sodium and other preservatives out of favor, clean-label products are being subjected to extreme cold before going through distribution, and many manufacturers are flash-freezing or blast-freezing finished goods that will be slacked off when they reach a store or foodservice outlet.
Baked goods are a prime example. Be it bread and rolls or dessert items, products sold as fresh at ambient temperature are increasingly likely to have undergone freezing. Rather than multiple direct-store deliveries to its restaurants, McDonald's has directed bun suppliers to ship frozen products to distribution centers, where store orders are consolidated into a single delivery.
Bakeries also are discovering value in freezing. Amoroso's, a Philadelphia bakery whose sandwich roll is considered essential for authentic hoagies and Philly cheese steaks, has achieved a national profile thanks to flash freezing. Now the focus is on maintaining that strength while driving down costs.
In partnership with Atlantic City, N.J.'s Ginsberg Bakery, Amoroso's established the contract manufacturer Omni Baking Co. in 1996. Since 2003, Omni has operated a 171,000-sq.-ft. facility in Vineland, N.J., producing par-baked and thaw-and-serve goods. Lacking mechanical refrigeration, Omni relies on a battery of cryogenic freezers to lock in moisture and freshness in products distributed across the country.
Cryogenic freezers require less space and capital investment than ammonia refrigeration, but they also elevate a plant's gas salesman to major-supplier status. Omni already had four cryogenic freezers in 2009 when it agreed to test a new cross-flow spiral freezer from Linde North America, its Murray Hill, N.J., supplier of liquid nitrogen.
"Linde reached out to us to be the R&D site for the freezer," which uses a cylindrical shape to improve the flow of air and nitrogen across the belt for faster heat transfer, recalls Dan Mulloy, general manager of Omni. "The freezing's a little more intense because of the amount of air blowing across it, and the footprint is smaller than freezers with similar throughput."
Cleaning and sanitation is accomplished "in probably half the time" because a sloped floor eliminates the need to squeegee water to drain, he adds. Mark DiMaggio, head of food and beverage at Linde, maintains the cross-flow freezer uses 15 percent less gas than a conventional spiral-in-a-box cryogenic freezer. Mulloy says he hasn't compared per-unit freezing costs for the new vs. older units, but he believes savings are "in the teens" in terms of gas consumption.
The cross-flow's compact design is another plus, but rapid freezing may be the greatest benefit from both a quality and yield perspective. "A raw hamburger typically experiences 0.5 percent dehydration in a mechanical freezer," according to DiMaggio. "With impingement freezing at -200 degrees Fahrenheit, we can lower it to 0.1 percent. We can often increase yield 4, 5, 6 percent by reducing dehydration," more than enough to offset cryogen costs in a high-throughput application.