Are Frozen Foods On Thin Ice?

While the hand-held breakfast niche is hot, the rest of the frozen food category mounts an ad campaign to reverse the slide.

By David Phillips, Technical Editor

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A pending $50 million ad campaign designed to boost sales of frozen foods attracted a great deal of media attention in April. The gist of the message is that frozen equals fresh — that frozen foods can be sold in better condition than their refrigerated or produce-department rivals.

The campaign, which is expected to launch before the end of the year, is funded by the Frozen Food Roundtable, a consortium of major food manufacturers (including ConAgra, Heinz and General Mills) organized through the American Frozen Food Institute.

In reporting the story, the mainstream media maintained a good deal of skepticism about the notion that "frozen equals fresh." This is not the first time the food industry has set out to change perceptions about frozen foods, and yet the challenge remains.

"Refrigerated is considered fresh and better," says Brad Rostowfske, director of innovation and business development with Palermo's Pizza Co., Milwaukee. "But the truth is that both frozen and refrigerated have different advantages."

While advances in frozen foods have come about primarily through better production processes — Palermo's, for instance, uses slabs of marble on a conveyor oven to create a frozen pizza that is more like those from a pizzeria — ingredients play key roles, too.

Also, as consumers warm up to frozen foods, the quality of the ingredients has become a key factor, Rostowfske notes. As with participants in all other food categories, frozen food makers know consumers are reading labels, so they are working with ingredient suppliers to reformulate with multifunctional ingredients that sound wholesome.

Trends toward eating less processed food also have presented a challenge to the market as has the continued economic downturn, but frozen handheld products' convenience and value have helped to keep sales afloat while renewed interest and innovation in breakfast handheld food has helped to grow sales in 2010-11.

While the Frozen Food Roundtable's campaign is making a big splash, it is not a lone voice. The National Frozen and Refrigerated Food Association recently introduced its own Cool Food Panel that is working with a public relations agency to champion frozen foods.

Breakfast any time

Frozen food sales totaled more than $40 billion in the U.S in 2011, but 98 percent of frozen products have flat or declining sales, according to the preliminary work to support the campaign. Mintel Global Market Research, Chicago, however reports sales growth in many of the sub-segments of frozen foods. Some, such as handheld breakfast foods, have experienced considerable growth, thanks in part to the convenience they offer. Mintel says there is a $2.7 billion market for handheld frozen foods.

"Total sales for the market grew 18 percent from 2006-11," states Mintel's June 2012 report Frozen Handheld Food. "Trends toward eating less processed food also have presented a challenge to the market as has the continued economic downturn, but frozen handheld products' convenience and value have helped to keep sales afloat while renewed interest and innovation in breakfast handheld food has helped to grow sales in 2010-11."

Handheld breakfast foods are especially hot, the group says, and they are eaten in the morning, or as a snack, or a convenient dinner.

"While composing just 26 percent of the total market in 2011, U.S. sales of frozen handheld food (breakfast) grew by 40 percent from 2009-11 and helped the total market to grow by 7 percent during that same period even as the larger frozen handheld food (non-breakfast) segment saw sales decline by 1 percent," the report states.

These products include items such as Jimmy Dean Delights, a breakfast sausage and biscuit sandwich marketed by Hillshire Brands, Chicago.

The report also notes that frozen snacks, including pocket snacks and personal-sized ones, plus pretzel and bagel snacks have experienced strong sales growth.

"At least 60 percent of respondents who eat frozen handheld food products look for products that have high protein, high fiber, or contain whole grains," the Mintel report states. A much lower share (49 percent) of the respondents who eat frozen handheld food are looking for low/reduced sodium and even fewer are looking for reduced fat or calories, indicating that consumers are looking to add value to what they are already eating.

While handheld foods and snacks are doing well, the market for frozen meals in the U.S. has declined between 2007 and 2012 for sales of $8.1 billion in 2012. Mintel estimates that sales will drop further into 2017 as buying power returns and many consumers increase their restaurant spending or maintain home cooking regimens.

And a new report by research consultants A.T. Kearney suggests the frozen food category is in a similar position to the category it brushed aside more than 75 years ago: canned good.

"The very attributes that made frozen food a successful alternative to canned foods are now more often perceived in fresh prepared foods," says "Prepared Foods – The Thawing of the Ice Age." "Consumers gravitate to fresh prepared foods because their environment has not been altered through massive temperature and processing changes. Celebrity chefs and reality cooking shows emphasize fresh ingredients and home cooking. Farmers markets have grown explosively in the past 15 years as consumers have become attracted to fresh and locally grown foods due to their health and nutritional benefits. Fresh is considered the ultimate, convenient, ready-to-eat solution.

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