SymphonyIRI data for the 52 weeks ending June 10, 2012, showed that retail sales of frozen foods through mass-market channels excluding Walmart edged up just 0.3% to $26.2bn, while volume sales fell by 5.1%, said the market researcher.
"Overall, the US retail market for frozen foods has been flat for the past five years."
It blamed the category funk on a series of factors from misconceptions about the merits of frozen vs fresh prepared food, to lackluster merchandizing.
A preference for fresh foods is the top reason (57%) shoppers cite for not buying frozen foods
For example, while frozen foods frequently represent better value for money than refrigerated prepared foods, generate less waste (as they are less likely to be thrown away), have fewer preservatives and lock in nutrients better than fresh foods that have been sitting on shelves for days, many shoppers see them as less ‘fresh’.
“The emphasis on freshness responds to shifting consumer priorities. According to an August 2012 national online survey by Packaged Facts, a preference for fresh foods is the top reason (57%) shoppers cite for not buying frozen foods in the last three months, followed by a preference for home-cooked foods (35%).
“In comparison, fewer than one in five shoppers say they have not bought frozen foods because they don’t like the taste, don’t have enough freezer space at home, are not confident in frozen foods’ nutrition, or are not confident in frozen foods’ quality (a concern that is, nonetheless, notably more prevalent among women).”
This situation presents huge challenges and opportunities for marketers and retailers
And while some firms such as ConAgra have recently introduced innovative new products such as Greek frozen yogurts to the fixture, the category as a whole is suffering due to “changing consumer eating patterns, shopping patterns and demographics and lack of excitement in frozen foods categories and merchandising”, it claimed.
For 2012, Packaged Facts estimates sales of frozen foods through all US retail channels will be $44bn, up just 0.4% on 2011, dragged down by decreases in sales of frozen dinners/entrees and frozen pizza (of the top 12 frozen pizza manufacturers, significant growth has come only from Newman’s Own and Amy’s Kitchen, it adds).
Between 2008 and 2012, sales increased by 7.7%, resulting in a compound annual growth rate of 1.9%.
Retailers, meanwhile, are contributing to the category malaise by “focusing on the fresh foods perimeter to the detriment of center store categories”, while competition is also intensifying from restaurants and shelf-stable foods, observed publisher David Sprinkle.
“This situation presents huge challenges and opportunities for marketers and retailers. Major marketers such as ConAgra, Heinz, and Unilever are already slimming down and refocusing their brand portfolios.”
However, there are pockets of growth, with strong sales in frozen baby food, cookie dough, fruit and breakfast foods, although the largest categories - frozen pizza and dinners/entrees - are dragging the overall category down.
ConAgra: Comfort food without the guilt…
However, ConAgra says it is confident it can drive growth not only in its own brands but in the category as a whole with the launch of new microwaveable Healthy Choice baked frozen entrees that meet consumer demand for comfort food - without the calories.
“Restaurant trends dictate what consumers crave at home, and this year the demand is for familiar, comforting foods like roast chicken, meat loaf and macaroni and cheese,” said Dana Southard, Healthy Choice brand manager.
“Unfortunately, comfort cuisine is not known for being synonymous with healthy, until now… Healthy Choice Baked Entrees deliver fresh baked taste, with flavors they love but without any of the guilt."
The range includes Four Cheese Ziti Marinara, Roasted Chicken and Potatoes, Fettuccini Alfredo Bake, Italian Sausage Pasta Bake, Lasagna with Meat Sauce and Chicken and Rice Cheddar Bake.
We are doing things that are platform oriented, not really one-off
ConAgra, which last week announced plans to pump $100m into expanding its facility in Arkansas to make the recently-acquired brands Bertolli and P.F. Chang's frozen meals, owns the Marie Callender’s, Banquet, Healthy Choice and Kid Cuisine frozen food brands.
While volumes of Banquet suffered when bosses put up prices to reflect higher costs, ConAgra is predicting a steady rebound in the frozen case this year as new products gain traction and commodity prices calm down.
Speaking to analysts on a call about the firm’s first quarter results last month, chief executive Gary Rodkin said: “We are doing things that are platform oriented, not really one-off.”
President of Consumer Foods André J. Hawaux added: “In frozen we have an innovation machine… We've now sort of captured the frozen case, if you will, from sunrise to sunset in the sense that we have it now at the breakfast occasion all the way through the dessert occasion.
“We're looking at innovation across that entire lineup. We think we'll bring out some things for breakfast that will get consumers interested.”