Published by Packaged Facts, the report focused on six categories of frozen foods: dinners/entrees; poultry, seafood and meat; vegetables; pizza; breakfast foods; and appetizers/snacks.
The sector is a giant in the food industry, recording sales of around $28bn in 2005. Growth has been uneven, however, with certain categories fluttering between sales increases and declines over the past four years. This suggests there is room for innovation in the market if it to hold out against an increasing threat from the fresh foods, 'meal solutions' and take out food.
According to the report, the US market for frozen foods is currently led by frozen dinners and entrees, which hold a 31 percent market share and saw sales of $8.6bn in 2005. However, this category has seen little growth since 2001, and sales even declined in some years.
For this reason, the market researcher predicts that the second largest category- frozen poultry, seafood and meat- will jump up to take the largest part of the market in 2006. This sector has seen the strongest growth since 2001, increasing 5.2 percent to reach a market value of $8.4bn last year, bringing it up to around a 30 percent market share.
Frozen vegetable sales have fallen fractionally in the period, which has prompted Packaged Facts to predict the $3.4bn market will soon be overtaken by the current number four: frozen pizza, which had sales of just under $3.2bn in 2005. Breakfast foods and appetizers/snacks come in as the sector's smallest categories, valued at $2.2bn and $3.4bn respectively.
According to the new report, Frozen Foods in the US, the market for frozen foods has changed significantly on the back of the changing face of America's family.
"The changing configuration of the family has sweeping implications for the frozen food industry. Increasing numbers of two-working-parent and single-parent households mean less time to shop and less time to cook," said the report.
"A prime market for frozen foods is not only busy parents looking to get dinner on the table quickly, but also family members who need to eat at different times. Items like frozen pizza, handheld entrees, and appetizer/snacks have natural "kid appeal" to youngsters from toddlers to teens, and they are fast and easy to prepare and eat."
But one disadvantage of frozen foods being able to be stored for months is a slower product turnover, and the deterioration of product quality over time.
According to one industry expert, marketers would in fact be better off by associating their products with freshness rather than long-term storage. This could involve positioning frozen foods as "The Other Fresh Foods" or "The Fresh Alternative".
The consultant also advocates open dating of packages with 'sell by' or 'use by' dates to urge consumers to use frozen products faster, thus increasing consumption rates and inviting consumption when the foods are at their best.
Another factor that food companies should take advantage of is a growing consumer awareness of the role food plays in enhancing health and quality of life. According to a 2004 report by AC Nielsen, the top two trends that have driven sales growth of foods and beverages in the year-prior period were a continued focus on health and the need for convenience.
Several marketers have already used nutrition as a marketing tool for their products, including General Mills, which has begun placing a nutrition claim on all Green Giant frozen vegetable packages, reading "Frozen vegetables are as nutritious as fresh vegetables."
In the same vein, frozen foods made with organic ingredients also present a market opportunity, especially in light of the mainstreaming of natural and organic foods, said the report.
Another area of opportunity, and one that has already resulted in sales increases for the category, is a focus on ethnic flavors. With Hispanics, African-Americans and Asians now comprising almost a third of the US population, their buying power is currently placed at over one trillion dollars, with this projected to grow to as much as $2.4 trillion by 2008. Additionally, mainstream Americans are eating more ethnic food now than ever before, said Packaged Facts.
The market researcher currently estimates that at least 300 companies market frozen foods in the US, and approximately 400 new frozen products are introduced each year.
Leading companies in the sector include Nestle, ConAgra Foods and Kraft Foods, each ringing up more than $1bn in retail sales of frozen foods in mass-market outlets.
And according to information from Datamonitor's Productscan, "Quick" and "Microwaveable" were the package tags marketers used most often in positioning their products between 2002-2005. Other popular tags included "Upscale" , "Natural" and "Fresh".