“Right now with so many options out there I think everyone is competing for a larger slice of the pie, and US consumers, depending on their income levels, when it comes to dinner they’re looking at a wide variety of options—be they supermarkets, fast-casual and full-service restaurants, or the deli,” Euromonitor International analyst Virginia Lee told FoodNavigator-USA.
Can celebrity endorsers turn the tide?
But sales continue to lag in the frozen section. Between 2009 and 2013, US sales of frozen meals slipped 3% to $8.92 billion, according to Euromonitor. And this year, the market researcher is forecasting a decline of an additional 2%.
Although a growing number of studies support the claim that frozen fruit and vegetables retain vitamins and minerals better than their fresh counterparts (see here and here), consumers have been slow to internalize the notion that frozen food could be a fresher option than fresh itself.
“The general population does consider frozen foods to be of poorer quality and not as good tasting as fresh food and with lower nutritional value. I’ve seen a number of studies that compare average fresh produce in supermarket against frozen—which is picked at the height of freshness and frozen within 24 hours—unlike average produce in supermarket, which was picked early when it was still hard and through transportation, getting on the shelf, etc., lost some of its nutrients,” she said.
The American Frozen Food Institute is looking to change consumers’ image of the industry with its three-year, $90 million “Frozen. How Fresh Stays Fresh” campaign to engage consumers about the health benefits of frozen foods, tapping registered dietitian Kerri Glassman as a spokesperson—a move Lee called “a step in the right direction”.
Premium, free from, customizable
But the best way to lure consumers to the freezer section is to give them what they want, Lee said, adding that that means premium, gluten-free and customizable offerings.
Consumers are increasingly looking to more premium frozen meal options as quick meal solutions. While the biggest player in natural and organic is still Amy’s Kitchen, Lee said she’s seeing some exciting offerings from the likes of Luvo (formerly Lyfe) and Saffron Road, which are jockeying for space in the Whole Foods Market frozen aisle.
Luvo, which features frozen entrees like kale ricotta ravioli, turkey meatloaf with mashed potatoes and whole grain penne, hits the sweet spot with its elevated, healthier offerings. “I think the fact that it’s positioned as higher quality and better tasting is really what people are looking for,” Lee said. Consumers are also looking for authentic ethnically inspired flavors, which could almost be Saffron Road’s tagline—the brand’s premium line of ethnic frozen-ready meals includes flavors such as Korean bulgogi, bibimbop and Indian vindaloo.
Premium offerings aren’t just selling in the natural set, with such recent success stories in the wider market as EVOL Foods (since its acquisition late last year by gluten-free manufacturer Boulder Brands) and Nestle’s DiGiorno (which recently launched custom pizza kits at Target), Lee noted.
“Before EVOL was acquired by Boulder Brands, it was mostly frozen burritos and starting to get into frozen ready meals. Following the acquisition by a much larger company with a bigger marketing budget, they’ve introduced gluten-free frozen burritos, frozen ready meals and gluten-free frozen ready meals. And they’ve been able to get shelf space in many retailers, including Target,” she said.
Nestle is blurring the boundary between CPGs and fast-casual pizza joints with its DiGiorno Design a Pizza kit, which enable consumers to build their own custom pizzas. The kits contain thin crust cheese pizza with tomato sauce, plus additional shredded cheese, assorted meat and veggies for consumers to add as they like.
“With the designer kits, DiGiorno is definitely capitalizing on consumer interest in the so-called fast-casual gourmet custom artisan pizza joints like Blaze Fast-Fire’d Pizza, where the ovens are very hot and thin-crust pizzas come out in three minutes,” Lee said. “In the past, DiGiorno had to compete against restaurant quality with their self-rising pizza crust. The trend is now toward flatbreads and thin pizzas that bake quickly, with the appeal of customizing artisan toppings. Now DiGiorno is competing against fast casual places.”
Where restaurants pose the biggest threat to CPGs in the frozen section is in licensed products, which Lee refers to as “pretty much a win-win” for operators like California Pizza Kitchen (whose frozen pizza line is owned by Nestle), Chili’s (which just teamed with Bellisio Foods to launch a frozen entree line) and P.F. Chang’s (whose Home Menu line was recently sold to ConAgra Foods by Unilever).
“They’re not worried about losing foot traffic or competing more against other restaurants,” she said. Indeed, for restaurants, licensed products mean two things: revenue and free advertising.
“Not only will Chili’s benefit from the licensing revenue from Bellioso Foods, it’s also benefiting from print and other advertising. But most importantly, every time someone walks by the frozen case, they see the Chili’s name.”
Manufacturers can’t quite capture the taste of a restaurant meal in the frozen version
But licensed brands have their own unique problems, chiefly remaining successful over time, as manufacturers allocate their marketing dollars elsewhere, Lee said.
“When it first came out, P.F. Chang’s frozen entrees did very well, but now sales have kind of lagged for ConAgra,” she said. “In that first year, manufacturers are very excited and investing marketing dollars for TV and print advertising. They pay slotting fees with retailers to get prime eye-level shelf space, and consumers are initially exciting because they see the advertising and hope the frozen-ready meals taste like what they can get at their favorite restaurants. But in most cases, the freezing process changes the texture and flavor, so the frozen version never tastes as good as what you can get at the restaurants.
“So far, it’s been impossible to capture the exact taste of a restaurant meal in frozen ready meal.”