Cool to be Cold

While supermarkets continue to command a substantial portion of frozen food sales, experts say they have to protect their frozen territory as other outlets eye the category.

By Craig Levitt

Eighty years ago, when Clarence Birdseye first introduced frozen foods to the masses, he got the proverbial cold shoulder from retailers and consumers alike. It is safe to say that since then both have warmed to the idea of frozen foods, as millions of shoppers can feed their families three nutritious meals a day—including appetizers and dessert—without ever leaving the frozen food aisle.

While supermarkets remain the primary channel consumers shop for frozen foods, mass merchants, club stores and even drug and convenience stores have made inroads with the category in recent years. While most observers expect grocery channel frozen foods sales to remain strong, they say grocers will have to make some adjustments to protect their market share going forward.

“Supermarkets can best optimize their frozen foods sales by providing a wide array of selection across its product categories that showcases all that the industry has available to the consumer,” says Giacomo Fallucca, president and CEO of Milwaukee-based Palermo’s Pizza.

As the economy remains in flux, more and more consumers are visiting the frozen food aisle than ever before. According to Rockville, Md.-based Packaged Facts Frozen Foods in the U.S., 3rd Edition report released in January, 2011, frozen food and beverage sales in all retail channels totaled $55.9 billion, up 1.7% from last year.

One of the primary reasons category sales are up, say industry observers, is the convenience that frozen foods provides consumers, who continue to see their free time dwindle. Other factors that have contributed to category sales include more microwaveable items and the increasing availability of upscale and more natural products.

Not surprisingly, one of the key drivers in the frozen food aisle is pizza, which had $3.2 billion in 2010 sales and accounted for nearly 10% of frozen food sales. Mirroring the category as a whole, frozen pizza sales are being spurred on by the premium segment of the category as well as new product introductions. Palermo’s recently added a hand-tossed style product line to its family of premium frozen pizzas.

Alan Hamer, vice president of sales and marketing for Stefano Foods, based in Charlotte, N.C., says unique products are also drumming up interest with consumers. One such product is Stefano’s Tuscanni handheld pizza, which he says is an Italian-inspired single-serve pizza.

Ethnic appeal
Frozen pizza not only increases pizza sales, according to Mike Ryan, vice president of marketing for Union N.J.-based Deep Foods, a family-owned second-generation business making authentic Indian products, pizza draws people into the frozen aisle improving the likelihood of that a consumer may pick up an Indian entrée.

Tandoor Chef, a Deep Foods brand, offers a naan bread pizza, which Ryan says is working well. While most consumers associate Indian food as vegetarian, Ryan says the top selling item in the Tandoor Chef line last year was its chicken tikka masala.

“One thing we try to stress with retail partners is helping them understand that we want them to have the menu solutions in the Indian category,” says Ryan. “They can’t carry just four items and say they are satisfying the Indian needs of their consumers.”

One segment that no longer needs to ride pizza’s coattails is Mexican cuisine. According to Bryce Ruiz, president and CEO of Ruiz Foods, burritos are the dominant Mexican product line within the frozen case. He adds that the El Mon­terey line of burritos continues to en­joy strong growth, and sales for the most recent addition, the 2-pack, are up 10.5% versus the previous year.

“Still growing in popularity, Mexican food has become an American favorite—for every eating occasion,” says Ruiz.

Frozen start
One of those eating occasions includes breakfast. Most nutritionists agree that breakfast is the most important meal of the day. Most observers agree that it is pretty valuable in the frozen aisle as well.

Michael Hunter, vice president frozen food sales strategy for Battle Creek, Mich.-based Kellogg Co., says that consumers continue to focus on health and wellness, which has contributed to the appeal of products such as Eggo Nutrigrain Waffles. He expects that interest to carry over as the company introduces its Eggo FiberPlus Waffles, which are available in Butter­milkPlus, Calcium and Chocolate Chip Plus Antioxidants.

“This will be an important year for Eggo, with significant product innovation and the 75th anniversary of the Eggo brand,” says Hunter.

In addition to the new FiberPlus products, other new Eggo products include Thick and Fluffy Original Recipe and Cinnamon Brown Sugar Waffles, and the company is reintroducing two varieties of Eggo French Toast. Kellogg’s is also celebrating 75 years of the Eggo brand with an on-pack sweepstakes promotion, in-store promotions, sampling and digital signage.

The dessert section is another popular area of the frozen aisle. Ice cream is usually first to mind and observers say retailers have an opportunity with ice cream novelties.

“Where we’ve seen the largest sales growth is novelties because consumers are seeking out more value and they feel these products provide it,” says Jim Rossiter, senior director retail marketing for Le Mars, Iowa-based Blue Bunny.

Observers say frozen pies are also a growth area for retailers. ConAgra Foods has recently expanded two of its brands, Marie Callender’s and Banquet, to include frozen dessert pies. The Banquet products include 7-ounce pies available in apple, cherry, berry and peach. Becky Niiya, communications manager for the Omaha, Neb.-based company, says ConAgra intends to continue leveraging its strength in delivering innovation to reach new eating occasions.

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