Time- and cash-strapped consumers continue to find value in grocers’ frozen food offerings.
Most Americans are hoping for an improved economy—soon. Forgive frozen food manufacturers if they would prefer to see the status quo remain for just a little while longer.
While grocers’ fresh sections may be the sexy place to shop, consumers seem to be flocking to the frozen food aisle in search of convenience and value. Whether it is waffles for breakfast, any one of a number of entrée options for dinner and of course dessert, frozen food sales continue to heat up.
Industry observers say that while sales remain strong, they have noticed a shift in purchasing habits. “People have pulled back a little on the upscale,” says Doon Wintz, CEO and founder of the Chester, N.J.-based Run-A-Ton Group, maker of the Wholly Wholesome brand. “[In the early 2000s] it was ‘We can’t get fancy fast enough to try and address the consumers interest in upscale product.’ Then the economy went south and disposable income went south; but people still wanted something good. So instead of a macadamia nut cookie, it was an oatmeal raisin.”
According to industry estimates, the frozen food category accounted for more than $55 billion in sales last year. Since 2006, dollar sales have increased more than 21% and industry observers expect growth to continue at about 2% to 3% over the next couple of years. Observers say much of the success can be attributed to the convenience frozen foods provide.
“We continue to see that busy lifestyles are creating a demand for convenient options that appeal to the entire family,” says Cathy Schneck, vice president of marketing and innovation for Battle Creek Mich.-based Kellogg Frozen Food. “At the same time consumers are also more demanding about the nutritional attributes of the food they select.”
Dollar sales for the entire frozen breakfast category continue to increase—up 10.4% at food, drug and mass outlets (excluding Walmart), for the 52-week period ended Oct. 30, according to Chicago-based SymphonyIRI Group. However, led by the Eggo brand, frozen waffles is the category’s fastest growing segment, up more than 20%, accounting for more than $611 million of the $1.7 billion frozen breakfast category.
Schneck says that it is important that retailers offer a wide range of products to meet the diverse needs of today’s demanding consumers. “Our portfolio, from traditional favorites such as Eggo Homestyle waffles to new innovations such as Simply Eggo waffles or hand-held Eggo Wafflers, is in line with those demands,” she says.
As more families are eating breakfast at home, she adds that retailers should pay attention to package size, particularly of popular family items. “Eggo Thick and Fluffy waffles proved to be very successful, so we are now introducing a 12-count package that should have great appeal to fans of this popular product,” says Schneck.
Starting the day with something from the frozen section may be relatively new for some consumers. Ending it certainly is not. Among frozen categories covered by the Frozen Foods in the U.S. 3rd Edition report, released by Packaged Facts, a Rockville, Md.-based research firm, ice cream and sherbet boast the highest household usage (87%).
Observers say one of the fastest growing segments within the ice cream category is frozen novelties. According to The SymphonyIRI Group, dollar sales of novelty ice cream are up 3.5% over last year.
“In the grocery channel, frozen novelties are growing with an increasing number of items on shelf and strong baseline trends,” says Timothy LeBel, vice president of sales-grocery/value/military for Mars Chocolate North America. “Consumers are moving toward frozen novelties as they provide a portion controlled offering that is fun and easy to eat.”
Over the past year LeBel says Hackettstown, N.J.-based Mars has had continued success with its Snickers and Twix ice cream bars as well as its multi-pack DoveBars. In 2012 Mars added the DoveBar Mint Swirl Ice Cream with Dark Chocolate and Milky Way Brand Chocolate Ice Cream Bars to its ice cream line-up. The Milky Way bars are available in three formats: single bars, 6-packs and a 12-pack of 80-calorie miniature bars. Along with the new products, Mars is adding 30% more ice cream to its M&M’s Cookie Sandwich.
“We have also made small changes to our packaging to increase the appetite appeal and to make the packages stand out stronger on shelf,” says LeBel. “We recently updated the M&M’s cookie sandwich packaging to bring the colorful fun of M&M’s brand candies to the ice cream aisle.”
Observers say that while the novelty segment continues to grow, retailers must still meet consumers’ full range of ice cream options. That can be done in a number of ways. “Opportunities exist to drive above average growth in the majority of both nationally branded and store brand segments,” says Scott Ortega, vice president, marketing for Blue Bunny. “Balanced emphasis across the full ice cream and frozen novelty spectrum is the key to participating in sustained category growth over the next decade.”
Blue Bunny, based in Le Mars, Iowa, is helping that balance and growth with several new offerings in 2012. Partnering with Duff Goldman, master cake baker and star of Ace of Cakes on the Food Network, Blue Bunny mixes the spiced flavor of carrot cake with the smooth decadence of cream cheese frosting in Blue Bunny Premium Ice Cream 24 Karat Carrot Cake. Also available are Cadbury premium ice cream bars by Blue Bunny, in four flavors: Caramello, Chocolate Almond, Vanilla Chocolate and Double Chocolate, featuring a combination of ice cream and Cadbury dairy milk chocolate.
In the better-for-you segment, Blue Bunny offers its Sweet Freedom line of no-sugar added options. “It’s not only about the no added sugars,” says Ortega. “All products have 150 calories or less, 8 grams of fat or less and 30 grams of carbs or less. Better-for-you relevance is certainly fueling a lot of interest in multiple areas. As a result it is also leading to a plethora of product entries targeting a broad range of benefits or needs.”
The perfect size
Many consumers, unwilling to give up the fats and sugars that contribute to great tasting ice cream—and desserts in general—use portion control as a way of monitoring themselves. Wintz says this trend has led to more personalization of product. Wholly Wholesome has addressed this trend with the introduction of its 6-inch organic pie shells.
Wintz says in the winter months the pie shells are not so much used for baking pies, but more so for quiches.
“The 6-inch pie shells are good when one person wants a quiche Lorraine and another wants a spinach and bacon quiche. “Both can be satisfied,” he says.
A completely different kind of pie remains one of the most popular in the frozen aisle—pizza pie. SymphonyIRI Group data estimates the frozen pizza category to be worth upwards of $3 million. Within the pizza category, Bill Whalen, executive vice president of Mt. Laurel, N.J.-based Dr. Oetker USA, says the thin crust segment is outgrowing all other categories.
“Consumers are also looking for more unique, innovative toppings on their pizza, similar to what they find in a restaurant,” he says. “This has led to more premium, upscale offerings hitting the shelves.” To meet this burgeoning demand Dr. Oetker Ristorante pizza, which Whalen says “tastes like a pizza you would get in an Italian Restaurant” has seen continued expansion in the Northeast region. Dr. Oetker Ristorante is available in six varieties: Mozzarella, Spinaci, Funghi, Quattro Formaggi, Vegetale and Speciale.
To get the most out of the pizza category, Giacomo Fallucca, president and CEO of Palermo’s Pizza, based in Milwaukee, says there are two things retailers need keep in mind. First, pizza is often used as a quick meal solution, and the ‘center-of-plate’ position that it holds.
“With those two ideas in mind, perhaps the best way to leverage the category is to create value bundles with other complimentary items such as bagged salads, soft drinks and desserts that enable consumers to quickly assemble a complete meal while increasing the overall market basket,” he says.
Palermo’s is launching several extensions to two of its premium product lines. In its Primo Thin line is a three meat Sicilian and a Spinach, Bacon & Feta variety. The Hand Tossed line will include a Meat Lovers and Philly Cheese Steak offering.
Observers say that Mexican frozen food offerings are popular among consumers, particularly around snack time. Bryce Ruiz, president and CEO of Ruiz Foods, says the cornerstone of the Dinuba, Calif.-based company’s portfolio is its El Monterey’s Multi-Pack Burritos and Snack Bags. The Snack Bag consists of mini chimichangas, quesadillas, taquitos and tamales while the burritos are available in eight flavors. New for this year are single server versions of El Monterey Family Pack Burritos and Supreme Burritos.
“In addition to being trans fat-free, we are also well on our way to reducing the sodium levels of our entire El Monterey line to meet the 2012 guidelines as committed partners of the National Sodium Reduction Initiative,” says Ruiz.
Get your fruits and veggies
Another growing segment in the frozen section is fruits and vegetables. Observers say packaging innovation for fruits and microwavable steam technology for vegetables have been integral reasons for generating consumer interest.
On the fruit side, Christine Herrera, vice president marketing Sunrise Growers–Frozsun Foods, says the shift from polybags to laminated stand-up pouches has transformed the shelf set to an eye-catching billboard of beautiful fruit from the former, confusing looking space. As a market leader in the category Herrera says the Placenta, Calif.-based company plays an active role in trying to help retailers grow the category.
“We have a laser focus on helping our partners to achieve accelerated sales and margin performance,” she says. “In addition to our full line of frozen fruit products, we are focusing on three big new opportunities for 2012, our fruit smoothies, new fruit blends and convenient Fruit-To-Go Cups.”
For vegetables, David Brown, vice president of retail sales for Allens, Inc., based in Siloam Springs, Ark., says in addition to the steamable technology, retailers can take advantage of the impulsive nature of the category. “The best way we can help supermarkets is by merchandising on a regular basis,” he says. “Using that secondary space and display space can show consumers there is a convenient and fast way to their meal solutions.”