Frozen food sales continue to improve as both retailers and manufacturers look to expand eating occasions.
The relationship between consumers and frozen foods has been hot and cold since the debut of the TV dinner in the early 1950s. A novelty when first introduced, sales of TV dinners—and frozen meals in general—stagnated as they became viewed as cheaper, significantly lesser-quality meals than home cooking.
While frozen meals still generate the majority of sales in the category, one of the fastest growing segments is frozen hand-held food. According to a June 2012 report from the Chicago-based research firm Mintel, the $2.7-billion frozen hand-held food subcategory has grown 18% since 2006.
In 2011, supermarkets accounted for more than 60% of frozen hand-held food sales, showing a growth of 11% since 2006. During that same period, sales at retail channels other than supermarkets grew by approximately 32%. Industry observers say the slower supermarket growth is likely a combination of other nontraditional food retailers, such as dollar stores and mass merchants expanding their frozen food sections combined with a migration to these outlets during the height of the economic recession. Observers say supermarket sales did begin to rebound in 2011, driven in part by recovering economy, continuing popularity of Hispanic cuisine and a revival of frozen hand-held breakfast food.
Within the frozen segment, Mexican foods continue to gain popularity with Hispanic and non-Hispanic consumers. Goya Foods, based in Secaucus, N.J., currently distributes nearly 200 frozen items that John Hernandez, director of sales, says attracts all ethnicities. He adds that authentic and powerful flavors continue to drive sales.
“We have improved recipes on grab-and-go favorites like our empanadillas and re-launched with improved packaging our ‘classic-entrées,’” says Hernandez. “We also continue to expand our offerings catering to Mexican, Colombian and Andean with authentic and traditional products.”
As the frozen Mexican segment grows, observers say it is important that retailers avoid low-velocity, undifferentiated items that fail to offer consumers value. They add that often items such as these actually wind up reducing retailers’ sales and profits in the long run.
Kim Ruiz Beck, chairman of Dinuba, Calif.-based Ruiz Food Products, says it is also important to note that while the mainstream consumer continues to gravitate toward Mexican food, tastes have expanded beyond the bean and cheese burrito.
“Consumers now enjoy, even crave, different textures and flavors and are very willing to experiment with heat,” says Ruiz Beck. “Their palates have developed a sophistication that results in a desire for more and different frozen Mexican food choices.”
The cornerstone of Ruiz Foods’ portfolio is the El Monterey line, which consists of burritos, chimichangas, taquitos (corn and flour), tamales, quesadillas and enchiladas. “El Monterey products offer real wholesome food, packed with protein, real meats and cheeses, zero trans fat and made with fresh baked tortillas, at an everyday value,” says Ruiz Beck.
With the understanding that most consumers are interested in value-oriented products, earlier this year Ruiz Foods expanded the El Monterey line to include single-serve versions of the Classic Burritos, single-serve Supreme Burritos and Mini Tacos (an extension of the snack bag line) in two flavors: Chicken & Monterey Jack Cheese and Beef and Cheddar Cheese.
Since many of the El Monterey products are considered impulse buys, Ruiz Beck suggests that retailers treat the category similar to salty snacks. “While most of our category’s marketing efforts are appropriately focused on driving sales, the challenge is to also employ initiatives to drive usage,” she says. “[Retailers can do so] by displaying this category during a high incidence of party/sporting event times.”
Iron is hot for waffles
Expanding usage occasions is essential for many frozen breakfast manufacturers since, despite being the most important meal of the day, an alarming number of people skip breakfast every morning. While it may be difficult to position bacon and eggs as anything other than breakfast; waffles are fast becoming an all day food.
When it comes to frozen waffles, the discussion begins and ends with Kellogg and its Eggo brand. According to Chicago-based SymphonyIRI Group, for the 52-week period ended May 13, Eggo captured 71% of dollar sales at food, drug and mass outlets, excluding Walmart, accounting for $449 million.
With more than 20 products in its waffle line—ranging from traditional Buttermilk Waffles to Wafflers Brown Sugar Cinnamon Roll and Wafflers Strawberry Strudel—Battle Creek Mich.-based Kellogg has done its part to grow the category.
This autumn Kellogg will add another flavor to its waffle portfolio. Building on the growing pumpkin taste trend are Eggo Seasons Pumpkin Spice waffles.
“Every new product from Kellogg is developed based on keen insights into the lifestyles, taste preferences and nutrition needs of our consumers,” says Brad Davidson, president of Kellogg North America. “By leveraging these emerging trends, we continue to introduce hot new products that excite both our consumers and our retail partners.”
While it can be daunting competing with a company that controls such a large portion of the category, Waffle Waffle is trying to do just that. However, officials from the Carlstadt, N.J.-based company which was created about 18 months ago, say the frozen Belgian waffle product they offer is not really in the same category as Eggo and most of the other frozen waffles on retailer shelves.
Born from the Belgian waffles sold in the streets of Europe, Sam Rockwell, one of the managing partners for Waffle Waffle, says the idea was to take the Belgian waffle product that consumers seemed willing to travel far distances to get, and bring it to their homes. Rockwell emphasizes that although traditionally associated with breakfast, Waffle Waffle has been able to expand upon that and create multiple eating occasions.
“People are becoming more aware of waffle products,” says Rockwell. “Waffles are becoming more popular and when people see these items they are becoming more and more in tune with them—it is more than just Eggo now. People are understanding that waffles can be eaten at anytime throughout the day.”
Invariably, one of the most popular destinations in the frozen aisle is the pizza section. According to the SymphonyIRI Group, the category generates more than $3 billion annually. While sales are down from last year (about 1.5%), premium and healthier options continue to entice consumers, say observers.
“The primary driver of the sales growth among premium brands is consumers’ desire for more authentic pizzeria pizza experiences, which these ‘craft brands’ do a better job of delivering,” says Chris Dresselhuys, director of marketing for Milwaukee-based Palermo’s Pizza.
Part of that authentic experience that consumers are looking is provided by thin crust pizza. According to Dresselhuys, Palermo’s Primo Thin product line features an ultra-thin crispy crust and variety of flavors ranging from the traditional, like Pepperoni & Sicilian to more artisan flavors like Chicken Fajita and the new Spinach, Bacon & Feta.
“Consumers are also seeking more better-for-you products which has affected the sales increase for ultra-thin crust products as well as for brands that offer ingredients that are perceived as being beneficial,” say Dresselhuys.
One of those brands that offer healthier ingredients is Better4U Foods. The Delray Beach, Fla.-based company recently entered the frozen pizza market with a line of nine all-natural pizzas, four of which are gluten-free and one gluten- and dairy-free.
While all products in the line are healthier versions than traditional frozen pizza, gluten-free is the real selling point, says Marc Feldman, vice president of operations for Better4U Foods. “Our gluten-free product doesn’t taste gluten-free,” he says. “When we tell people it is, they are blown away.”
The obvious target consumers are those with celiac disease, but Feldman says the opportunity goes well beyond those with gluten issues. “We are targeting people that want to eat healthy. That can be parents who want their kid to eat healthy and obviously pizza is a staple in kids’ diets. A lot of people 55 and older, they can’t eat greasy foods anymore but still want to enjoy pizza, this is a whole new world for them.”