Categories / Frozen Foods
Category Review: Frozen Entrees

Entrée Sales Frozen In Time

November 27, 2012
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Frozen entrees have a reputation for convenience and affordability – two characteristics that usually help products in tough economic times. But that hasn’t made a difference in the $7.9 billion category over the past three years.

Sales declined in 2009 and 2010, and last year remained basically flat, according to figures from Mintel Group Ltd.

Tough competition from quick-service restaurants and even in-store food service, which were forced into budget consciousness during the recession, have chipped away at some of the traditional advantages of frozen entrées. Consumer trends toward less processed foods also have hurt the category.

As the Better For You (BFY) market increased, frozen entrees have struggled to overcome the perception that they are neither tasty nor healthy. A quick trip down the frozen food aisle shows that healthy choices are available – and portion-control and diet options make up a big part of the category.

But you’ll also find many entrees that deliver high-calorie meals with heavy sauces and cheeses, the types of meals that keep the “TV dinner” reputation alive.

“The frozen food industry has not been able to leverage consumer’s interest in convenience into sustained, meaningful growth,” says a Mintel Group executive summary from May 2012. “This may be due in part to the perception that frozen meals are not particularly healthy. Only 38 percent of frozen meal users consider these products to be an easy way to get a healthy meal.”

It suggests that “generating significant and sustainable growth will likely require an emphasis on innovations that capture the imagination of consumers, possibly in terms of new flavors, preparation methods, nutritional benefits, etc.”

“Chefs have to find that right balance that makes their new products exciting,” says Allan Kliger, President and CEO of Victory’s Kitchen, a Toronto-based custom manufacturer of frozen and fresh foods. “You want something new that can draw interest, but at the same time you don’t want consumers to say, ‘What the blazes is that?’ It should be new and compelling, but still familiar.”

Kliger, whose company has had success as a niche manufacturer, says that some of the trouble in frozen entrees comes from food “that tastes like it comes out of a food plant.

“The way to do it is to not put crap in your products. The ingredient deck needs to have real ingredients in it. If you have good, fresh ingredients, you can make food that people really want to eat.”

PRIVATE LABEL STILL SMALL
Although other categories have seen strong growth in private label products during the recession, frozen entrees still remain strongly dominated by brand names. The five leading manufacturers account for 81.9 percent of 2011-2012 FDMx frozen meal sales, according to Mintel. Private-label products accounted for only 2.8 percent of sales.

The reluctance of consumers to trust store-brand products probably reflects the wariness with which they view the entire category. It also might explain the one area of strong growth over the past several years – restaurant branded meals that have done well in the freezer aisle.

Offerings from TGI Fridays, Marie Callender, P.F. Changs and California Pizza Kitchen now crowd the shelves with Stouffer’s and Lean Cuisine. Consumers have been unwilling to bypass these known quantities for a store brand, even if the cost is significantly lower.

Although frozen meals might be a tough nut to crack for private label, more opportunities for growth could develop in other areas. Multi-serve frozen meals have seen a steep decline in the category – 1.3 percent in 2011 – while hand-held frozen food has been growing quickly, led by breakfast offerings.

Total sales rose by 18 percent from 2006-2011, although the $2.7 billion market is still considerably smaller than frozen entrees.

Demographic changes also might influence areas of growth. According to the U.S. Census Bureau, Hispanics and Asians are expected to be the fastest growing populations from 2011-2016, which could bode well for the frozen food industry. Compared with other ethnic groups, Hispanics have the largest average weekly consumption of frozen or refrigerated meals, according to a Mintel survey.

The same survey found that Asians are very interested in BFY attributes of frozen meals. The group’s population increase should improve that segment.

Ethnic flavors long have been a staple of frozen meals, but expect that trend to continue as the U.S. population diversifies. With flat sales, you can expect manufacturers to use innovation to try and attract more consumers. Mintel suggests that 2012 will see the most new product launches since 2007.

Victory’s Kitchen launched a Mexican mole sauce earlier this year. The dark, tangy chocolate-based sauce is more commonly found in Mexican restaurants than grocery freezers, but it taps into two hot food trends – Hispanic flavors and gourmet tastes as seen on cooking shows.

“I think you’re going to see strong growth in these peripherals,” Kliger says, “We’re seeing a lot of spinoffs, in the marinades and the sauces that help you create something unique at home.”

Finally, there appears to be a demand for more BFY frozen entrees, even if that demand hasn’t yet translated to higher sales.

“BFY attributes are important to the majority of frozen meal users,” according to Mintel. “These consumers are particularly interested in high fiber and high protean products and whole grains, while at the same time consider reduced sodium to be a primary concern.”

Of course, they’d also like bigger portions and cheaper price points.

Whether or not frozen entrée manufacturers can provide the consumer with what they want – and convince them to try it – will determine how fast the category grows in the years ahead.

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