Will Nutrition Themes Grow Frozens?

Noting the "largest communication challenge" for the frozen food industry is in "health awareness and nutritional education," American Frozen Food Institute president and CEO Kraig Naasz...

Noting the "largest communication challenge" for the frozen food industry is in "health awareness and nutritional education," American Frozen Food Institute president and CEO Kraig Naasz also posed a rhetorical question last month: "Which is more nutritional - a vegetable flash-frozen within six hours of being harvested, which cryogenically locks in its nutritional value, or a raw vegetable that sheds its nutrients the whole time it gets sorted, packaged, transported, stored and stocked....?"

His address before the Food Technology, Innovation & Safety Forum 2010 pinpointed 'locked-in freshness' as one of the key trends that will drive the frozen foods aisle this year. Others F3 predicts: convenience through packaging innovations that quicken meal preparation and deliver the simplified tastes that consumers want, value pricing initiatives and better shelf presentation, all of which lead us to believe that key frozen foods categories such as dinners, entrees and vegetables could pick up in 2010.

Indeed, Insight Track research cited by Mr. Naasz found that:

• Nearly half of consumers surveyed think frozen foods "would help them through the current credit crunch."
• 70% said frozen foods help them reduce food waste and their number of store trips.

For 'locked-in freshness' to emerge alongside convenience and value as a prominent sales driver of frozens, advances in packaging are required. Within a Freedonia Group report on frozen-food packaging is the identification of a growth niche - frozen vegetables packaged in self-ventilating pouches.

Frozen vegetables are already a pretty mature category, penetrating more than 90% of U.S. households in the 52 weeks ended Dec. 26, 2009, according to Nielsen Homescan Consumer Facts data. Nearly 92% of these households are repeat buyers that spend $40.28 on average annually in the category.

This maturity is reflected in a flattening of dollar sales growth in U.S. food, drug and mass merchandiser stores (including Walmart) during the 52 weeks ended April 17, 2010 (prepackaged, UPC-coded products only). Nielsen data showed that frozen vegetables grew by 2.1% to $4.7 billion, following a year in which it vaulted by 7.8%. An even bigger tell is the 0.9% decline in equivalized unit volume (16-ounce basis), which followed a 1.3% decline the year earlier; this suggests that price hikes were a greater factor than actual demand in the prior year's sales growth.

??By comparison, frozen dinners were in more extreme negative territory during the latest 52-week period ended April 17, 2010. Dollar sales fell by 8.0% to $1.3 billion on a 7.8% EUV decline; this compared with a prior-year period in which dollar sales slid by 6.0% on an 8.0% EUV decline. Moreover, the category's household penetration is just 49%, the Homescan data showed.

Meanwhile, frozen entrée segments showing the most perk are ethnic. Dollar sales of Italian entrees rose by 5.6% to $2.4 billion on a 4.5% EUV increase in the latest 52 weeks. Dollar sales of Mexican entrees were up 6.6% to $1.0 billion on a 3.7% EUV rise. Dollar sales of Oriental entrees gained 7.0% to $825.0 million on a 6.6% EUV rise, the Nielsen data showed.