FDBuyer: Reviving Frozen Sales

Discussion
Aug 16, 2012

Through a special arrangement, presented here for discussion is a summary of a current article from Frozen & Dairy Buyer magazine.

In 2011, frozen food unit sales dropped to 2008 levels and haven’t been able to bounce back fully.

Although most retailers have seen an increase in frozen food dollar sales, nearly all of these dollar sales increases can be attributed to inflation — not to increased consumer demand.

To delve deeper into these department trends, we recently surveyed frozen food shoppers and discovered a number of interesting root causes challenging the frozen food category. These include:

Seasonality: The frozen food department is seasonal, with traditionally increased activity during the summer months and also in March around National Frozen Food Month. The 2011 summer season, however, was soft from a unit sales perspective. Ice cream and frozen novelties, two of the key summer season categories, experienced lower than normal sales levels than the past few years. Ice cream, pizza and frozen prepared foods (dinners/ entrees) — which contribute more than 40 percent of dollar sales and are key traffic drivers — have seen the largest decreases in demand.

Competition: Increased competition from substitute products has impacted consumer demand for frozen products. For example, Domino’s and others have been discounting heavily.

Pricing: Prices topped the list of reasons shoppers cited for buying less frozen food. On average, prices are up by seven percent across the department versus last year. Promotional activity in the department has also changed. With the increase in everyday prices, promotional discounts in the frozen food department are not as deep as last year.

More Fresh & Doing Without: Shoppers are buying more fresh foods and cooking more fresh foods at home. Consumers in certain categories such as frozen desserts cite dietary concerns as a reason for lower demand. Consumers are also trading frozen vegetables for canned and fresh vegetables, and, in some frozen categories, shoppers are just "doing without."

Lack Of Innovation: In reviewing new item entries into the frozen food categories, manufacturers introduced 22 percent fewer new items in 2011 than in 2009. Frozen breakfast, the one category that showed an increase in new item introductions, was the only frozen category showing an increase in unit sales.

Package Sizes: What used to be a "half-gallon" of ice cream is now often a 48-ounce package. When asked, 33 percent of all frozen food shoppers indicated they recognized the package size reduction.

Fewer Young Shoppers: Compared with 2007, there are 37 percent fewer shoppers under the age of 35 purchasing frozen foods. Of shoppers ages 35-44, a key shopper demographic, 25 percent have left the department since 2007. About 50 percent of frozen pizza is purchased by households whose shoppers are younger than 44, while this same group is responsible for only 33 percent of ice cream sales.

Aisle Confusion: Out of 20 major departments or categories surveyed, frozen foods ranked at No. 18 among the "hardest to shop." Only personal care and candy ranked lower.

Discussion Questions: What steps should be taken to revive frozen food sales, particularly with younger consumers? What lessons do frozen food’s recent challenges offer to other categories?

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6 Comments on "FDBuyer: Reviving Frozen Sales"


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Gene Hoffman
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Gene Hoffman
9 years 9 months ago

Nothing remains “preferred” forever without tuning into the tune of the times.

The convenience of frozen foods has given way to the fashionable timeliness of freshness. Young people want to be contemporary. The challenge for frozen foods is to build a perception that they are fresher than fresh. And therein lies a major lesson for other categories.

Ben Ball
Guest
9 years 9 months ago

Unfortunately for frozen food manufacturers, several of the changes noted appear to be structurally driven. For example, increased urbanization leads to more frequent daily shopping — often for prepared foods — and reduces the need for home storage as a convenience. In addition, frozen has not been the gold standard of quality since the boomer generation. These things are not going to change. The best hope for frozen is a technological breakthrough of some sort. But the opportunities for that seem limited.

Zel Bianco
Guest
9 years 9 months ago
One area I believe would help, particularly with younger shoppers, is stocking the types of smaller brand frozen pizzas that are available at retailers such as Trader Joe’s. Yes, they are frozen, but they are quite good and do not have the negative connotations associated with the more unhealthy national brands that many shoppers are staying clear of. Another area that I would have to hand it to Trader Joe’s is the frozen appetizers or hors d’oeuvres category. They are great for dinner parties or as quick snacks. Just as we are seeing in the beer category, big brands are not necessarily better, in fact the smaller, hand-crafted brands, the better. I am not suggesting that the national brands should be delisted, but that the smaller, artisanal brands should be integrated into the frozen section to re-energize the category and attract the younger shopper to come back and check out what’s new and different. From the consumer’s point of view however, clearly the packaging at Trader Joe’s is sneaky in that the perception is that… Read more »
Gene Detroyer
Guest
9 years 9 months ago

This is probably a similar question that was asked at Kodak… “What steps can be taken to revive film sales, particularly with younger consumers?” These kinds of questions are the ones that bring companies down. The question should be, “What do we (retailers, companies) do to take advantage of the change in shopping habits of the younger generations?

Craig Sundstrom
Guest
9 years 9 months ago

I think Gene has it down cold (pun intended): some of these underlying trends CAN’T be changed, some of them — “Shoppers are buying more fresh foods and cooking more fresh foods at home” — I don’t think we would WANT changed. Presumably, Mother Nature has done her part this year to perk-up ice cream sales.

John Crossman
Guest
John Crossman
9 years 9 months ago

This is a tough one, but if I was looking for an angle, I would focus on healthy choices. Like exercise, every step we can make to eating healthier is a good one and younger consumers (many of them) understand this. They are also busy and buying fresh fruit and other groceries can get slowed due to time constraints.

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