Consumer markets researcherPackaged Factsprojects the market for frozen convenience foods will grow 2 percent by year-end to reach sales of $17 billion in 2010, fueled by a trio of strong performing categories that have offered products able to compete on the basis of freshness and quality with fresh convenience food.
In its latest release, "Frozen Convenience Foods in the U.S.," the New York, N.Y., firm says three categories -- frozen pizza, handheld breakfast food, and prepared vegetables -- have infused the otherwise ambivalent market with the potential to increase 10 percent and approach $19 billion in retail sales by 2015.
Packaged Facts predicts the sales of frozen foods will thrive as marketers in other categories adopt similar strategies to compete with the parallel fresh convenience food market, restaurant takeout, and meals prepared from scratch by consumers.
"There is considerable activity in the frozen convenience food market and ample opportunities for growth within certain retail sectors and market niches," says Don Montuori, Packaged Facts publisher. "So while we do not anticipate substantial overall growth, we do expect some segments and individual marketers to grow considerably over the next five years."
During the 2005-2010 period, increased competition from fresh prepared food -- whose marketers pushed forward with a wide variety of new menu items and merchandising strategies that dimmed frozen convenience foods' appeal -- was a primary reason why sales growth was driven down. The frozen food categories and individual products that have suffered the most recently have lost out because they are seen as less fresh and more expensive alternatives to cooking from scratch. Packaged Facts forecasts a tough competitive situation involving an increasing onslaught from fresh prepared food will persist.
Conversely, the colossal frozen pizza category and the burgeoning handheld breakfast category thrived when going head-to-head with restaurants and other foodservice outlets in the fight for customer dollars. In addition to their perceived quality and freshness, both categories benefited from marketer positioning that created an identity as products that were lower-cost alternatives to dining out. Similarly, the prepared vegetable category has triumphed on the freshness front via the development of steaming techniques.
Beyond freshness and quality, Packaged Facts says it identities several diverse influences affecting the frozen convenience food market, including consumer lifestyles, Americans' growing concern with health and wellness and higher nutritional demands, demographic shifts, growing interest in world cuisines, and the recession.
For example, due to packaging that serves as an excellent canvas for information about nutrition and ingredients, frozen convenience food marketers have an advantage over their competitors in the fresh convenience food sector and foodservice outlets. Likewise, as ethnic foods become more accepted by the general public, frozen food marketers have been expanding their base by further tapping the diversity of America's ethnic cuisines with new Indian, Japanese and Middle Eastern flavors, among others, while expanding their product range to encompass fusion flavors like Mexican-style, Thai-topped, and Jamaican Jerk pizzas.