Frozen foods are increasingly becoming an integral part of the daily diet, especially in European countries. Busy lifestyles continue to drive demand, which in turn, fuels growth in the overall frozen food market.
The global frozen food market valued at $219.87 billion in 2018, and is projected to grow at a CAGR of 5.14% during the forecast period, reaching $282.50 billion by 2023, according to research presented by MarketsandMarkets, New York. International trade of frozen foods continues to gain prominence, complemented by improved transportation facilities. The increase in the consumption of frozen food products in the emerging markets of Asia Pacific and South America has also contributed to the increase in the sale of frozen bakery products. The demand in developing regions is driven by the increase in disposable income.
Other trends, such as packaging and shelf-life enhancement, present growth opportunities for the frozen foods market. That’s why companies in the food market are investing in technologies to get refrigerated or retarded dough, frozen vegetables and meat, partially cooked food and fully cooked food to store for a longer duration.
Investments in cold chain drive frozen foods market
Cold chain infrastructure has played an important role in driving the frozen foods market, as it helps to transport products at both the domestic and international levels. The global demand for fresh and processed fruits and vegetables is increasing, as the consumption habits of the urban population change. This demand is fulfilled using cold chain logistics to maintain the temperature and quality of food products. The rise in the import and export of frozen foods is possible due to the strong global cold chain services available in developed economies.
In 2018, India was the single-largest country-level market, at 150 million cubic meters, followed by the United States at 131 million cubic meters and China at 105 million cubic meters. Due to this progression in the cold storage capacity, handling of frozen food products is becoming more convenient for frozen food manufacturers.
According to the USDA’s quarterly report from fourth quarter 2017, shipments of refrigerated fruits and vegetables have been increasing since 2000. The report states, “At 7.72 million tons, the reported shipments of refrigerated fruits and vegetables in the fourth quarter of 2017 were the third-highest on record for any fourth quarter, behind 8.05 million tons in 2016 and 7.99 million tons in 2011.”
Digitalization offers opportunities in the frozen foods market
One of the latest trends driving the frozen foods market is online grocery shopping and the introduction of new apps, which makes it convenient for consumers to pick their preferred products.
According to statistics released by Eurostat, UK, in 2018, almost 25% of the population bought food and groceries from online retail channels. With the growing penetration of the internet and smartphone usage, retail grocery shopping is emerging as one of the platforms for companies to showcase and sell their food products.
Moreover, the number of stores accepting online payments is rising globally. Factors such as increasing smartphone usage, dedicated apps and emerging payment methods fuel the overall online grocery market, thus contributing to the growth of the frozen foods market.
Frozen fruits and vegetables segment is the fastest-growing in the frozen foods market
Developed countries such as the United States, Germany, France and Japan are dominating the frozen foods market due to the high purchasing power of consumers. The convenience foods and ready meals segment holds the largest market share, due to the changing and busy lifestyles of consumers globally.
Emerging markets such as Russia, India and the Latin American countries have a huge potential for frozen fruits and vegetables due to lower adoption rates. Growth in the frozen foods market is stagnating in countries such as the UK, Germany and the Scandinavia due to the maturity of the markets. Additionally, countries such as Italy and Spain provide ample opportunities for market penetration of frozen vegetables such as potatoes, broccoli, cauliflowers and carrots.
Major factors propelling the growth of frozen fruits is the need for hygienic frozen fruit dishes. The demand for frozen fruits in the European market is high due to the extreme temperatures prevalent in the region. In the United States and emerging Asian markets, the penetration of frozen fruits, as compared to frozen vegetables, is low, and therefore the year-round availability of seasonal fruits in the frozen state is expected to increase their demand.
Vegetables accounted for about 90.6% share in the global frozen fruits and vegetables segment in 2017. Peas and spinach hold a larger share in the global frozen vegetables market. Top spinach importers include Germany, Japan, the United States, France and Italy.
Globally, Europe is the largest consumer and exporter of frozen vegetables. In order to increase market share, companies are focusing on multinational campaigns and promotional strategies to increase awareness and consumption of processed frozen vegetables. This effort is anticipated to increase the market share of the frozen vegetables market.
The frozen potatoes segment accounts for about 37.9% market share, due to the rising demand for frozen potatoes for French fries and cutlets. Meanwhile, the United States is the largest exporter of frozen potatoes. The main export destinations for the United States are Japan, Mexico, China and Canada. The demand for French fries has been growing rapidly in regions such as Asia Pacific, the Middle East and South America due to the expansion of quick-service restaurants (QSRs) and retail channels in these regions.
Nowadays, mushrooms are becoming popular in this category, owing to its functional applications. In fact, mushrooms can be found on eight out of 10 menus, and are becoming an ideal ingredient for pizza, pasta, hamburgers, soups, mixes, sauces, ready meals and sandwiches. That’s why companies are adopting individually-quick frozen (IQF) techniques for increasing the shelf life of mushrooms without the use of preservatives.
Another category gaining traction is IQF herbs such as mint, coriander, sage, oregano, basil, parsley, lemon grass and rosemary.
The foodservice industry is estimated to be the largest across all regions
The foodservice segment accounted for a larger share of the global frozen foods market due to high demand for fast food, the rise in the population of working women, increase in disposable income levels and growth in food delivery channels.
Among the delivery channels, QSRs dominate the foodservice segment in the frozen foods market due to the high contribution of QSR chains.
Along with restaurants, the increase in the number of national and international brands in the hotel industry is expected to drive the demand for frozen foods during the forecast period.
Europe is estimated to be the dominant market
The value market for frozen foods is estimated to be largely concentrated in Europe, followed by North America and Asia Pacific. Europe acquired the largest share of the global frozen food market in 2017, valued at $68,951.3 million in 2017 and projections to grow at a CAGR of 4.3% from 2018. Italy is projected to reach a value of $8,282.6 million in 2023, recording the highest CAGR of 5% during the forecast period. Europe has witnessed increasing consumption of fruits and vegetables. This is due to the changing consumer preferences toward a vegan diet, which is indirectly contributing to the growth of the frozen foods market, particularly the fruits and vegetable segment.
Germany accounted for the largest share (23.5%) in the European frozen food market in 2017. That’s because Germany has a good infrastructure and a large consumer base with high purchasing power.
Manufacturers are continuously driving innovation in the industry
The frozen foods market is highly concentrated and competitive in nature, with key market players using strategies such as new product launches and expansions of business operations to meet the rising consumer demand.
The global frozen foods market, especially in Asia Pacific, is growing rapidly. This growth will be continued in the future with a focus on producing new specialty frozen food products with plenty of innovations for health-conscious consumers. The Asian Pacific frozen foods market is highly concentrated in China and Japan due to the high consumption of meat and fish. Japan is the second-largest market for frozen foods in Asia Pacific.
Globalization and increasing international trade are the main factors responsible for the development of the frozen foods industry globally. With economic development and increasing purchasing power parity, consumers can afford premium products with improved nutritional value and shelf life. This drives the trade of various food products between regions. According to statistics shared by the Agriculture Marketing Resource Centre (AGMRC), Ames, Iowa, the United States is the world’s largest producer of strawberries. In 2014, it produced 3 billion pounds of strawberries, valued at $2.9 billion, of which 63.4 million pounds of frozen strawberries were exported, valued at $45 million.
The global seafood market is also witnessing immense growth due to the health benefits offered by these products. According to research presented by the Food and Agriculture Organization of United Nations (FAO), Italy, an estimated 2.3% hike in global fish production combined with good market conditions around the world led to a significant boost in trade revenues in 2017. India, Peru, Ecuador, Chile and Norway were the top exporters of seafood in 2017.