Heat Up A Really Cool Market

When it comes to frozen snacks and appetizers, the market can be hot or cold, depending on the economy and other factors, including new products.

Tough economic times often spell good news for sales of frozen snacks and appetizers. When the Great Recession began to hit in 2007, the category experienced robust growth as consumers, specifically households with children, ate out less frequently and turned to more affordable frozen snacks, according to a 2010 report on frozen snacks by global research firm Mintel.

However, as the economy began to recover, sales in this $1.9 billion category slowed, said a more recent 2012 Mintel report on frozen snacks. Store brands lost sales in 2009 primarily due to a reduction in new products, the firm noted. However, Mintel added that store brands managed to eke out sales increases in 2010 and 2011, but the segment marginally lost market share.

In 2012, however, frozen snacks and appetizers rebounded nicely. Dollar sales for the total category once again are increasing, and private label sales rose a hefty 24.4 percent to reach $128.0 million for the 52 weeks ending Nov. 4, 2012, according to data from Chicago-based SymphonyIRI Group (see the table, p. 40, for subcategory performance).

Do use resealable packaging.

Fire and ice

To heat up sales in the frozen snack market, retailers and private label suppliers need to focus on developing value-priced restaurant-style products that cater to the category's core demographic groups, which include Hispanics, Asians, teens and families with children, according to Mintel.

Carla Dobre-Chastain, food analyst for Mintel, emphasizes that private label producers can increase market share in this category the old-fashioned way.

"Innovate, innovate, innovate," she explains. "Focus on healthful alternatives and restaurant-like offerings that are still at a more attractive price point than national brands and restaurant dishes."

Frank Benso, vice president with Nampa, Idaho-based Great American Appetizers, agrees that retailers should offer more healthful alternatives to fire up sales.

"Trends are snacks/appetizers with a tilt toward nutritious," he notes.

Don't separate ethnic snacks and appetizers from others — merchandise them together.

Taste of success

Product sampling can boost market penetration for store brand items, according to Susan Porjes, analyst with the Packaged Facts division of Rockville, Md.-based MarketResearch.com and author of its October 2012 report, "Frozen Foods in the U.S."

"The single best thing private label marketers can do to drive sales is [to] sample their products in stores," she says. "Tasting is believing."

Pretzel manufacturer Auntie Anne's Inc. is a firm believer that product sampling and product perception are everything. City Line Foods Manufacturing Co., a division of Lancaster, Pa.-based Auntie Anne's, offers gourmet soft pretzel products for private labeling. Phil Lapp, director of corporate sales for City Line Foods, says once consumers try it, they tend to buy it.

Another critical facet to heating up sales in the frozen snack category involves altering the perception that the products are solely "snack" items. Porjes explains frozen appetizers can provide a nice alternative to a hearty lunch or dinner.

"Appetizers/snacks that can be turned into mini-meals will be winners, if they are affordable," she says.

Jeff Gehres, director of sales and product development for Holland, Mich.-based Request Foods Inc., notes that his company has been positioning its meatball appetizers as a meal replacement.

"The private label customer that we produce for has been working on promoting our barbecue meatballs in sub sandwiches to try to get more business year-round," Gehres explains. "The Swedish meatballs are also used over pasta, and the sweet and sour meatballs over rice. This gets the products out of the appetizer arena and used as a main entrée to drive business year-round."

Additionally, retailers need to roll out products that are lower in sodium, fat and calories to lure more health-conscious consumers into the market, as well as those consumers over 50 who are less likely to buy frozen snacks and appetizers. Stealth health can bring a lot of wealth in the long run, says Dobre-Chastain.

"While households with children remain important [in this market], older consumers need to be reached, as this demographic is forecast to grow at a much higher rate than other age groups, mainly driven by baby boomers getting older," she explains. "Additionally, Hispanics are the fastest-growing ethnic group and Asians are the fastest-growing racial group. Creating authentic ethnic food that suits the tastes of these groups is a strategy that could prove lucrative."

Do sample store brand frozen snacks and appetizers in store.

Make products more exotic

Noorudin Jiwani, president of Edmonton, Alberta-based Aliya's Foods Ltd., says his company has found success with the ethnic market. Retailers, however, need to be careful how they position these products.

"Don't segregate ethnic foods from the mainstream, as most of the ethnic foods are now mainstream," he says. "An appetizer that is flavorful and with a bit of a different spice rather than the regular, that is exotic."

Teri Valentine, CEO of Glendale, Calif.-based The Perfect Bite Co., suggests that the robust performance of more exotic foods reflects a sign of the times.

"Ethnic foods like Moroccan, Indian [and] Middle Eastern influences are doing well [in this market]," she says.

Although ethnic snacks and appetizers have grown in popularity, their appeal depends on where consumers live.

"The trend is to address your own customer and region rather than knocking off a national brand," Valentine says. "Consumers are more likely to try an Indian Samosa rather than committing to an entire Indian meal if it's new to them. Ethnic that is worldly is hot right now, but my clients in the Northeast are still thinking Mexican is new, so trends are very regional."

Although most frozen snacks and appetizers are consumed in the afternoon and evening, positioning these products as an everyday snack also can help retailers bolster sales.

"Trader Joe's selling frozen appetizers all year has led competitors to rethink the idea," Valentine notes. "Consumers are eating smaller amounts of food more often, which would explain small-bite sales as well."

But don't make it complicated, Benso suggests.

"We are an instant gratification society, so convenience and fast are the key points," he adds. "Quick microwaveable snacks/appetizers fit the criteria."

As for packaging, Porjes says resealable packages are musts.

And on the marketing front, Valentine notes that nothing works better than telling the story of each product or product line.

"Consumers want to know more about what they are buying and how they can serve it at home," Valentine explains. "Newsletters or in-store magazines [can help] to tell the story. Store websites and QR codes are also becoming popular ways to spread the news."

To fire up sales in the frozen snack and appetizer category, retailers and private label manufacturers must use every tool available to target core consumers and attract new ones.

Don't miss the opportunity to suggest consumption occasions beyond the traditional — merchandise frozen snacks and appetizers as meals solutions also.

Look what's new

New from Whole Foods Market, Austin, Texas, are Whole Foods Market Indian Cuisine Potato and Pea Samosas. The petite wheat pastries are said to be filled with a mixture of potatoes and green peas slow-roasted in a blend of Southeast Asian herbs and spices. They retail in a 7.5-oz. box containing eight pieces.

Daily Chef Chicken, Spinach and Artichoke Bruschetta from Sam's Club, Bentonville, Ark., consists of chicken breast with rib meat, seasoned cheese sauce, cheese, spinach and artichokes on toasted bread. This gourmet appetizer is said to be easy to prepare and features a creamy parmesan and Romano sauce. The product retails in a 32-oz. box containing 32 pieces.

Source: Mintel's Global New Products Database