Take The Chill Off Frozens

Sales of frozen meals and entrées might be off, but retailers can light a fire by investing in unique, high-quality products, with a focus on multi-serve options.

It's been widely reported that cash-strapped consumers have been eating out less often during the past couple of years — and have been looking to food retailers for "meal solutions." That might be the case, but it doesn't look as though they are spending those extra retail dollars on frozen meals and entrées. Data from The Nielsen Co., New York, show dollar and unit sales declines of 13.6 percent and 13.1 percent, respectively, in the total U.S. frozen dinner segment during the 52 weeks ending Feb. 19 (food, drug and mass merchandiser stores, including Walmart). Many of the total frozen entrée subcategories also posted declines. (See the table, p. 32.)

According to "Frozen Meals — US," a September 2010 report from global market research firm Mintel International, shoppers might be opting for prepared supermarket meals and shelf-stable meals and meal kits instead, believing that they are somehow superior in quality to frozen options.

"Although frozen meals have evolved significantly from 'TV dinner' days, it appears that this perception may be holding the category back," the report states. "Manufacturers have been fighting this negative image by developing premium lines of meals and cobranding with popular restaurant chains."

Single-serve frozen meals remain the largest part of the segment, but Mintel points to growth opportunities for multi-serve frozen meals. The company notes that the multi-serve frozen meals subsegment has been the only one to post overall sales gains since 2008. Frozen pot pies, meanwhile, have seen significant sales drops since 2008, and Mintel expects that trend to continue.

For their part, store brands accounted for only a 3.3 percent share across U.S. food, drug and mass merchandise outlets in the 2009-2010 timeframe, Mintel says. Here, perception still appears to be a challenge, with only 43 percent of consumers agreeing — and only 14 percent strongly agreeing — that store brand frozen meals are as good as their national brand counterparts.

Uniqueness counts

Retailers that want to capture a greater share of the store brand frozen meal and entrée segment — and increase overall sales here as well — should bear in mind the unique wants and needs of today's consumers during the product development/ procurement process.

"We're seeing that consumers are looking for better options — not necessarily diet, but something that tastes great that you don't feel guilty about," says Nancy Ragozzino, president of Meriden, Conn.-based Ragozzino Foods Inc. "For instance, in our case, a whole grain pasta coupled with a lower-fat alfredo sauce."

She adds that retailers still put too much emphasis on national brand knockoffs instead of unique items. That mindset really limits the manufacturer, which often can get to a better price with a better-tasting item that doesn't mimic the national brand's flavor profile.

Speaking of taste, it must be consistent with consumer expectations, stresses Moe Cheramie, vice president of sales and marketing and part-owner of International Frozen Foods LLC, Great Falls, Va. And he notes that retailers now offer little on the frozen side in terms of diversity, with Italian and Asian accounting for the bulk of store brand items. Retailers could and should, therefore, expand in terms of ethnic variety, with Cajun/Creole, Tex-Mex and more all presenting opportunity — particularly in the meal kits subsegment, where his company competes.

Michael Jewett, director of sales for Harvest Food Group, Warrenville, Ill., expects comfort foods such as macaroni and cheese, meatloaf and stew to continue to grow within the category in the years to come. But he believes that easy one-step preparation also will be important to convenience-seeking consumers.

"Multiple bags within a bag that ask the consumer to perform multiple steps are going to be products of the past," he contends.

A dose of innovation also could help retailers infuse excitement into declining subsegments such as frozen pot pies and quiches.

David Hendin, director of business development for Les Cuisines Rochette, Quebec, says his company has been working to meet customer demands for more healthful, family-sized frozen pies/quiche. In fact, it designed a full range of pies with no top crust, providing more value, more protein and more vegetables to the consumer.

"For many years, we have been providing the Canadian market with frozen deep dish pies to feed families, not single-serve [versions], and we are now seeing this size become popular in expanding markets, including the U.S.," he says.

To help build interest in meal-minded store brand frozen pies, retailers also might want to invest in premium-type products and think outside of just chicken and beef for the main ingredients, Hendin says.

"Perhaps veal; a selection of toppings such as cauliflower or roasted potato; [or] frittata, not simply quiche," he suggests. "If retailers build an image to their customer of a better meal and still keep their pricing competitive, both the retailer and the consumer win."

It's in the bag

Right now, single-serve steamable meals are popular for brown bagging it at lunchtime, Jewett notes.

David Brown, director of retail sales for Siloam Springs, Ark.-based Allens Inc., agrees, noting that steam technology started within the frozen vegetables segment but now is breathing new life into bagged frozen entrées.

"It's very quick, and it's sustainable," he says. "You cook in the bag; you don't use a lot of pots. … You put it into the microwave for five minutes and you're done — you pour it out of the bag and throw the bag in the recycle bin."

Steam technology also is more economical and less wasteful for the retailer, Brown adds, usually calling for a poly bag instead of a tray-inside-a-box alternative.

"The challenge has been displaying it on the shelf," he notes, "but we've gotten the packaging down so it's space-oriented and they can even get more on the shelf now."

Inside or outside the steamable space, bags' appeal — particularly for multi-serve meals — is expected only to grow.

"Frozen bagged meals and side dishes are becoming the standard," Jewett says. "Watch the boxed meals and side dishes decline over time. Also driving this trend is the reduction of packaging and waste. As we become greener here in the United States, this will force more and more products into a bag for delivery to the consumer."

Draw them in

Unique, on-trend store brand frozen meals and entrées make for a great start. But retailers still need to get shoppers to notice them. Cheramie believes the store banner name represents a bigger draw on the package than a branding approach that mimics the national brands'.

"Their reputation is at stake; people view it as something better when their name is on it," he contends. "But the quality better be there."

Choice is important, but too many store brand options might confuse consumers — and eventually will necessitate SKU reductions, Jewett notes.

"My suggestion would be to have a core line and offer limited-time flavor[s] on a quarterly basis," he says.

Shelf talkers allow store brand meals and entrées to stand out in the freezercase, Cheramie notes. To achieve the best results, he encourages retailers to place the national brands at eye level and position the store brand items above them.

But don't limit store brand merchandising to just the freezercase, Allens' Brown advises.

Display the products off-shelf — in a separate end-cap freezer — whenever possible. Store brand frozen entrées even could be cross-merchandised with store brand frozen vegetables and side dishes for complete meal solutions.

Finally, retailers that truly seize the opportunity to grow store brand share and the total category will win.

"I think it's going to be survival of the fittest as far as who can stay and compete with the national brands," Cheramie says. "The retailers really have to listen to what consumers want, and consumers want diversity and quality. And they don't want to add their own protein if they can avoid it."

Ragozzino adds that more and more consumers actually are beginning to view some retailers' store brands as the premier brands, noting that her company packs for two retailers that really shine in this space.

"What we produce for them are certainly [of] better-quality than branded products," she stresses.

Do develop unique — and diverse — frozen meals and entrées instead of just mimicking the national brands.

Don't be afraid to think outside the box in terms of packaging, adopting less-wasteful poly bags.

Do consider the addition of healthier family-sized pies to add interest and excitement to the declining pot pie/quiche subsegment.

Don't go overboard when it comes to choices — consider rotating some flavors/varieties on a seasonal basis.

Look What's New

New from Fresh & Easy Neighborhood Market of El Segundo, Calif., is fresh&easy Eatwell Kung Pao Chicken. The frozen dish tops rice with white chicken and peanuts mixed in a spicy soy-sesame sauce. In keeping with consumers' desire for simpler ingredient statements, the microwavable single-serve product is said to contain no artificial flavors, colors or preservatives and retails in a 9.5-oz. pack.

The President's Choice Dine-In Tonight Roasted Chicken in Red Wine Reduction "entreé for two" from Brampton, Ontario-based Loblaw Companies is said to include two roasted, seasoned chicken breasts in a red wine and shallot reduction and a side of roasted garlic and thyme red-skinned mashed potatoes. This frozen product is conventional or microwave ovenable and retails in a 680g pack. Also new under the upscale brand are Creamy Tarragon Pan Seared Chicken, Creamy Dijon Roasted Pork, Slow Cooked Beef Bourguignon and more.

Promising a "rich Pomodoro sauce," the Priano Meatball Rigatoni family-sized pasta meal from Batavia, Ill.-based ALDI Inc. is said to serve a family of four. The microwavable frozen product retails in a recyclable 32-oz. pack and also is available in an Italian Sausage Rigatoni variety.

Trader Joe's gives a healthful new spin to a comfort food favorite, introducing Trader Joe's Reduced Guilt Mac & Cheese. The frozen microwavable entreé is said to contain 65 percent less fat and 25 percent fewer calories than the retailer's "regular" mac & cheese. It retails in a single-serve 7-oz. pack.

OK, it's refrigerated, not frozen, but Walmart Indian Butter Chicken from Mississauga, Ontario-based Walmart Canada meets growing consumer interest in both chilled offerings and Indian fare. The entreé features fully cooked boneless chicken breast slices in a rich, mild tomato curry sauce. It can be served over rice or with another side dish. This microwavable product retails in a 400g pack. Also new to the retailer's refrigerated meal lineup are Walmart Chinese General Tao Chicken and Walmart Italian Chicken Cacciatore.

Source: Mintel's Global New Products Database