|
Frozen is once again melting consumers' hearts. Having been in the doldrums for the past few years, sales of frozen products have been titanic over in the past 12 months.
Seven out of the nine key frozen sectors are in growth, with three - fish, meat & poultry and potato products - up by more than 9% compared with the previous year [TNS Worldpanel, Dec 07].
Of the two in decline, ice cream's sales were hit by last year's wet summer and are expected to return to form in 2008, while frozen ready meals have continued their long-term decline as retailers push sexier, higher-value chilled products.
Manufacturers are understandably upbeat about the fortunes of frozen.
"The growth has been led by an improved understanding from brands about what consumers look for from frozen foods and the role it can play in their life," says Ian McCarthy, marketing manager for WeightWatchers from Heinz.
Retailers are stocking more premium lines and there have been significantly fewer promotions, driving value back into a sector hit hard by repeated bogofs and price cutting.
Another key factor, according to Brian Young, director general of the British Frozen Food Federation, is that retailers have worked hard at improving availability.
"One of the bizarre things," he says, "was that, even though the market wasn't doing very well, if you went into a store on a Saturday afternoon the frozen cabinets were almost empty."
"This has been about backroom management within supermarkets themselves. It's a cold place and you've got people on minimum wage asked to find stock. Fortunately, all the retailers are getting better at managing the logistics of the frozen sector."
Another factor that has helped has been the resurgence of Iceland. After several years in the doldrums the chain has been rejuvenated under the leadership of Malcolm Walker. It has gone back to basics, repositioned its products, reduced the number of lines and provided better choice with clear differentiation - as well as launching strong new products. "Iceland is including higher price ticket items," explains Young. "It's done an excellent job at turning around its fortunes."
Big brands have also had something to shout about. Birds Eye, McCain, Heinz, Young's and Aunt Bessie's have improved their market positions off the back of consumer education, targeted advertising and consistent NPD.
The frozen pizza market has also grown, with significant activity from brands such as Schwan's, Dr Oetker and Goodfella's, while own label continues to offer serious competition with new varieties, different bases and increased convenience.
The fortunes of the category have previously been tied in with how consumers perceive it: cheap, lacking in innovation and not as fresh as chilled. "It's a misperception," says John Hendy, commercial director at Tryton Foods, which owns the Aunt Bessie's brand. "Frozen is the best way of getting food to the table, although this is often not realised because we have had sectors in the past which have been heavily processed."
He says there is now a move to getting consumers to understand that frozen is fresher and that products in categories such as fish, potatoes and vegetables have no additives or preservatives.
Health is a big factor affecting the growth of frozen fish. Seafood is perceived as a healthy product and government recommendations that consumers should be eating two portions of fish a week are starting to get through.
"It's not as high profile as the 5-a-day fruit and veg message," says Hugh Taylor, Young's category development controller, "but consumers are starting to pick up on it and it is something we flag up on our packs."
"Frozen is taking on a new meaning," says Hendy. "It will be interesting over the next couple of years to see people's realisation about the value of frozen food and the good quality it provides. Apart from being convenient, it represents great value."
Natural fish is one area where consumers are switching from chilled to frozen for things such as cod, haddock or salmon fillets. Young's has brought in new species, particularly premium lines such as sea bass, sardines and basa.
"You can get a similar breadth in frozen as you'd get in chilled," says Taylor. "Even speciality products like scallops, which were once seen as aspirational, are more within reach and add value to the sector."
Innovation has been a key theme for Birds Eye, which launched Omega-3 Fish Fingers, made from 100% Alaskan pollock fillet sourced from a Marine Stewardship Council certified fishery in order to protect declining stocks of cod worldwide.
"Sustainability is an important concern for the fish industry and consumers too," said a company spokesperson. The brand has backed the launch with a £7.5m campaign.
While sales of fish and added-value fish products have performed well, another key growth area has been potato products, which has enjoyed significant value growth driven by McCain's promotional activity and innovative product launches. "Consumers are looking for simple solutions and the frozen potato sector offers just that: a wide range of products in a variety of flavours that are easy to cook," says Alan Castle, head of customer marketing for retail at McCain.
Health factors have also helped bolster sales of frozen potato products: McCain, for example, makes a big play of its 'less than 5%' on-pack claim. "The success of our Rustics sub brand, which includes McCain Rustic Oven Chips, highlights the demand for 'healthier' products in the frozen sector," adds Castle.
You might expect frozen desserts brands to be following the success curve of other segments, however the announcement of Gü pulling out of the sector, as MB&R went to press, may cause ripples of concern. The brand gave few reasons, instead choosing to focus on the future: "2008 will see the Gü/Frü brand focusing its attention on the chilled pudding category with a strategic departure from the frozen sector."n
CATEGORY INSIGHT:?FROZEN PIZZA
Pizza brands benefited from 2007's terrible summer, when consumers curled up indoors with a slice or two
Ice cream's misfortune was pizza's blessing, as last year's poor summer scuppered the barbecue season and forced consumers to party inside with convenient alternatives.
Out of the key frozen sectors, the fastest year-on-year volume growth was in frozen pizzas at 6.7%, while value growth rose 4.2% [TNS Worldpanel, Dec '07]. Frozen pizza is a competitive marketplace - a dynamic which is helping fuel a constant NPD.
Schwan's new launches include a tomato-sauce filled crust option in its Takeaway range - and a re-development of its 13cm Deep Dish and Thin and Crispy ranges.
Consumer interest in healthier products has extended into frozen pizza. Chicago Town, for example, is now free from hydrogenated fat, artificial colours and has reduced salt content.
Dr Oetker's £31m Ristorante range includes its Mozzarella and Speciale (pepperoni, ham and mushroom) varieties which are the UK's best selling thin and crispy frozen pizza lines. The brand's 2008 marketing campaign will include £2m of TV activity, which kicked off with a new ad last month.
"Our objective is to educate shoppers that frozen pizza can taste just as good if not better than chilled while encouraging those who already buy in the frozen aisle to try our products," says Caroline Donnelly, Dr Oetker's senior brand manager.
Meanwhile, at £105m, sales of Goodfella's topped £100m for the first time last year. With growth of 32% year-on-year, Goodfella's has a 31% value share of the category.
With a key growth area in frozen being the rise of 'just for me' occasions, Goodfella's Solos brand has climbed to a value of £17.5m and has a 20% share.
David Wilson, Goodfella's senior brand manager, believes the category will see more convenient and handheld products over the coming year. "The category can also expect to see more exciting bases, with cues taken from artisan bread trends, such as cheese/garlic/herb," says Wilson. "Exotic ingredients and toppings will feature (in line with current food trends and flavours such as Mexican) as well as different shapes and sizes."
CATEGORY INSIGHT:?MERCHANDISING
The sector is trying to address the challenge of creating an engaging atmosphere in-store for shoppers
Retailers and suppliers are working hard to create a 'warmer' environment for shoppers, with upright freezers, improved packaging graphics and increased theatre.
"Clogged-up freezers and misty cabinets often categorise the frozen aisle, making it a cold and uninviting place to linger," says David Wilson, Goodfella's senior brand manager. He says more activity executed in store could encourage shoppers to take a look in the freezers - especially those who don't usually venture down the frozen aisles.
Birds Eye is working with retailers to ensure products are presented in the best way. This involves working closely with customers to provide recommendations on range, space and flow. An important part of this is finding ways to minimise the risk of out of stocks while providing the right level of choice for shoppers.
The use of 'hot spot' features could be used to pull people into the aisle.
"The challenge is to create some theatre in the aisles but that is always difficult given the constraints of the cabinets," says Hugh Taylor, Young's category development controller. He believes packaging has a big role to play in catching people's eye, but there's still a missed opportunity in getting more visual impact around the cabinets.
"The category tends to rely on packaging to do that job," he says. "We could use promotions to target chilled category consumers and make them aware of the ranges available within frozen."
John Hendy, Tryton Foods' commercial director, says things are beginning to change. "One of the reasons is the improvement in pack graphics. It's really helped stand-out and has improved the representation of the food.
"Freezer door graphics are also getting better - even if they're just signposting at the moment. I still think there's a further step to go and that's using real photography to show great quality food shots at POS."
Ian McCarthy, marketing manager for WWfH, believes work could be done before consumers even get to the store. "Brand communication is important to let consumers know there's something down the frozen aisle, to give them a reason to go there and browse," he says.
what the suppliers are saying
Consumers in the UK are currently looking for health, but they're also looking for indulgence. So you've got these two drivers at opposite ends of the spectrum, which retailers as well as suppliers need to address. WeightWatchers from Heinz is the only diet brand in the market delivering tasty food in a calorie-controlled manner. We also need to deliver rich, wholesome tastes, which is why a lot of our innovation has been around premium SKUs that can be defining products in our range. This premiumisation is helping change the perception that frozen is down-market or heavily traded.
Ian McCarthy,
marketing manager, WeightWatchers from Heinz
what the suppliers are saying
"All the retailers are prepared to invest in more premium products and it will be the quality of the top end of the ranges that will bring people back in. There are some misperceptions about shopping in store: walking around a chilled area is colder than frozen, where sealed cabinets keep the cold air in. What will continue to drive market growth is new products and better quality products coming in, like cook-from-frozen joints and fruit. In terms of theatre, it is quite hard: freezers are freezers. There can be improvements in pack design and a lot of that is already going on. I think a bigger prize for retailers in terms of sales is working hard at further improving availability."
Brian Young,
director general, British Frozen Food Federation
Has the number of customer complaints about the price of goods increased recently?
