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Good news: How recession led to frozen food sales boom

12 July 2011

According to Frozen Foods 2010, a new Market Report from market intelligence provider Key Note, frozen foods has seen a boom recently thanks to the recession pressurising consumers into choosing cheaper fare for their tables in order to cut grocery bills

The market has grown to a value of £5.29bn in 2010, which is a 3.6% rise on 2009 and shows growth of 17.6% over Key Note’s review period, which began in 2006. Prior to this, sales of frozen foods had been falling, with the freezer aisles in supermarkets gradually seeing less and less traffic.

However, thanks to tough economic times, frozen is back in fashion due to it being cheaper than its fresh and chilled counterparts and the fact that it offers a low-waste option for consumers suffering in the current economic situation.

Though part of the growth can be attributed to the rising cost of food-price inflation, which grew at the fastest level for almost two years in the year ending May 2011, volume sales across nearly all sectors are on the up.

Showing particularly strong growth in 2009 and 2010 was the frozen pizzas category, turned to as a convenient option due to its long storage time in a home freezer and also as a cheaper alternative to take-away and restaurant pizzas during a period where consumer expenditure on restaurants was falling.

Also showing strong growth in the face of the recession was the frozen fruit and vegetables category, which has been working hard of late to shed its image of being ‘unhealthy’ and ‘dated’ and re-educating consumers regarding the quality and benefits of the product, even extrapolating that frozen is better than fresh in terms of fruit and vegetables because its nature means that it is frozen quickly after picking and therefore has had its nutrients ‘locked in’.

The frozen ready meals sector has fallen victim to deep discounting and has been overrun with promotional activity, which has forced down the price of the sector even as volume sales grow, thanks to deals such as ‘buy-one-get-one-free’.

However, a convenience sector that has seen growth is that of frozen cakes and desserts; although this sector has not increased massively up to 2010, it has been rising in value thanks to the growing popularity of frozen desserts as a quick and easy option for family eating or for formal dinner situations over homemade items.

For the future, Key Note is predicting growth in the market until at least 2015, when the market will reach £6.04bn thanks to the two-pronged effects of both food-price inflation and an increasing consumer base brought about by a struggling economy.

With innovations to improve the taste and appearance of frozen foods being such a main part of this sector and likely to continue to be so in the future, the aim of the industry appears to be that, once consumers have been enticed in due to financial pressures, they may stay due to the new ideas and approaches that the sector has offered of late.

Consumer education is another weapon in the industry’s arsenal — in the future, companies are likely to continue the rush of information that they dish out to consumers in order to better inform them about the sector and about facts such as frozen foods being considered as good as fresh.

This is necessary; an exclusive survey commissioned by Key Note from NEMS Market Research asked 1,000 adults aged 16 and over a selection of questions to determine their beliefs with regards to frozen foods — though 83.6% of the respondents were aware that frozen fruit and vegetables counted as one of their five portions per day, over a third believed that frozen fruit and vegetables, frozen meats and frozen fish were less healthy than their fresh counterparts.

Worryingly for the industry, nearly three-quarters of those asked believed that fresh food still tasted better than frozen despite improvements over the years, which will give the industry something to consider in the future.

Further trends for the future will be dominated by food-price inflation and rising prices, thanks to increases in commodity prices and a rising population around the world putting pressure on food supplies.

The revival of the frozen sector may not be rapid due to the economy beginning its slow climb to recovery, but this will not be enough to force the sector back into a decline and record market lows akin to those seen at the beginning of the last decade.

Educating the consumer will be a key strategy for the industry; survival at its current volume rate will hinge largely on the way in which companies promote their wares to consumers in the months and years to come.

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