From The Spring 2004 Issue of Natural Grocery Buyer

Frozen Food Sales Still Red Hot

Lynn Ginsburg

Busy Americans who want their food both fast and healthy are increasingly making a meal out of natural frozen entrées. SPINS, a San Francisco-based natural products research firm, reports in ScanTrack, its research with ACNielsen, that natural frozen entrées, pizzas and convenience foods rang up an estimated $350 million in sales in 2003. Of that, $224 million was spent in mainstream grocery stores. The biggest growth in frozen meal sales is in the mainstream channel, with a growth rate of 9.9 percent, as opposed to a 4 percent growth rate in natural foods stores.

Bea James, whole-health manager for Lunds and Byerly’s, says that frozen meals are one of the biggest growth areas in the stores’ natural and organic foods program. Both of the upscale, Minneapolis-based grocery store chains have been under the Lund Food Holdings umbrella since 1997. “We’re currently experiencing 12 to 15 percent growth in natural frozen meals, in part due to … new item introduction[s], education and promotions,” James says.

According to David Browne, director of operations and content development at SPINS, the most popular frozen entrées in mainstream stores are those that are most familiar to consumers. “The most successful are the most accessible—like frozen pizzas and Italian entrées,” Browne explains, “whereas in the naturals channel, the more ethnically diverse entrées are doing well. But if you’re shopping in a mainstream supermarket and have a choice of an Indian entrée vs. pizzas, at this point pizzas are way outselling the Indian entrées.”

Browne also says that organic continues to be a big selling point for mainstream consumers. “Organic frozen entrées are absolutely outpacing the growth of nonorganic,” he says. “In general, if you take a natural category that’s growing well, and break out just organic sales, the growth is often 50 percent greater—or double that—over nonorganic items.”

Although there are now quite a few companies competing in the natural frozen entrées market, Browne says the clear leader in sales continues to be Amy’s Kitchen. “Amy’s dominates the category in both mainstream and naturals channels, and has for years,” Browne says. “Right now they’re experiencing better growth in the mainstream channel, where they have more room to expand.”

Steve Warnert, director of sales and marketing at Amy’s, projects the company will continue to grow 15 percent to 20 percent over the next several years. “We attribute our growth to several factors, including more and better-quality products coming to market, rapidly increasing consumer awareness brought on by the popular ‘super’ natural foods stores, mainstream supermarket operators becoming more effective at how they communicate and merchandise natural and organic foods, and more space being devoted to both of these categories within mainstream stores,” Warnert says.

James, of Lunds and Byerly’s, says her stores carry a variety of natural frozen meal brands, including Cascadian Farm, Cedarlane, Deep Foods, Ian’s and Taj Gourmet. “But our best seller is Amy’s by a landslide, and our best-selling types are pizza, enchiladas and Indian food,” she says. “We also use special signage and two promotions a year to actually get the food into the customer’s mouth, so they know how good these products really are.”

Amy’s Warnert says that, in fact, one of the most important trends in natural frozen meals is toward a better-tasting product. “As more and more shoppers are turning their attention to better-for-you products, they will demand better flavor,” Warnert explains. “Additionally, products that offer solutions to diet restrictions [such as dairy free or gluten free] are becoming very popular.”

SPINS’ Browne concurs that special diets are an important driver for growth in the natural frozen meals market. “Low carbohydrates are the hot trend right now, but I haven’t seen a lot of entrées that are marketed at that, although Cedarlane [is] introducing a couple of new ones,” Browne says.

“I think obviously the biggest reason behind the popularity of natural frozen meals is that there’s an overall desire for Americans to be consuming more natural products,” Browne says. “With GMO issues in the news, as well as mad cow, there’s more of a desire to buy cleaner products. And it’s not just mainstream converting to natural—you’ll also find that more naturals consumers are also shopping and purchasing natural frozen meals at conventional outlets.”

Lynn Ginsburg is a free-lance writer based in Boulder, Colo., and co-author of What Are You Hungry For? Women, Food and Spirituality (St. Martin’s Press, 2002). For more information, check out www.whatareyouhungryfor.net.