At Central Market in Houston, a frozen Stouffer's tuna casserole shares shelf space with an Amy's Kitchen organic vegetable potpie. Sure the placement is eclectic, but it makes the folks at Amy's happy. It's just one sign the frozen organic and natural foods industry has grown up and can compete with the mainstream players.

The rapidly growing organic frozen food category gives natural foods retailers more product choices, allowing for a well-stocked and diverse freezer case. But it also requires retailers to give more thought to their product mix, as manufacturers clamor to place their frozen organic peaches next to the all-natural frozen enchiladas.

Don't expect this trend to change anytime soon. According to Nutrition Business Journal, sales of natural and organic frozen entrees—everything from pizza to peas—have grown 10 percent to 14 percent each year since 1997. Consumer sales for the category totaled $380 million in 2001. Sales are split between the natural foods and grocery channel, with more growth in supermarkets.

Cold Competition
Although organic and natural frozen food sales make up less than 6 percent of the $6.5 billion frozen prepared foods market in the United States, growth forecasts call for natural and organic frozen entrée sales to remain in the double digits. This is leading to a growing number of new competitors in the frozen food category. At Wild Oats Markets Inc., the frozen food buyer gets an average of three requests a day from manufacturers trying to place products in the Boulder, Colo.-based chain's already packed freezer cases, spokeswoman Sonja Tuitele says.

Established manufacturers such as Amy's Kitchen and Cascadian Farm aren't overly concerned by the new competition. Santa Rosa, Calif.-based Amy's Kitchen had 19 of the top 20 best-selling natural/organic prepared frozen foods in mass and natural retail channels in 2001, President Andy Berliner says. According to the company's distributor data, Amy's Kitchen is the leading brand of frozen prepared organic/natural meals in the natural retail category, with 29 percent growth in 2001 and 43 percent dollar share, up from 41 percent in 2000. Berliner anticipates "maybe a few more years at 20 percent to 30 percent growth." Sedro-Wooley, Wash.-based Cascadian Farm is Amy's closest competitor, followed by Cedarlane Natural Foods in Carson, Calif., according to NBJ.

At Central Market, the seven-store gourmet natural foods chain in Texas owned by San Antonio-based H.E. Butts Grocery, Food Service Director David Hamilton reports Amy's frozen items are its best sellers in the "healthy food" category, followed by Cascadian Farm products and Van's All Natural Waffles. Fruits and vegetables are the top-selling frozen food category, he says. At Wild Oats, the best-selling category is frozen bread, particularly Ezekiel's sprouted grain bread, Tuitele says. Frozen fruits and vegetables finish in second place. At Harvest Organic Foods and Café in Jackson, Wyo., Ezekiel bread is the top frozen foods seller, followed by whole-wheat tortillas and juices, co-owner Sophia Wakefield says.

Categories that don't perform well for Wild Oats are frozen dough, breakfasts and desserts, Tuitele says. "Historically, they have been hard to get a hold of. We're really focusing on building those categories."

Amy's Kitchen and Cascadian Farm concentrate almost exclusively on the organic market, as does organic soy burger manufacturer Sunrich (Hearty & Natural). But natural frozen food manufacturers such as Cedarlane are also introducing organic items. San Carlos, Calif.-based Imagine Foods sells Imagine Natural Stuffed Sandwiches containing organic ingredients. Worthington (owned by Kellogg) manufactures organic Natural Touch frozen entrees, and Celentano Food Products, based in Verona, N.J., also offers frozen organic products, as does Kraft's Boca Burger.

Organics Vs. Naturals
Amy's Berliner doesn't break the competition down into organic and natural products. "Since we are the category manager, we look at it all as competition," he says. John De Paolis, marketing guy for Small Planet Foods, which produces the Cascadian Farm frozen food line, says once the U.S. Department of Agriculture organic standards go into effect Oct. 21, the debate over organic versus natural frozen foods will be moot.

"All natural is not going to stand for much anymore. There's going to be consumer confusion as to what natural is, since it won't be defined like organics. People are either going to choose organic or non-organic. All natural is going to be no-man's land."

At Wild Oats, a typical freezer case product mix is 40 percent organic and 60 percent natural, Tuitele says. In comparison, the produce department mix is 70 percent organic and 30 percent nonorganic. At Central Market, the mix is roughly 30 percent to 40 percent mainstream frozen food, 30 percent to 40 percent natural and 12 percent to 15 percent organic, Hamilton says.

At smaller stores, such as the 2,000-square-foot Harvest Organic Foods, "our freezer is so small that we don't have the luxury of dividing it into organic and natural," Wakefield says. Instead, the three-door freezer case is stocked according to top-selling natural and organic brands in various frozen food categories.

Vicky Uhland is a Denver freelance writer who can be reached at [email protected].

Natural Foods Merchandiser volume XXIII/number 10/p. 48, 52

Natural Foods Merchandiser volume XXIII/number 10/p. 52