Frozen Food: Opportunities and Challenges for Retailers

Frozen food is a staple in the kitchens and pantries of families and individuals nowadays. From frozen desserts and treats to meats and vegetables to full meals, these are frozen foods that are consumed by many. They have integrated into the lives of people, especially in the midst of the pandemic, because of their convenience and their palatability. This presents a great opportunity for retailers such as supermarkets, grocery stores, and convenience stores. However, it also leads to unique challenges for retailers.

Frozen food refers to food items that have been subjected to rapid freezing to preserve their freshness, nutritional value, texture, and taste for extended periods of time. This method of preservation slows down the decomposition process by converting the water content or moisture of the food into ice, which inhibits the growth of most bacterial species.

Frozen food can come in various forms and preparations. Examples of frozen foods include:

• Frozen food vegetables such as peas, carrots, broccoli, spinach, and other vegetable medleys
• Frozen fruits such as berries (strawberries, blueberries, raspberries), mango chunks, pineapple, and mixed fruit medleys
• Frozen meats and seafood such as chicken breasts and parts, ground beef, various beef and pork cuts, fish fillets (salmon, cod), shrimp
• Frozen prepared meals such as frozen pizzas, lasagna, burritos, frozen food dinners (TV dinners), meal preps, rice meals, noodles, and more
• Frozen breakfast foods and items such as waffles, pancakes, breakfast sandwiches, and hash browns
• Frozen bread and baked goods like bread loaves, bagels, croissants, muffins
• Frozen dairy products like ice cream, frozen yogurt, cheese (sometimes shredded or in blocks), butter
• Frozen snacks and appetizers such as French fries, mozzarella sticks, chicken nuggets, hotdogs, and spring rolls
• Other frozen processed foods and ready-made meals

These frozen food items can be added as ingredients to cooked meals, snacks, and other food preparations. They can also be eaten as-is, especially those that are considered ready-made meals. Frozen food provides convenience to different kinds of people nowadays. Interestingly, they can also be a practical option for reducing food waste and maintaining a supply of various food items for extended periods of time.

According to CivicScience, 60% of American adults say they turn to a frozen meal at least once a week, and 45% eat between one and two times in 2023. Statista also reports that frozen novelties (ice creams, pizza, and more) were the best-selling frozen food items in the United States in 2022, with about 1.6 billion U.S. dollars in sales. Younger consumers, such as Gen Z adults, were also reported as more favorable to frozen food, with 80% of them consuming at least one frozen meal a week.

The pandemic also happens to be a big driving force behind significant frozen food sales. More people turned to frozen foods as they isolated themselves and limited their errands and tasks in public. These frozen foods are convenient for small families and individuals who mostly stay inside, while studying and working remotely.

The demand for Asian and global tastes is also propelling the frozen food market. According to the Future of Frozen Food 2024 Report from Conagra, Asian-inspired products and food items such as dumplings and wontons grew by more than 375% in the last four years. Meanwhile, hot and spicy frozen food sales reached nearly $600 million in 2023, which is an 8% increase from the four-year average. It’s clear that customer preferences are growing and changing in the modern era. They’re looking for more diverse options, new tastes, and new kinds of food items that are easy to eat, tasty, and special.

This rise in frozen food sales presents new demand among consumers, and a good opportunity for retailers to serve their customers and larger communities. Retailers need to be ready to accommodate this booming market and its demographic. This doesn’t just mean the actual frozen food offerings, but the other retail elements as well, to ensure that they’re attracting the right customers and are boosting their frozen food selections to their potential.

Frozen food trends have evolved in recent years. They’re mostly driven by consumer preferences for convenience, health, sustainability, novelties, and innovative flavors. Here are some notable trends in the frozen food industry:

1. Healthy and Organic Options

• Organic Products: The demand for organic frozen food has grown significantly as consumers look for healthier options. These products often carry certifications, ensuring they meet organic farming standards. Examples include organic frozen berries, vegetables, and ready-to-eat meals that avoid synthetic pesticides and fertilizers.
• Clean Labels: Shoppers are increasingly scrutinizing ingredient lists, preferring products with simple, recognizable ingredients. Clean-label products avoid artificial preservatives, colors, and flavors, focusing on natural and minimally processed components. These labels are also necessary for clear allergen warnings, health restrictions, and more.
• Plant-Based Foods: Plant-based diets are on the rise, with more consumers opting for vegetarian and vegan options. This trend includes plant-based meats like frozen veggie burgers, meatless crumbles, and plant-based dairy alternatives like cashew-based frozen desserts and almond milk-based ice creams.

2. Global and Ethnic Flavors

• International Cuisine: Consumers are exploring diverse cuisines from around the world, reflected in the variety of frozen meals available. Popular options include Indian curries, Thai stir-fries, Mexican enchiladas, and Mediterranean falafel platters.
• Fusion Foods: Fusion frozen foods combine elements from different culinary traditions, offering unique and innovative flavors.

3. Premium and Gourmet Products

• Artisanal Quality: These products emphasize gourmet ingredients and sophisticated flavors, targeting consumers willing to pay more for a premium experience. Examples include hand-crafted frozen pastas, truffle mac and cheese, and artisanal gelato.
• Chef-Curated Meals: Collaborations with celebrity chefs or frozen food lines from renowned culinary experts bring exclusive recipes and high-quality meals to the frozen food aisle. These meals often feature unique flavor combinations and premium ingredients.

4. Convenience and Ready-to-Eat Meals

• Single-Serve Portions: Designed for quick and easy meal preparation, these products cater to single households or busy individuals. Single-serve portions often include microwaveable bowls, personal pizzas, individual entrees, and more.
• Microwaveable and Oven-Ready Options: These meals are designed for rapid preparation, making them ideal for time-constrained consumers. They include microwaveable grain bowls, oven-ready lasagnas, and steam-in-bag vegetables.

5. Sustainable and Eco-Friendly Packaging

• Recyclable and Compostable Materials: To reduce environmental impact, companies are using recyclable and compostable packaging materials. Examples include biodegradable trays, recyclable plastic bags, and compostable containers.

6. Functional Foods

• Nutrient-Rich Options: These products are fortified with vitamins, minerals, and other beneficial nutrients, targeting health-conscious consumers. Examples include frozen smoothies with added protein, fiber-rich veggie blends, and antioxidant-packed fruit mixes.
• Diet-Specific Products: Catering to specific dietary needs, these products include options like keto-friendly frozen meals, paleo frozen dinners, gluten-free pizzas, and low-carb frozen entrees.

7. Innovative Frozen Desserts

• Non-Dairy Ice Creams: With the rise of veganism and lactose intolerance awareness, non-dairy frozen desserts have become popular. Options include ice creams made from almond milk, coconut milk, and oat milk, available in various flavors.
• Exotic Flavors: Consumers seeking unique and adventurous tastes can find frozen desserts with flavors like matcha green tea, ube (purple yam), black sesame, and spicy chocolate.

8. Snackable Frozen Foods

• Bite-Sized Snacks: Convenient, bite-sized frozen snacks are perfect for quick, on-the-go consumption. Examples include mini quiches, stuffed pastries, and bite-sized empanadas.
• Healthy Snacks: Nutrient-dense frozen snacks cater to health-conscious consumers, offering options like smoothie bowls, frozen yogurt bars, and vegetable-based chips.

9. Meal Kits and DIY Cooking

• Frozen Meal Kits: Complete kits with pre-portioned ingredients allow consumers to prepare fresh meals at home. These kits often include all necessary components, from proteins and vegetables to sauces and spices, simplifying the cooking process for busy individuals and households.
• DIY Freezer Prep Kits: These kits enable consumers to prepare and freeze their own meals at home for future use. They often include recipes and pre-measured ingredients, making it easy to assemble and freeze meals like casseroles, soups, and stir-fries.

With the rising frozen food sales and new trends cropping up, retailers have numerous opportunities to capitalize on the growing demand in this particular food sector. If you run a supermarket, a grocery store, or even a convenience store, you have the chance to step up and cater to this sector.

Here are some key opportunities you can explore:

1. Expanding Product Variety. Offer a wider range of international and ethnic frozen foods to cater to adventurous eaters and multicultural communities. Develop and promote product lines tailored to specific diets, such as keto, paleo, gluten-free, and vegan options. Increase the availability of organic, low-calorie, and nutrient-dense frozen foods to attract health-conscious consumers.

2. Innovative Packaging Solutions. Invest in eco-friendly, recyclable, and compostable packaging to appeal to environmentally conscious shoppers. A lot of frozen food items are single-serve and use plastic packaging, and you need to make sure your products are more sustainable. Make sure to also use packaging that offers convenience, such as resealable bags, microwave-safe containers, and easy-to-open designs.

3. Private Label Products. If you have the means for it, develop private-label frozen food lines to offer unique, high-quality products at competitive prices. This can build brand loyalty and increase profit margins. Offer both premium and budget-friendly options to cater to a broad range of customers.

4. Enhanced In-Store Experience. Create specialized sections within the freezer aisle for specific categories, such as plant-based foods, gourmet meals, or international cuisine. Using digital price tags specifically for freezers and frozen food items also improves the customer experience. Newton Freezer labels, for example, are digital price tags made specifically for freezing environments. These digital price tags can be used to display prices and additional product information without being worn down, torn, or damaged by the extreme temperatures.

Of course, you can also offer in-store sampling and cooking demonstrations to introduce customers to new products and cooking techniques.

5. Online and Omnichannel Strategies. Expand the online catalog of frozen foods, making it easy for customers to shop from the comfort and safety of their homes. Digital price tags such as Newton ESL freezer labels would actually help with omnichannel retailing, as these digital labels can be integrated into inventory management systems and allow mobile payments for checkout. This creates a seamless experience for different kinds of customers shopping for frozen food items and more.

6. Partnerships and Collaborations. Partner with local farms and producers to offer locally sourced, seasonal frozen products. Not only does this boost the community, but it also impacts the food supply chain and the reduction of food waste.

7. Marketing and Promotions. Run promotions tied to seasons, holidays, and special events to drive sales of relevant frozen foods (e.g., summer BBQ packs, holiday meal kits). Promote the health benefits of frozen foods, highlighting nutrient preservation and convenience for healthy eating.

8. Consumer Education. Provide recipes, cooking tips, and meal planning ideas that incorporate frozen foods. This helps consumers understand how to use these products effectively. Highlight the nutritional benefits of frozen foods, dispelling myths about their inferiority compared to fresh foods.

9. Technological Integration. Invest in smart freezer technology that can track inventory, suggest recipes, and notify staff when products are nearing their expiration date. Develop mobile apps that offer personalized shopping experiences, including recipe suggestions based on purchased frozen foods. Invest in modern product labels or digital price tags, like the Newton ESL, to help customers make well-informed purchase decisions. This also helps streamline entire retail operations, as Newton ESLs as digital price tags are very easy to use and requires minimal staff training.

10. Focus on Convenience. Stock a variety of microwaveable and oven-ready meals that cater to busy lifestyles. Provide single-serve portions for individuals and small households. This reduces food waste and caters to on-the-go and busy consumers.

While the frozen food sector is filled with opportunities, retailers face several challenges that need to be addressed. These can impact your ability to effectively stock, market, and sell these products if not given attention and proper countermeasures.

Here are some key challenges when selling frozen food items:

1. Storage and Display Costs. Freezers consume a significant amount of energy, leading to higher operating costs for retailers. Freezer space is also often limited, making it challenging to stock a wide variety of products without overcrowding or compromising quality and visibility.

2. Supply Chain Issues. Maintaining the integrity of the cold chain from production to the retail shelf is critical. Any break in the chain can lead to spoilage, product recalls, and significant food safety issues. This can be crucial for grocery stores and supermarkets, which might end up putting customers in danger. Balancing inventory levels to avoid overstocking (leading to waste) or understocking (leading to lost sales) can also be difficult.

3. Consumer Perceptions. Some consumers perceive frozen foods as inferior to fresh products in terms of taste, texture, and nutritional value. This is because there are misconceptions that frozen foods are less healthy due to preservatives or additives. Despite the many clean-label and organic options available, breaking these perceptions will be a challenge on the retailers’ end.

4. Regulatory Compliance. Adhering to stringent food safety regulations and standards for frozen food products can be complex and costly. Ensuring compliance with labeling laws, including nutritional information and health claims, can be challenging and requires regular updates.

5. Outdated Equipment and Technology. Retailers, especially small convenience stores or grocery stores, may struggle with outdated freezer equipment. Some of these might be less energy-efficient and reliable. Integrating advanced inventory management systems that track and manage frozen food stocks effectively can be costly for these retailers and require significant training from the staff. Retailers will need a robust solution that is easy to implement across the store.

6. Marketing and Promotion. Effectively marketing frozen foods, particularly those perceived as premium or healthy, requires targeted strategies and often substantial investment. Running in-store promotions for frozen foods can also be challenging due to logistical constraints like freezer space and the need for temperature control.

7. Environmental Impact. The high energy consumption of supermarket freezers contributes to a larger carbon footprint, which can be a concern for environmentally conscious consumers. And of course, managing and reducing packaging waste associated with frozen foods, while maintaining product integrity, is an ongoing challenge.

For an all-around solution that will boost frozen food sales and other aspects of retail operations, Newton ESL is here. Talk to SOLUM experts now to find out why Newton Freezer labels are a must for a supermarket, grocery store, or more.

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References

• https://civicscience.com/5-unexpected-consumer-insights-about-people-who-eat-frozen-entrees/
• https://www.statista.com/topics/1339/frozen-foods-market/#topicOverview
• https://www.foodbusinessnews.net/articles/25670-consumers-seeking-global-flavors-smaller-portions-in-frozen-foods
• https://www.retail-insight-network.com/comment/frozen-food-retailers-opportunities-challenges/?cf-view
• https://www.grocerydive.com/news/frozen-food-sales-grocery-inflation-headwinds/697907/
• https://www.solumesl.com/en/insights/why-newton-esls-are-the-best-freezer-labels