The effects of the pandemic are melting away and, with them, some of the customers who turned to the resurgent frozen food category in 2020; however, the prospects for frozen are potentially bright in the long term, above all thanks to a strong consumer desire for affordable and convenient food products. The next few years will be crucial to prove if the category can hold onto its pandemic gains in the long term, which will require an active defence against competition like foodservice delivery.
This report comes in PPT.
The COVID-19 pandemic saw soaring frozen food sales, with the category being re-introduced to many consumers. Growth rates have, however, slowed and now largely match those of shelf-stable and chilled competition food. Frozen food manufacturers will need to make an active effort to hold onto a larger share of packaged food occasions for the long term.
Of USD25 billion in growth forecast globally in frozen retail food by 2027, about USD10 billion each will come from ice cream and frozen staple foods. Of the remaining expected growth, about half will come from ready meals in China and half from pizza in the US. The remaining frozen food categories are small and/or stagnant, and are doing little to boost growth.
While there are many potential advantages frozen food can leverage, the most important is that of presenting an affordable and convenient option at a time when the cost of living is rising and people’s lives are busier than ever. This is true both now, during the current inflation wave, as well as in the future, when inflation is likely to stay higher than in the past.
Affordability is important but it is not everything. Changing consumer snacking habits, a desire to consume more fruit and vegetables, and interest in reducing food waste can all play a role in boosting frozen food as a distinct category. Even the premium portion of the price tier could hold potential if approached correctly.
The largest long-term threat is delivery moving into frozen food’s core area of affordable convenient options, through advances in automation driving costs down. Other concerns include a growing backlash against processed foods, and the logistical challenges of the move to grocery delivery.
NOTE: Couscous, polenta and quinoa are excluded from staple foods.
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