Anne-Marie Roerink
Principal & Founder, 210 Analytics
The first six months of the year are in the books and what a year it has been for frozen food. Following the massive pandemic sales spikes in 2020 and the first half of 2021, frozen food sales had been struggling to go up against these all-time high volumes, though inflation boosted dollar sales to record highs. Despite unit declines in 2022 and 2023, frozen food sales consistently remained ahead of the pre-pandemic volume levels. During the first half of 2024, frozen food unit sales moved back in the black as strengthening consumer demand went hand-in-hand with inflation moderating to very low levels.
Source: Circana, Integrated Fresh, MULO+, 26 and 52 weeks ending 6/30/2024
The American Frozen Food Institute provides its member companies with free monthly performance reports that provide the latest data and market analysis, and recent findings show more and more frozen food categories moving into positive growth territory. Insights from the Circana MULO+, which provides an extensive overview of the food retail landscape, reveal some of the highest performers year-to-date, including:
- Frozen fruit, up 8.8% in unit sales over the first half of 2023.
- Various meats, including processed chicken (+9.6%), breakfast sausage (+7.4%) and beef (+3.1%).
- Frozen meal solutions, including pizza (+1.3%) and side dishes (+3.2%) and all things potatoes, such as fries (+0.6%) and tater tots (+8.2%).
Moreover, all the signs point to ongoing strength for frozen food. Here are some of the big reasons why:
- Investment in freezer space — At the 2024 Frozen IQ conference, the Association of Home Appliance Manufacturers shared that freezer unit shipments increased by 97% in 2020 as consumers invested in additional freezer space during the COVID-19 pandemic. Importantly, freezer sales continue to trend far above pre-pandemic levels, with about 2.3 million freezer shipments in 2023 versus 1.5 million 2019. This added storage capability creates added growth opportunity for the frozen food category. AFFI’s 2023 Power of Frozen in Retail report shows that the consumers with a dedicated chest or standalone freezer are more likely to be the core consumers who enjoy frozen foods daily or every few days (figure 1).
Figure 1: Difference in freezer space between light frozen food consumers and core, high-frequency consumers.
An ongoing home-centric environment — While consumer confidence has varied over the past 12 months in response to inflation and job concerns, many households are maintaining a home-centric environment and increased reliance on food retail. Consumers look for meal ingredients and meal solutions that are delicious, convenient and provide good value. This is precisely the domain for frozen food, according to the Power of Frozen in Retail (figure 2). Retail dollar growth improved from 1.6% in the fourth quarter of 2023 to 2.9% during the first quarter of 2024. The foodservice growth rate decreased from 4.8% in Q4 2023 to 3.0% in Q1 2024 despite a growing inflationary boost.
Figure 2: Reasons for buying frozen food.
- Dollars and sense — Consumers are in a nonstop balancing act in which value and minimizing waste hold lead roles. This has led to an increased share of (frozen) food dollars for value-focused channels, including mass, club and dollar stores. It also led to a sharp focus on minimizing food waste — by consumers and retailers alike. The Power of Frozen in Retail found that 50% of consumers who now buy more frozen food do so because it helps reduce food waste thanks to its longer shelf life and ability to prepare only what is needed.
Additionally, retailers are focused on minimizing shrink through a variety of inventory controls. This includes SKU rationalization, especially for niche products and cuisines. The frozen food aisle is a great solution for retailers trying to reduce shrink on items that have a smaller shopper base and/or a lower sales velocity, but can help cater to consumers looking for specialty items. Plant-based meat alternatives are a good example of items increasingly moving from the meat department into the frozen food aisle.
- Innovation drives hearts and carts — Spicy, swicy, global cuisines and nostalgic are among the big flavor and ingredient trends today. Frozen food product launches are ramping back up and innovation is addressing consumers’ wants and needs in the areas of sustainability and health & wellbeing, including vegan, plant-based and foods aimed at people taking GLP-1 medications.
As the food landscape continues to evolve, frozen food remains a vital solution for cash-strapped consumers seeking quality, cost-effective and delicious foods.