June 21, 2011
by Allison Gibeson
The H.J. Heinz Co., Pittsburgh, is finding strength in its T.G.I. Friday’s brand despite the fact the overall market for frozen meals declined during the recession — a true showing of the strength of co-branding.
Consumers became so cost-conscious during the recession they often turned away from single-serve frozen meals, according to a September 2010 Frozen Meals report from Mintel International, Chicago. After all, cooking from scratch is almost always less expensive. Additionally, while the products are modestly priced, because these products do not produce leftovers many consumers consider them to be more expensive in the long-run.
Mintel estimated sales of single-serve frozen meals reached $3,675 million in 2009, down more than 3% from the previous year, and came in at $3,468 million in 2010, down more than 5% from the previous year.
David Browne, senior analyst with Mintel, said 52% of consumers prefer to cook from scratch. He said the multi-serve frozen food segment is performing better than the single-serve market because consumers wanted leftovers during the recession.
“These products are seen as not very good tasting and not premium quality,” Mr. Browne said. “Because of that, it’s actually led to some of these innovations … co-branding such as restaurant/retail brands is a viable option.”
Mr. Browne said co-branding is effective, and the T.G.I. Friday’s option by Heinz is doing especially well in the current environment. Overall, he said it is a good strategic move on the part of the company to introduce such products.
In 2008, Heinz announced it would open a frozen food production facility in Florence, S.C., and the facility is scheduled to come on line later this year.
“This new factory aligns with our plans to aggressively grow the T.G.I. Friday’s branded line of products, which … are under way to becoming our next U.S. mega-brand,” said William R. Johnson, president and chief executive officer, during the Consumer Analyst Group of New York conference this past February. “Importantly, we plan to introduce the brand’s first line of premium single-serve entrees during the fourth quarter of this fiscal year, building on the success of its restaurant-quality snacks and multi-serve skillet meals.
“This is our most important news in frozen since the introduction of Smart Ones. Our initial launch features nine single-serve s.k.u.s — five bag meals and four tray meals — all of which have been tested extensively and tested with great results. The new single-serve line features great-tasting varieties ranging from Sizzling Steak Fajitas and Grilled Chicken and Mac and Cheese to Prime Rib Stroganoff and Chicken and Broccoli Alfredo.”
Mr. Browne said part of the reason such products are successful despite the overall climate of the market is due to the brand recognition the restaurants often have.
“Consumers may be eating out less at some of these restaurants during the recession, and they recognize the brand and they have a certain trust with it,” he said. “But when they go to the supermarket and they see that name appearing somewhere else in the frozen aisle, they may be inclined to choose it as a trade-down from going out to eat, but they also believe the product has a certain quality that is appealing.”
Additionally, he said con-sumers are increasingly inter-ested in more premium products that have a perception of better quality and fresh taste.
Lucinda Wisniewski, group vice-president of marketing and client solutions with the National Food Lab, Livermore, Calif., said in these products it is important to emphasize wholesomeness and natural ingredients, including more whole grains and vegetables.
“Consumers really strive for variety in this category,” Ms. Wisniewski said. “You see this proliferation of flavor varieties. I think the challenge is coming out with something unique because it’s a pretty crowded category now.”
Both Ms. Wisniewski and Mr. Browne said single-serve fresh-stable products such as meal kits as well as products in the perimeter of the grocery store are becoming an important part of the market. Mr. Browne said macaroni and cheese has especially been successful when it comes to meal kits.