State of the industry: Packaged foods

by Jeff Gelski
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Packaged foods
Frozen innovation is shaking up a once-challenged category.
 

KANSAS CITY — Vegetables, quinoa and kale all were part of frozen food product introductions in 2017. So were marinara sauce and Korean-style beef.

“Bold and unique flavors, varieties inspired by world cuisines, cleaner labels and healthier nutrition profiles, and products that accommodate special dietary concerns will drive purchases,” said David Sprinkle, research director for Packaged Facts, Rockville, Md.

Packaged Facts projected U.S. sales of frozen foods from 2016-21 will lose 1.2% in sales annually over the next several years, dropping to $21 billion in 2021 from $22 billion in 2016. The report covered the four categories of frozen dinners/entrees, frozen pizzas, frozen side dishes and frozen appetizers/snacks.

Frozen foods chart
 

Packaged Facts estimated frozen vegetables are used in three out of four U.S. households. Frozen snacks are found in more than one-third of U.S. households. In 2016, 90% of U.S. consumers bought packaged frozen hot meal items for heating or microwaving at home, which was an increase of 15 percentage points in two years.

B&G Foods, Parsippany, N.J., has brought innovation to the Green Giant brand, which it purchased from General Mills, Inc., Minneapolis, in November 2015. Total sales for the Green Giant brand reached about $507 million in the 2016 fiscal year and may surpass $530 million in 2017, said Robert C. Cantwell, chief executive officer and president of B&G Foods, in an Aug. 3 earnings call.

Green Giant Veggie Spirals, which may work as an alternative to pasta, are scheduled to launch in January 2018. They are gluten-free, paleo-friendly and available in zucchini, carrots and butternut squash varieties.

 

“Purchase data (show) that Green Giant frozen innovation products have not only brought new consumers to the Green Giant brand but have also brought new consumers to the overall frozen vegetable category,” Mr. Cantwell said. “The power of Green Giant is real, and B&G Foods is proud to have begun reinvigorating this beloved brand as we continue to roll out new product innovations to meet the demands of today’s consumers.”

Birds Eye product launches from Pinnacle Foods, Inc., Parsippany, N.J., came in May. Steamfresh Veggie Made Pasta varieties feature zucchini, lentils and spinach as well as cheddar sauce, Alfredo sauce and marinara sauce. Veggie Made Mashed items feature cauliflower, sour cream and chives, and sweet potatoes and carrots with brown sugar. Steamfresh Superfood Blends feature barley, kale, chickpeas, spinach, quinoa, black rice and edamame. Steamfresh Organic Vegetables contain sweet peas, sweet corn, green beans and mixed vegetables.

Second-quarter net sales in Pinnacle’s Frozen segment increased 2.5% despite a negative 4% impact from an exit of certain Aunt Jemima products. The Birds Eye Voila! business was up nearly double-digits in sales.

 

Redundancy in the overall frozen food category presents an opportunity for Pinnacle, said Mark A. Clouse, c.e.o., in a July 27 earnings call.

“If you look at a lot of the smaller regional players, where you would have been No. 3 or No. 4 on frozen corn or peas, that was an opportunity for us to really point out the better return for the slot by putting our innovation in,” he said.

Pinnacle stands poised to make acquisitions, including in the frozen food category.

“However, we maintain our commitment to having a strong organic plan, where M.&A. is an accelerator and not required to deliver our algorithm,” said Mark L. Schiller, chief commercial officer and executive vice-president, on Sept. 6 at the Barclays Global Consumer Staples Conference in Boston. “As always, we’re going to maintain an active approach looking at businesses in North America, ones that are in adjacent categories with leading share positions, transactions that are synergy-rich and allow for fast and efficient integration, and given our portfolio, we believe we have great optionality both in health and wellness and in center of store, particularly in frozen.”

 

Nestle S.A. has reformulated frozen foods in recent years with an aim toward cleaner labels, said Jeff Hamilton, president of the Nestle Food Division, Nestle USA, on Feb. 23 at the Consumer Analyst Group of New York Conference in Boca Raton, Fla. The ingredient list for Stouffer’s meat and sauce lasagna was reduced to 35 words from 83. The Lean Cuisine brand now has a focus on high-protein, gluten-free, non-G.M.O. and organic ingredients as well as culinary recipes such as sweet and spicy Korean-style beef and mushroom and spring pea risotto.

Conagra Brands, Inc., Chicago, this year introduced Marie Callender’s Delights.

 

“Think of it as comfort with a conscience, and what we do here is smart swaps,” said Sean M. Connolly, president and c.e.o. of Conagra Brands, at the Barclays event on Sept. 5. “So we’ll take a turkey meatball instead of a beef meatball. We take sweet potato fries instead of mash potato and gravy — still very comforting, but it gives access to those consumers with particular constraints.”

Data from Information Resources, Inc., a Chicago-based market research firm, showed two frozen foods categories with U.S. retail sales increases in the 52 weeks ended July 9 and two others with declines. Sales were up 1.5% to $2,013 million for multi-serve frozen dinners/entrees and up 0.5% to $4,253 million for single-serve frozen dinners/entrees. Sales slipped 0.4% to $2,449 million for frozen handheld entrees (non-breakfast) and fell 0.2% to $4,471 million for frozen pizza.

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