Frozen pies actually had to be baked — some even up to an unthinkable 45 minutes to an hour — and forget pre-portioned or single-serve cheesecakes. Back then, desserts were family-sized and came in just a few varieties. Likewise, the limited offerings of pizzas — many of which contained crusts that were almost indistinguishable from the cardboard support beneath them — needed to be heated up in the oven for as much as 20 minutes.
As for bread products, the selections were historically slim at best, according to Tom Marcucci, a 43-year veteran of the baking industry and vice-president of marketing, Gonnella Baking Co., Schaumburg, IL.
“Many years ago, frozen baked goods in the grocery store were limited to bagels, waffles, dinner rolls and even garlic bread. That was it,” he recalled. “Grocers tended to put them together, so garlic bread was in the breakfast section.”
Today, one of the fastest-growing opportunities for bakers involves partnering with meat, protein and consumer packaged goods companies by incorporating and positioning artisan and specialty breads and other baked goods as key components of frozen foods.
“Sometimes, it’s a high-quality hamburger bun, a pretzel roll or brioche,” Mr. Marcucci said. “Each one of these is where Gonnella is expanding in the freezer case as a component of someone else’s finished product. Generally speaking, you don’t see the Gonnella name with any of these products.”
Portable frozen offerings now include various twists on the conventional sausage, egg and cheese biscuit as well as more gourmet varieties of paninis that are microwaved in four to seven minutes — at the most. In many offices, workers now microwave their sandwiches for a hot, quick meal instead of brown-bagging a cold sandwich.
“The microwave now works in ways it didn’t 15 or 20 years ago,” Mr. Marcucci observed. “Packaging innovations, specifically the receptor that heats up the products, has helped the quality of bread tremendously and has given bakers a whole new opportunity to pursue in the freezer case. You also have new formulations. You cannot sell the same products we had in 1985. The product is going into a completely different distribution system.”
Need to go utensil-less
The importance of on-the-go products cannot be understated, according to Tom Vierhile, innovations insights director, Datamonitor, Fairport, NY. “Frozen bakery has not historically been a strong player in the convenience market, but that is no longer the case,” he noted. “Frozen bakery products are increasingly designed for hand-held consumption as consumers do more eating in the car or at the desk at work.”
Datamonitor Consumer’s 2014 consumer survey found that nearly one-third of consumers tend to snack “at my workplace” when they snack outside of mealtimes. The survey also found 69% of Americans snack at home.
And that can be anywhere depending on what hour it is. Datamonitor reported that 55% of those surveyed agreed that they snack between lunch and dinner while 28% do so between breakfast and lunch.
Maybe the after-school snacking habit is something many people never outgrow, or it is just transformed, either into a solution to the 4 p.m. slump or even a pre-workout or after-work routine. Then again, it’s easy to overanalyze. Snacking is often just grabbing a quick bite while working or doing something else.
“Products like Farm Rich Signature Sweets Pie Bites and Farm Rich Brownie Bites are intended to capitalize on this behavior and also provide portion control and sizes that are more appropriate for smaller households,” Mr. Vierhile said.
Years ago, only a handful of companies offered pre-portioned desserts. Now, catering to smaller households, consumers can get two packs of individually sliced pies under the Edwards and Sara Lee brands or puff pastry turnovers sold under the Pepperidge Farm label.
Frozen desserts now compete not only with poppable bites but also with Greek yogurt and pudding cups in the refrigerated case. “Frozen desserts are in some danger because the yogurt category is beginning to invade that market,” Mr. Vierhile suggested. “You’re seeing the chilled dairy case become a dessert destination. This could be a problem for frozen desserts.”
Consumers might be snacking more because they spend less time eating meals. Recently published research by the Port Arthur, NY-based NPD Group noted that, on average, Americans wolf down breakfast in only 12 minutes, take 28 minutes for lunch and consume dinner in 24 minutes. Moreover, 34% of those responding to Datamonitor’s 2013 consumer survey value “ease and simplicity” at breakfast — that’s more than twice (16%) those who value it for dinner.
Not surprisingly, sales of those microwaveable breakfast hand-held items are experiencing solid growth and are one of the few bright spots in the freezer case, according to IRI, a Chicago-based market research firm. Overall, sales of hand-held breakfast items rose 11.8% to $984.9 million for the 52-week period ending Aug. 10, 2014. By contrast, IRI reported frozen breakfast entrees inched up only 1% to $757.5 million for the same period.
Clearly, Mr. Vierhile noted, the emphasis at breakfast is on eating and getting out of the house as quickly as possible. “Utensil-less dining and snacking is definitely influencing launches like Kellogg’s Eggo Waffle Bites and Pillsbury Heat ’n Go Pancakes, which go after the most time-stressed meal of the day — breakfast,” he said.
Time-stressed and simplicity are the key trends driving new product innovation for multiple eating occasions. Instead of asking consumers to heat up a cumbersome whole loaf of garlic bread, T. Marzetti, Columbus, OH, rolled out New York Soft Pull Apart loaves earlier this year. The savory bread can be shared as an appetizer or served as a snack during a special occasion.
“Consumers are looking for something that can be prepared quickly and easily served,” Mr. Vierhile said.
Going beyond roller grills
The growth in frozen baked goods is not only in the freezer case. For years, bakers have supplied frozen dough, parbaked products and desserts to in-store bakeries and delis. During the past few years, gas stations and c-stores have become the hot market as they expand and upgrade their foodservice offerings to provide greater grab-and-go meals and snacks for a mobile world.
It’s easy to see why. Foodservice categories offer the fastest growth for c-stores, according to the National Association of Convenience Stores (NACS). In fact, foodservice garners more than 29% of in-store product dollars, according to the NACS 2013 state-of-the industry survey. The top quarter of those surveyed experienced 35 to 40% in sales, according to the report, and bakers and snack manufacturers are responding in a big way as c-stores try to compete with the Starbucks and McDonalds of the world.
Mr. Marcucci described it as a convergence of channels as gas stations now house a c-store — and in some cases a branded quick service restaurant (QSR) or sub shop — in the building behind the pumps. Gone are the two auto repair bays for lube jobs and maintenance. “It’s become a much more sophisticated operation addressing all of the needs across the day,” he said. “They’re trying to give consumers what they want and when they want it,” he said.
Some progressive c-stores like Sheetz, based at Altoona, PA, with 475 locations across six states and sales of $5.23 billion, now consider QSRs to be their main competitors for breakfast sandwiches, luncheon sandwiches, pizza and more premium items for the roller grill, noted Louie Sheetz, retired vice-president of sales and marketing. He spoke at a retail panel at the Snack Food Association’s Executive Leadership Forum this past September.
In fact, foodservice selections and “fresh snacks” — Mr. Sheetz defined sandwiches as a snack, a.k.a. an “immediate consumption food” — are perhaps the fastest growing and most profitable departments for many retail chains.
Individually wrapped muffins and single-sliced loaf cakes — shipped frozen and slacked out at store level — are hot sellers, especially if they’re positioned as an accompaniment to the ever-expanding array of premium coffee choices.
“We make it very easy for people to stop and get their breakfast,” Mr. Sheetz said, and lunch and dinner. Sheetz offers a take-home menu and online ordering of food. Made-to-order deli sandwiches, which carry a nice-sized margin, are becoming more common, despite the labor involved. Mr. Sheetz noted the company’s new stores — those built within the past five years are called “convenience restaurants” — even allot 1,500 sq ft for dining.
Quinoa in a c-store?
On top of the fresh-food phenomena, c-stores are “going healthy.” While convenience and single-serve are king, fresh items and better-for-you snacks and portable meals will be better for c-stores in the long run, according to Mr. Sheetz.
In September, Dallas-based 7-Eleven joined the bandwagon by rolling out fresh, more nutritiously balanced wraps, sandwiches and snacks under the Tony Horton Kitchen brand. The P90X workout czar’s product line that includes quinoa, hummus and whole grain rolls now complement more conventional offerings such as Big Gulps, Slurpees, roller-grilled hot dogs, beer and Ho-Hos. From a nutritional standpoint, the calorie-controlled items are filled with protein and dietary fiber and geared toward luring fitness-minded consumers into a store that they wouldn’t have dared step into before.
For bakers, this opens up the opportunity to partner with their c-store customers to customize new sandwich carriers filled with fiber, ancient grains and even protein.
Inside the freezer case, ingredients perceived by the consumer as being more healthful are beginning to appear in a greater number of frozen bakery products or as a component of a frozen food meal.
Amy’s Kitchen, Petaluma, CA, lists an assortment of Mexican burritos and entrees, where tortillas are a component, as its top-sellers. To boost its natural and organic products portfolio, General Mills, Minneapolis, recently moved to purchase Berkeley, CA-based Annie’s, which offers more healthful frozen pizza and snacks. General Mills noted organic and natural sales have grown at a 12% compound rate over the past 10 years.
Mr. Vierhile said the move toward improving the nutritional value of products in the freezer case has been a long time coming. “We are seeing clear evidence that frozen bakery producers are focusing more attention on products with ‘better for you’ ingredients like vegetables — as with Garden Lites Veggie Muffins made with carrots, zucchini and more — and flax, as with Flax4Life Mini Flax Muffins, and more,” he said.
This meshes well with a key finding from Datamonitor’s 2013 consumer survey, which found that just under 65% of US consumers surveyed stated they “tend to agree” or “strongly agree” that they are “more interested in hearing about what to eat rather than what not to eat.”
“This is one reason we are seeing more companies introducing baked goods featuring healthful ancient grains and seeds like chia, quinoa, amaranth, millet and many more,” Mr. Vierhile said.
Emerging foodie mentality
Frozen baked goods — whether sold through the freezer case or elsewhere — are tapping into what’s happening in the restaurant channel or developing new varieties for in-store bakeries/delis, c-stores and foodservice operations.
“Frozen bakery products are in more of a borrowing mood than in the past, taking flavor and product ideas from different categories,” Mr. Vierhile said. “Snacks provided the inspiration for pretzel bread, one of the more dynamic recent developments. Influences from high-end desserts, artisan baked goods and ethnic food trends — shown by Trader Joe’s Frozen Mini Gyro Bites — are much more evident today than in the past. The influence of the fast-food restaurant industry is also evident from all of the recent flatbread sandwich launches.”
Earlier this year, Gonnella opened its 2,000-sq-ft research center — a state-of-the-art product development and test facility that works with frozen food manufacturers to address formulation challenges for microwaveable products. “We want to make sure the product we supply is equal to the fresh bread that you buy in the bread aisle today,” Mr. Marcucci said.
Additionally, the Gonnella Research Center tries to provide a new perspective to the freezer case. “It used to be an egg-and-English-muffin sandwich. Now it’s a Texas omelet that has new seasonings, red peppers and green peppers on a biscuit bun,” Mr. Marcucci noted.
Retailers, he added, are hiring chefs and others with culinary training. Producers of frozen baked goods — whether sold in the freezer case, in-store bakery, c-store or foodservice channel — are stepping up their game to get a piece of the action.
“It’s all about how we address the needs of consumers to get a quick, quality meal when and where they want it,” Mr. Marcucci said.
Future for frozen foods
There also may be some headwinds for frozen foods going forward. Nearly one-quarter (24%) of US consumers either “strongly believe” or “tend to believe” that freezing food compromises nutritional quality, according to Datamonitor’s 2011 survey. Although the information is a few years old, Mr. Vierhile still thinks that perception holds true today.
“For the future, we think frozen baked goods makers are going to have to step up their game to build consumer trust and dispel the negative image consumers sometimes have toward frozen food,” he said.
Younger consumers, especially millennials, are not enamored with offerings in the freezer case. According to a survey by Omaha-based ConAgra, Mr. Vierhile noted, more than half of the people who buy frozen foods are 45 and older. That’s a challenge as younger consumers control a larger share of spending on food. They tend to consider themselves “foodies” and are less trusting than older shoppers. They want to know where ingredients in products come from and how a product is made.
“Millennials tend to see frozen food as just another form of processed food,” Mr. Vierhile explained. “The frozen food industry hasn’t done a great job of trying to portray frozen food as a fresh type of food. That can have ramifications going forward.”