Higher-than-average price increases boosted dollar sales, but units tanked. Still, manufacturers are optimistic about the category’s future.
Thanks to some pretty hefty price increases, dollar sales of frozen dinners and entrees jumped 5.7% during the 12 weeks ended May 15 (versus the same period a year ago) to $2.76 billion across channels, reports Chicago-based market research firm IRI (iriworldwide.com). However, unit sales tumbled 9.8%.
The decline was particularly precipitous in the multi-serve segment where unit sales plunged 16.2% — worst among the top 20 frozen department subcategories. Multi-serve dollar sales were down 3.4%, also worst among the top 20. In the single-serve segment, dollars shot up 8.3%, but units fell 9.8%, creating a sizeable gap between dollar growth and unit losses. Manufacturers attribute the discrepancy to higher labor costs for frozen meals — and single-serves in particular — which led to higher-than-average price increases.
‘Searches for ‘homemade meals’ are down 14%, while searches for ‘convenient meals’ are up 16%. Those trends have set the stage for frozen meals as a solution.’
“Unit prices of single-serve meals increased an average of 18% versus a year ago while the frozen department average was 11%,” explains Lindsay Brady, vp/general manager at Chicago-based Conagra Brands. The price increases may have also contributed to the drop in unit sales. However, Brady says it’s difficult to compare sales growth year to year since some subcategories surged while consumers were at home during the pandemic while others took off once they headed back to work, creating year-over-year comparisons that don’t tell the whole story.
But three-year CAGRs of 7% and 6% for single- and multi-serve meals, respectively, indicate both segments are growing at a similar rate as the frozen department as a whole (+8%) over the long term. And Brady sees no reason that won’t continue.
COOKING FATIGUE A BOON FOR FROZEN?
“A major trend shaping the frozen meals category is Americans’ exhaustion over meal prep,” she reports, citing a new NPD Group study that found the average U.S. household added 215 meals at home in the past year. “That uptick is taking a toll,” explains Brady. “Searches for ‘homemade meals’ are down 14%, while searches for ‘convenient meals’ are up 16%. Those trends have set the stage for frozen meals as a solution.”
Beyond convenience, what are consumers looking for from frozen meals? More premium, better-for-you options top many shoppers’ lists. In fact, the natural segment continues to outperform the category as a whole. In the single-serve subcategory, for example, natural dollar sales jumped 9.0% during the most recent 12 weeks, while units were down only 2.3%, according to Chicago-based SPINS. Some brands are doing much better. The natural segment’s new No. 2, Stamford, Conn.-based Saffron Road, saw its sales jump 30.2% while units rose 19.3%, which executive vp Jack Acree attributes to restaurant quality flavor combined with better-for-you ingredients, including no-antibiotics-ever proteins. “We also shipped 99.5% in stock over the past two years, which generated enormous trial when other brands were out of stock,” he adds. “A large majority of those customers stayed with us and made repeat purchases.”
Despite growing interest in better quality meals, inflation is forcing many consumers to tighten their belts, creating a need for “value-priced” premium entrees. “The majority of recent growth in the category has come from meals that cost upwards of $3, [which] demonstrates that consumers are gravitating toward a better product experience at a higher price point,” says Jeff Tuttle, senior vp and chief growth officer at Minneapolis-based Bellisio Foods, whose frozen entrée portfolio includes the budget-friendly Michelina’s brand. However, “There are virtually no [premium] options available in the $2 to $3 range.” But the company’s proprietary research found that value consumers are willing to pay a bit more for two things — larger portion sizes and better taste — leading to its development of Michelina’s Grande.
The new meals are more than 50% larger than Michelina’s core entrees and include both familiar favorites “but with a twist” (Rigatoni Alfredo with Chicken & Broccoli, Italian-Style Pasta Bake, Macaroni & Cheese and Cheeseburger Mac) and completely new dishes that offer what Tuttle calls “approachable adventure” (Kung Pao Chicken & Rice, Cheesy Chipotle Nacho Pasta, Bacon Parmesan Linguine, and Feta Pasta Bake, the latter of which was inspired by a viral TikTok recipe). With a $2.49 MSRP, he adds, Michelina’s Grande offers “the best price on the shelf for a premium offering.”
RESTAURANT QUALITY AT HOME
Although consumers have largely returned to restaurants, Tuttle says inflationary pressure has some shoppers opting for restaurant brands in the frozen space instead, including Bellisio Foods’ Boston Market and White Castle offerings.
The folks at Conagra are also looking for ways to better replicate the restaurant experience at home. Building on the knowledge that nine of the top 10 chains offer combo meals, the company recently debuted Marie Callender’s Duos, which feature two entrees in one single-serve meal, reports Brady. Pairings include Chicken Alfredo & Chicken Parmigiana, Meatloaf & Country Fried Chicken, and Creamy Pesto Chicken & Four Cheese Ravioli.
Conagra is also expanding its ethnic meal offerings, adding new bowls to both its P.F. Chang’s Home Menu (Beef & Broccoli, Chicken Teriyaki and Chicken Fried Rice) and Frontera (Chicken Fajita, Carne Asada Burrito, Chicken Verde Burrito and Pork Carnitas Burrito) lineups.
In the natural segment, meanwhile, Saffron Road is building on strong response to its Sweet & Sour Chicken with three new Chinese dishes: Kung Pao Chicken, Chicken Lo Mein and plant-based General Tso’s with dumplings made out of cauliflower. “We thought it was important to offer plant-based protein in a more traditional way — without having to develop something in a lab, (i.e. a highly processed chicken analog),” explains Acree.
Another key player in the natural space, Nestlé-owned Sweet Earth, Arlington, Va., is also expanding its plant-based lineup with a pair of eth-
nic dishes whose popularity among U.S. consumers has surged recently. Made with wholesome, veggie-forward ingredients, the vegan bowls include Korean BBQ-Style Chik’n and Cacio e Pepe (with gluten-free chick-pea pasta and vegan cheese). Already available at Target, both offer 15 to 16 grams of protein and 5 to 7 grams of fiber per serving, according to the company.
Paramount, Calif.-based Tattooed Chef is jumping into the plant-based ethnic meals category as well, with plans to introduce seven gluten-free and vegan Mexican entrees this year: Cheese Enchiladas, Cheese Enchilada Meal, Chicken Verde Enchilada Meal, Chicken Enchiladas, Wet Burrito, Chicken Roja Enchilada Meal, and Chicken Mole Enchiladas. The company is also rolling out six 8.5-ounce vegan entrée bowls, many of which feature globally inspired cuisines: Chicken Teriyaki, Beef & Chinese Spice Vermicelli, Chicken Burrito, Chicken Parmesan, Chicken Ravioli & Lemon Butter, and Mac & Cheese.
COULD NEW MULTI-SERVES JUMPSTART GROWTH?
On the multi-serve side, Tattooed Chef will launch five 20-ounce vegan and vegetarian family-size meals: Fettuccine Alfredo with Plant Based Chicken, Cauliflower Spaghetti with Plant Based Bolognese, Grain Free Fried Rice with Plant Based Chicken, Cauliflower Penne Pesto with Plant Based Chicken and Cauliflower Gnocchi Pomodoro.
Conagra is also expanding its presence in the multi-serve segment, adding three new meals to its Birds Eye Voila! Oven Bake Meals collection: Chicken Taco, Lasagna and Meat Sauce, and Creamy Parmesan Garlic Chicken. In addition, reports Brady, the company is launching a new Pasta Sides collection under its Bertolli brand. Although they’re referred to as sides, “The dishes can serve as [a meat-free] entrée, side dish or meal starter,” she says. Available varieties include Cheese & Spinach Ravioli, Cheese Lovers’ Tortellini, Four Cheese Ravioli and Herb Gnocchi.
How to make sure all of these new frozen entrees make it into consumers’ carts? Shelf placement is key. “New introductions need an opportunity to stand out in the freezer aisle,” says Brady. “But retailers don’t always give new products a prominent
position,” often opting to showcase “entrenched favorites” instead. It’s important to give newcomers a fair shot. However, that does not mean placing different types of entrees — new, natural, gluten-free or whatever — in separate sections.
“The No. 1 thing to avoid is segmentation,” says Saffron Road’s Acree, who believes segregating products by attribute makes it much harder for shoppers to consider all of their options. “Today’s consumer is looking for choice, but all in one area,” he explains.
Manufacturers says it’s also important to offer meals at every price point so consumers grappling with record inflation are still able to find something that works within their budget. “Loyalty programs, online offers and in-store promotions are increasingly relevant to keep these shoppers from visiting multiple stores in search of an affordable solution,” says Bellisio’s Tuttle.
“In the face of inflation,” adds Conagra’s Brady, “It’s an ideal time for retailers and brands to work together to highlight frozen meals’ strengths: convenience and value.”
