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$2.4 billion microwaveable food market.

Retail sales of microwaveable foods sold from all retail outlets totaled just over $2.4 billion and consumers purchased just under 900 million pounds of foods designed for microwave oven preparation in 1992, estimates The Market for Microwaveable Foods, a recently published report by the New York consulting and research firm, FIND/SVP.

Microwaveable popcorn and frozen breakfast products clearly dominate the market for microwaveable foods. On a dollar basis, FIND/SVP estimates that these two product categories accounted for 56.3% of the total market.

Despite the growth of the overall market from 1989 to 1992, it is important to note that annual growth rates have dramatically decelerated since 1991. Of 15 microwaveable food categories, only four--frozen breakfasts, shelf-stable entrees, shelf-stable popcorn, and frozen and refrigerated gravies--have shown continual annual tonnage growth. Each of the remaining 11 categories have shown both dollar and tonnage decline for at least one of the 52-week periods.

Market Forecasts

FIND/SVP forecasts that total sales of microwaveable products will grow from 1992 dollar volumes of $2.4 billion to $2.7 billion in 1997. It is further anticipated that tonnage volumes for the entire market will grow from 1992 levels of 917 million pounds to 1.1 billion pounds in 1997. "At first glance," says Catherine Roberts, author of the study, "the growth rates may seem rather lackluster. But the numbers are rather deceiving when you take into account that only seven of the fifteen product categories will be responsible for the growth of the total market."

The seven growth categories are frozen breakfasts, frozen sandwiches, frozen potato products, shelf-stable popcorn, shelf stable entrees, and refrigerated sauces, and refrigerated prepared poultry. Sales declines are expected for frozen pizza, shelf-stable soup, and dessert baking mix products. The report also predicts that five categories of microwave-specific products will be eliminated altogether by 1997 as a result of product withdrawals from all competing manufacturers. These are frozen entrees, frozen vegetables, shelf-stable side dishes, shelf-stable dinners, and refrigerated breakfast sausage products.

Market Trends

The microwaveable foods market has been shaped more by failures than by achievements. With supermarket sales volumes down in 1992 for 10 of 15 product categories, it is clear that success remains elusive for what was once considered one of the most promising segments of the convenience foods market. The current trends are:

* Promises of convenience and quality made to the consumer remain unfulfilled.

* There exists little product differentiation within categories.

* Relatively high-priced microwaveable products offer less actual or perceived value.

* Microwave-specific line extensions have been introduced even when existing products are microwaveable.

* Scant attention has been paid to how consumers use their ovens as well as to the benefits of the appliance.

* A dearth of technological innovation prevents the market from advancing.

* A lack of commitment to new product introductions is pervasive.

* The costs of participation have become unjustifiably excessive.

* The recession has adversely affected consumer spending patterns.

"Just look at the trends, they're all negative," says Roberts. "The trade-offs that consumers have been asked to make for the sake of convenience are clearly unacceptable."

According to Roberts, it's not unheard of for companies to spend an average of $25 million to launch new microwaveable products only to see those products fail after little more than a year. In fact, over the past two years, the market has undergone a significant shakeout, resulting in a considerable number of product withdrawals. "Many companies have learned that the microwave oven user is not as forgiving as once thought. Consumers still have a bad taste in their mouths from all the promises microwave oven products failed to live up to," says Roberts.

However, oven and packaging manufacturers continue to launch innovative products, such as active packaging systems, improved retortable plastic containers, and new lidding technologies.

While it is true that consumers aren't willing to pay increased costs at retail for packaging changes, they are willing to pay for any benefits they might reap as a result. "The marketer must make clear to the consumer that his or her money has been well spent," says Roberts.
COPYRIGHT 1993 Frozen Food Digest, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1993 Gale, Cengage Learning. All rights reserved.

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Publication:Frozen Food Digest
Date:Oct 1, 1993
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