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Prepared frozen foods market climbs to $11 billion +.

"Quick" and "convenient" are still the magic words underlying consumer appeal for prepared frozen foods. But "light" and "healthy" are definite up-and-comers, according to a new report by leading business research firm FIND/SVP.

"We're essentially entering the third wave of prepared frozen foods," says Catherine Roberts, a frozen foods industry expert and author of the FIND/SVP report. "The first wave was TV-dinners. The second in the 1980s saw the emergence of higher-priced exotic meals. Now, the current trend is toward light and healthy prepared frozen food dishes."

The report defines prepared frozen foods as any frozen food that is cooked, or otherwise has value added by the manufacturer or packer, before the final packaging of the product. The report focuses on entrees; dinners; pizzas; sandwiches; hors d'oeuvres; pot pies; prepared vegetables; breakfast foods and baked goods.

FIND/SVP estimates that retail sales of prepared frozen foods will reach over $11 billion by the end of 1991, up slightly from $10.7 billion in 1990. The market is expected to total just over $13 billion in 1995, for a compound annual growth rate of 4.2% between 1990 and 1995.

This tally includes all prepared frozen foods sold from all outlets, including supermarkets and grocery stores, convenience stores, and other non-grocery channels including warehouse clubs.

These market figures also reflect the sales of products that are direct-store-delivered (DSD) as well as products that are made, packed, and sold on-site. Products made and sold on-site are most commonly found in independent gourmet stores, delis, and bakeries.

In 1990, supermarkets and grocery stores represented approximately 92% of all prepared frozen food sales, or $9.2 billion. This channel is expected to stay this course, and climb to just over $12 billion by 1995.

Sales made by convenience stores represented approximately 4.6% of total 1990 sales, or $460 million. FIND/SVP expects this share to continue to decline, reflecting no more than 2.3% of the 1995 market, or $300 million.

Frozen products sold through warehouse and price clubs represent an ever-increasing share of total market sales. This channel should climb from 1990's $340 million (a 3.4% market share) to at least 5.7% of the 1995 market, or $745 million in retail sales of all prepared frozen food products.

Growth by product category

Several prepared frozen foods categories have shown outstanding growth in both dollars and volume since the early 1980s. In particular, retail sales of frozen sandwiches skyrocketed from $60 million in 1983 to $290 million in 1990, showing a compound annual growth rate of 25.2%. During the same period, volume grew at a compound annualized rate of 24.6% from 15 million pounds in 1984 to 70 million pounds in 1990.

Similarly, frozen breakfast sales grew at a compound annual rate of 19.9% between 1983 and 1990. Volume sales grew 11.3% compounded annually, during the same period. In 1990, retail sales totaled $890 million, and volume equalled 350 million pounds.

In contrast, categories which demonstrated below-average growth in this same period include pizza, pot pies, prepared vegetables, and baked goods at 1.1%, 1.4%, 2.3%, and 4.6%, respectively. Categories which saw average growth include entrees, dinners, and hors d'oeuvres, at 6.9%, 8.2%, and 8% respectively.

One common challenge facing marketers in all categories is successful product positioning. "Not only do the attributes a product touts have to be real, but marketers have to convince consumers of this swiftly and succinctly," says Roberts. "ConAgra's marketing of Healthy Choice managed to accomplish this, while Campbell Soup's LeMenu fell a little short."

The 277-page report, The Market for Prepared Frozen Foods, is priced at $1,650, and is available from FIND/SVP, Dept. V6, 625 Avenue of the Americas, New York, NY 10011.
COPYRIGHT 1992 Frozen Food Digest, Inc.
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Copyright 1992 Gale, Cengage Learning. All rights reserved.

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Publication:Frozen Food Digest
Article Type:Industry Overview
Date:Feb 1, 1992
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