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The future has never been brighter.

The frozen food industry is a relatively new industry in reference to agriculture and food. It is my belief that the future has never been brighter than it is today for frozen foods. This is especially true in the United States, but will be true throughout the world, and the reasons are relatively simple. The technologies and distribution systems have advanced to a point where processors, distributors, retailers and food service personnel can take advantage of all of the experimentation and improvements that have been made over the last half century.

This is even made brighter when you consider the ecological and environmental moves that are taking place in the United States and the world in general, because one of the greatest challenges to frozen food has been the advent of an artificial induced way of preserving fresh foods with chemicals and different gases, etc. It is my belief that these are going to come under increasing scrutiny over the next several years, and as this occurs, both the costs and the availability of the various inhibitors that prevent spoilage or discoloration of fresh fruit, vegetables, meats etc., will become less available and will cost more. Therefore, the competitive position of frozen foods will continue to increase versus coming under attacks as they have for the last decade or more.

On the marketing front of frozen foods, manufacturers have managed to do everything they can to buy or gain market share in the last half of the eighties and the first couple years of the nineties. This has occurred because of a tremendous shift in power from the manufacturer to the retailer, distributor, etc. I don't think there is any question that we may see a resurgence in private label on the retail front. Those of us that are involved in food service already realize that this is a powerful force because we have seen the concentration of the distribution channel.

For the rest of the decade , it is my belief that manufacturers, individually and collectively, will become smarter marketers and will take a very serious look at what they have done to the industry and to themselves and that the M.B.A. thought process, which basically said, "market share at any cost", will die a slow death, and we will see again the building of strong regional and national brands which in the long run will be good for the industry and good for America. With that will come with a diminishing of the intense introductory offers, slotting allowances, and cap allowances, advertising allowances, and any other allowance that a person could think of. There isn't any question that we will see new and emerging channels of distribution.

We watched as the retail grocery store, supermarket, whatever word we want to use to describe this form of merchandising, has allowed its cost to increase from under 20% to an excess of 24%. This cost has been over-shadowed by sheltered income or hidden income from various sources and gotten so blatant that the typical retailer was really not being honest with themselves in reference to their cost of doing business. It is highly possible that third party distributors will see a renaissance in the United States as they have in Europe and in the food service chain restaurant segment of the business. In other words, each portion of the channel will concentrate on what it does best. Manufacturing will concentrate on manufacturing and marketing, distribution on distribution, retailing and retailing.

The era of the leverage buy-out is over, at least for the time being, and that is good. For unfortunately, the last ten to twelve years have produced many companies whose leverage is at a point where they can no longer invest in R&D, let alone, new factories or even bring out new products, if the R&D group or marketing group had identified them because they lack the capital or resources necessary to bring the product to fruition. We also saw retailers that were so leveraged, they could not build new stores when their customer base was moving to the suburbs or new areas.

Yes, I believe the future has never been brighter for the frozen food industry, an industry that has the best possible way of food preservation and presentation, as well as an industry that can truly serve the American population and the world population. We will have to become more effective and efficient to complete in a new economic order, but that is nothing new for this industry. It is my belief that we will see more changes in the next eight years until the year 2000 than we have seen since Clarence Birdseye marketed his first product in the 30's. That is a powerful statement, but all you have to do is look around. We have new emerging companies. We have new emerging retailers. We have a world economy in terms of ownership of companies, distribution networks and retailers. We have emerging new channels of distribution and the opportunities for those willing to take the risks have probably never been greater in the history in America. Yes, the obstacles course is full if holes and fences and moats, but for those willing to take the calculated risk that goes along with the wisdom and the knowledge that is necessary to operate in the American economic system today, the rewards will be commensurate with that risk.

Have a great 1993 and beyond.
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Copyright 1993 Gale, Cengage Learning. All rights reserved.

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Title Annotation:frozen food industry
Author:Caron, Tom
Publication:Frozen Food Digest
Date:Feb 1, 1993
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