USA has been one of the nations with the highest growth rate of frozen food in the packaged food market. There are various reasons which can be attributed to this growth such as changing lifestyle, change in work-life balance, changed eating habits and hectic life.
Definition / Scope
- Frozen food- it is a form of ready to eat food preserved in the frozen form.
- Changing trends in the lifestyle of people is driving factor because of which the need of convenience is prevailing these days.
- Busy lives and hectic work schedules have led to the emergence of frozen food industry where convenient food which is readily available is preferred over home cooked food.
For families with rigid working schedule, trying to strike a balance between the work and living a healthy life is a difficult task. In such situations, variety of frozen food can be a savior for all the efforts of cooking after long day of work.
Significant player among the frozen food market in USA is Nestle USA.
A survey on consumer insights has revealed that about 15% of the USA consumers say that frozen food items are an important part of their grocery shopping.
In a market report published by Persistence market research on “Global Market study on frozen food: Frozen ready meals to be the largest segment by 2020”, the estimated value of frozen food market has been valued at $122.1 billion in the year 2013 and is supposedly to grow at a Compound annual growth rate of 3.6% between 2014-2020, and by the year 2020, it is estimated to reach a value of $156.4 billion.
Classificationof Frozen Food
Frozen food market can be divided into several frozen food categories or products such as:
- Frozen sea food
- Frozen meat products
- Frozen ready meals
- Frozen Pizza
- Frozen bakery products
- Frozen fruits and vegetables
High energy consumptionThere is a huge amount of energy which is consumed while freezing the products at a temperature which is much lower than the normal temperature. Also while transportation, the temperature has to be maintained throughout and the main challenge is to maintain the temperature in the whole supply chain process.
Top Market Opportunities
- Operators of the industry produce variety of frozen and packaged food, which includes frozen breakfast, frozen desserts, frozen fruits and vegetable, juices, frozen pizza, frozen ready to cook meals, frozen toppings and bakery products such as waffles etc. These products then after the production are distributed to various retail and grocery stores, hospitality industry and wholesalers.
- Economic downturn in U.S.A. definitely had an impact on the economy at large, but it was observed that it had a reverse effect on the frozen food industry. There was a decline in the earnings of the people, which eventually led to reduced expenditure power. The culture and trend of nations like USA where going out for parties, clubbing was rather reduced by the people and they preferred staying at home rather than going out and spending a considerable amount of their income in a crunch situation. But due to this option of people deciding to stay back home rather than going out, the frozen food industry took a boom after 2008. According to a survey, it was highlighted that even after the economic downturn, the spending on the food was not decreased, rather just that the people shifted more to the options of frozen food products which were convenient to cook and saved time.
- Most demanded products among the frozen food industry are frozen fruits and vegetable and ready to cook meals. The market for such a high demand of frozen ready to cook meals was majorly driven by the demands of frozen ready breakfast and frozen pizza which initially were kept in the market as a low cost products but were equal on the terms of freshness and quality when compared to the food outlets and dining out at some restaurant.
Lower penetration in Asian CountriesThe reason for high sale of frozen food products in US region is the changing lifestyle of people that has led to changing food habits, whereas Asian countries do not have a high penetration rate in when compared to US. This developing Asian countries are going through rapid economic and social changes, with a change in the pattern of urbanization also which is creating a need of people in these countries also to shift to convenient food products readily available and less time consuming. For the global frozen food market, it is an open opportunity to expand its boundary to a new level.
Growth in freezer spaceWith the expansion of frozen food market globally, the need for expansion of freezer has increased manifolds. According to an estimation, in the coming five years, the freezer space will be almost double to that of what is currently existing. During the initial inception of frozen food market, only sea food and poultry products were a part of frozen food category, but with the increase in the range of frozen food products, the freezer space has also increased to an extent and creates a further need of more freezer space in the coming times.
- In the year 2014, around $50.37 billion was recorded as the sale of the frozen food market in US as compared to $50.38billion in the year 2013.
- In the category of the packaged food and prepared food, Frozen food was considered to be the best selling item among the other food items within a round off figure of 14 million US dollars.
- The categories of frozen desserts, ice, frozen breakfast, fruits and toppings have reported a growth of more than 3%.
- From USD 1, 11,400 million in 2010 to USD 1, 22,084.6 million in the year 2013, the global frozen food market has grown in value terms at a CAGR of 3.1%.
- The work-life balance of the people in developed nation as well developing nations has been disrupt since the work life is becoming very hectic leaving less or rather no time to spend on cooking food.
- Also the trend which has been taking hype nowadays is going out for parties, dining and spending more time outside the home which leaves everyone with no such option of leading a healthy life simultaneously maintaining their work life also.
- Eventually the hectic life in the cities have drove the need of ready to cook meals or ready to eat items as a preference on the people’s menu. Also frozen food is an option for those customers who want tasty food in less time as the amount of time required for preparation of frozen food is much less.
- In a way it saves all the time of preparation while gives you tasty food to eat. And then there are those seasonal fruits and vegetable which cannot be available throughout the year. So any fruit or vegetable available in a particular season can be frozen and then sent across the globe.
Some of the major market competitors in the frozen food market are Nestle, H.J. Heinz Co., ConAgra foods, Unilever PLC, Ajinomoto Co., Kraft Foods Group Inc. , Pinnacle Foods Inc. and Maple Leaf Foods Inc.
Though at the global level, Frozen food market is highly dominated by the top four companies namely Nestle, H.J. Heinz and two others holding almost 19% of the global frozen food market share. Other than those companies operating at the global level, some companies dominate at the regional level also. To name few are Mother dairy Fruit &vegetable Pvt. Ltd. (India) and BRF SA (Brazil).
Key Success Factors
- There are several factors which can be attributed as a key success factors in which one of the most important factors is the availability of extensive range of frozen food products that are available in the market in different categories.
- Other factors could be changing lifestyle and changing purchasing patterns of the customers.
- There has been a significant increase the urban population and a drift of people from rural areas to urban has been a significant factor of changing food habits of people.
- Other than the factors mentioned above, increased number of working women in several sectors could be considered as a reason shifting to more convenient food such frozen food rather than cooking at home. With the working lifestyle, it becomes majorly difficulty for a women to take out that much time to cook meals. According to the US department of Labor, it is supposedly to reach 202 million of working women in US by 2022 as compared to 127.1 million women working in the year 2013.