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The fast and the frozen

Frozen food hasn’t been as recession proof as expected.

The ancient Chinese did it. So did the Romans. Freezing food to eat later is as old as civilization itself–though it didn’t quite take off until the TV dinner’s heyday. Scroll forward to the present day and frozen food is not only convenient, there’s a lot more of it from which to choose. Consumers can pick anything from prepared meals to pre-cut and prewashed vegetables. It’s no wonder frozen foods is now one of the largest categories within the grocery channel.

Yet the category can be a difficult one for grocers to manage and merchandise. Limited freezer space in stores means retailers need to be choosy as to which products to add and which ones to delete. And despite one analyst’s recent assertion that frozen food had become “recession proof,” flagship frozen foods such as frozen dinners haven’t been, well, hot. Sales of frozen dinner entrees are down 4% this year compared to last, along with frozen vegetables (-2%), breakfasts (-6%) and fish and chips (-13%; see chart on opposite page).

None of this surprises Debbie Slinn, Nestlé’s coordinator of corporate affairs. Consumers will shy away from frozen dinners in a weakened economy, she says, and move toward fresh meat and veggies, two categories that have seen good growth over the past year (4% and 3%, respectively). “Consumers are gravitating to healthier food options,” says Slinn. No wonder healthier frozen fare is doing a lot better than the old TV dinners. A good example is frozen seafood. Sales in this category are 4% ahead of last year.

Pizza is still tops

Pizza remains the biggest frozen category. Nielsen data indicates frozen pizza meals rose 8% in sales and 14% in units in the 52 weeks to July 31, 2010. Pizza’s popularity in recent years was credited to Nestlé’s decision to acquire Kraft’s Canadian frozen pizza business in 2008.

Dr. Oetker marketing director Stuart Schneiderman says competition in the category has been stiff “since more brands in the marketplace mean less shelf space and warehouse slots available.”

But what’s key, says Schneiderman, is not the number of players, but the innovation and variety manufacturers bring to the pizza category. “While classic varieties such as pepperoni and deluxe continue to be important, adding additional variety–including vegetables, for example–increases brand interest by consumers. Retailers who win in this category are those with the widest assortments.”

Increased consumer demand for choice, nutrition and convenience in frozen foods is underpinned by demographics. Popping a frozen entree into the microwave fits younger on-the-go Canadians perfectly. For Canada’s older citizens, though, the health benefits of food are more important than how fast it can be nuked. It’s estimated that by 2025, one in four Canadians will be 65 or older. Many will suffer from food-related disease, notably celiac disease, which drives the demand for gluten-free products–and that includes what’s in the freezer aisle.

Retailers aren’t waiting for the “silver tsunami” to sweep away wheat-based products, says Kristi Chambers, a Sobeys manager in Winnipeg. They’re stocking their freezers now: “We have a huge eight-foot section in our freezer devoted to gluten-free products…I’ve got everything from frozen sandwich bread and hot dog buns to waffles to frozen macaroni and cheese, lasagna, all kinds of dried pasta, bread and muffin mixes and cookies.”

Work with what you’ve got

Frozen food managers are often hamstrung by limited space in the freezer aisle, a fact McCain’s director of customer information, John Alexiou, says complicates a frozen fruit beverage sector already struggling to rebound from an 8% sales loss in the segment this year. “Given the demand for space and the competition for space in the freezer aisle, concentrates just haven’t been able to generate the historic volume that it has in the past.”

But restricted freezer space not only limits the number of frozen products on offer, it also limits the retailer’s merchandising options. It’s harder for a grocer to build excitement around a frozen food display versus a regular shelf display of, say, cookies. “Those items are easier to display in people’s faces,” says Neil Lindenbach, an Independent Grocer owner in Ottawa. “At my store, we normally bring in extra portable freezers and tie them in with some high-moving product to get people to that area,” says Lindenbach. Christopher Szeszorak stopped short of featuring entrees at the front of his store in Prince Albert, “but we did feature pizzas and chicken wings in front of the till.”

Portable freezers are great if you have the space. But what if your store is small and doesn’t have the room? Norma Adams, assistant manager at Powell’s Supermarket in Harbour Grace, N.L., thinks vertical freezers are the solution. Her store upgraded from open freezers to glass-door freezers, which improved product visibility. “Since we put those in a few months ago, I’d say frozen food sales have increased by 20% to 25%.”

Bottom line: the frozen foods category “is fantastic,” says Sobeys’ Chambers. It has great shelf life and makes a good gross, but only if you take the time to see where it fits within the general scheme of your store. “Just looking at the layout of most stores, frozen food is usually right at the beginning of the lineup or right at the end of the lineup, between all your shelves,” says Chambers. “But you have to wonder how many sales you’ve missed because people don’t even think to go down the freezer aisle.”

Top 2 Merchandising Tips

1. Use the space above your freezer for themed displays. At Sobeys in Winnipeg, staff built a themed display for the Super Bowl last winter. “We actually built a display on top of the freezer, on the end cap, with big goal posts, McCain pizza boxes, a McCain cooler and T-shirts,” says manager Kristi Chambers.

2. Promote the healthy benefits of frozen vegetables. A study this year by the Institute of Food Research for frozen foods–maker Birds Eye found that vegetables frozen close to where they were harvested retain more vitamins and nutrients than fresh veggies, which can lose up to 45% of their nutrients by the time they’re served.

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