Frozen food sales are in value growth – just. But sales are not evenly distributed across its various sub-categories and meat is struggling even more than last year. Jon Severs reports
Frozen food remains out in the cold.
Last year's modest 1.6% value growth was bad enough for the category many wrongly assumed would come into its own in a harsh economic climate. But over the past 12 months [Kantar Worldpanel, 52w/e March 2011], this has dwindled to just 1% largely as a result of the dreadful performance of frozen meat.
Sales of frozen raw meat have slumped 9% more than double the decline experienced in 2009 to 2010 and processed meat products haven't fared much better, falling 8.4%. Hit by retail price hikes, their problems have been compounded by heavy promotional activity in the fresh meat category (see Fresh News, page 29), a lack of branded presence and mounting health concerns about red meat.
And their woeful performance has done nothing to help a category that for all the efforts of the big brands continues to struggle to communicate its health benefits effectively, merchandise itself well or keep the lid on aggressive promotional tactics. But the outlook may not be as bleak as it appears especially if meat can take a leaf out of the book of more successful sub-categories such as pizza.
A major reason meat is in the predicament it's in is the level of promotional activity taking place in the chillers at the moment. Frozen meat suppliers already faced an uphill task convincing consumers to buy products that tend to look less than appetising than their fresh counterparts and are widely perceived to be lower quality. Narrowing the price gap with fresh has only made matters worse.
Frozen meat also lacks big brands, say the experts, and this makes it much harder to add value or justify necessary price rises, which unfortunately have become inevitable thanks to import quotas, fluctuating currency rates, changes in diet in the Far East and high feed prices.
Simon Parnell, consumer insight director at Kantar Worldpanel. notes that the price of frozen lamb has risen over the past year. "In terms of proteins, lamb is the key driver of the sales decline for frozen meat in the last year," he says. "And it has a greater share of frozen meat than fresh meat and so any change in lamb sales has a greater effect on frozen meat sales."
The sub-category has also been hit by a fall in shopper numbers, he says, adding: "In terms of relative pricing, frozen meat prices have been growing faster than fresh for almost two years, meaning the competitive price advantage has been eroded."
Without a major brand to drive innovation and marketing, frozen meat has struggled to justify price rises or stop consumers gravitating to chilled. "The lack of brands means you don't have someone advertising, supporting, selling the benefits of frozen meat, so it faces a much harder challenge to compete than other areas of the frozen market," says Kevan Mallinder, sales director at Aunt Bessie's.
Another issue is that own-label meat propositions sit very much at the value end of the spectrum, so retailers have not exactly been pulling their weight when it comes to tempting shoppers towards the meat section of the freezer. They have, however, stepped up their merchandising efforts when it comes to other sub-categories reflecting their growing presence in the sector.
Sainsbury's, Asda, Tesco and Morrisons have been gradually expanding their own-label frozen ranges. In times of austerity, frozen becomes a more attractive option to consumers, explains Andy Phelps, Sainsbury's category manager. "The level of both our product innovation and quality and value customer communications is enabling us to grow our customer numbers," he adds.
Tellingly, traditionally upmarket Waitrose is also significantly upping its activity in this price-sensitive category and has enjoyed an 8.3% rise in its value share of the frozen market as a result [Kantar]. Experts believe that renewed interest in frozen from retailers augurs well for the overall category. Some add that although 1% category growth is low, the fact it is in growth at all is encouraging. They point out that in 2009-2010, growth had slipped from 6.7% the previous year far more than it has this year.
Brian Young, director general of the British Frozen Food Federation (BFFF), believes it is a sign that the market is stabilising and goes so far as to say: "We should be very positive".
There's certainly plenty to celebrate when it comes to the level of NPD in the sector (see right). Brands have obviously been key in driving this, though, which is why meat has had problems and the sub-categories that are enjoying some of the strongest growth boast some of the biggest and most competitive brands not to mention own-label players.
Take pizza. Dr Oetker's Chicago Town brand has seen sales rise 10.3% over the past year [SymphonyIRI 52w/e 19 March 2011]. Many experts have questioned the historically high levels of promotional activity, claiming it has been responsible for devaluing the category.
Dr Oetker, however, claims that promotions are precisely what is driving value growth for Chicago Town. "Frozen pizza is one of the heaviest-promoted categories in frozen," says Paula Wyatt, marketing manager for Dr Oetker UK. "The key behind our value growth is people buying more products, more often, because of the promotions we have been running."
Dr Oetker is clearly confident in the effectiveness of promotions, but there are concerns that consumers have got so used to cheap deals that they're no longer prepared to pay full price for their pizza.
Aggressive promotional tactics are an issue, believes Dorothy Mackenzie, chairman at branding agency Dragon Rouge. "The danger is that the consumer gets used to buying the brand at a reduced price point, which might compromise on the brand's long-term potential to earn a premium, and consumers may even end up feeling that brands continually 'on offer' are less inherently desirable than brands that are not."
The fact that seven of the top ten brands have reduced levels of promotional activity in the past year [Assosia] suggests the penny may have finally dropped. But promotions are a key way of getting consumers to try frozen products, and if brands are going to ditch them they need to find another way of getting consumers to buy their products such as advertising.
It is no coincidence that the drop in promotions has been accompanied by a 31.2% rise in advertising spend by the top 10 brands [Ebiquity 52w/e 31 March 2011, see p48]. As well as encouraging people to buy a particular brand, an effective advertising campaign can also convince shoppers that frozen is as fresh as chilled, if not fresher which is why the majority of this money has been spent on television adverts educating the public about the benefits of freezing food.
McCain has spent 24.4% more on advertising over the past year, 90.8% of it on television adverts, according to Ebiquity. Birds Eye, one of the three top 10 brands that actually increased its promotional activity, also massively increased its spend and its Willem Defoe-voiced Polar Bear campaign is widely credited with having best communicated the frozen freshness message. The sales figures bear this out, claims Margaret Jobling, marketing director for Birds Eye, who says that in October last year, it recorded a 3% uplift in value sales as a result of consumers who had seen the advert.
There is still a lot of work to do, however, believes Greg Vallance, co-founder of Embrace Brands. "The inherent health benefits associated with freezing food are rarely communicated across all categories and the frozen sections of supermarkets are often a bargain basement where all messaging is the same and nothing stands out," he argues.
Not all brands have McCain's or Birds Eye's deep pockets, either. The challenger brands, in particular, are unlikely to divert funds from product development and will be relying on trade federations such as the BFFF to relay frozen's quality message.
Fortunately, the federation's New Ice Age campaign stepped up a gear this year, putting the likes of celebrity chef Aldo Zilli in front of BBC Breakfast viewers to expound the benefits of frozen food. In August, the federation will run a pop-up restaurant called N-Ice where top chefs such as Simon Rimmer and Atul Kochhar will use frozen ingredients such as steak and lamb to demonstrate the category's credentials, hopefully providing a shot in the arm for ailing frozen meat suppliers.
The big prepared foods brands, meanwhile, are eschewing overt health messages for heavyweight campaigns with a more pop-culture bent. Dr Oetker has invested in cross-promotional activities with X Factor and 20th Century Fox, for instance, while McCain sponsored Film4 9pm films (see p48).
Others are sticking to a more traditional message but trying to refresh their advertising and branding at the same time. The eponymous Aunt Bessie, for example, has been given a makeover both on pack and on screen. "We have gone back to our roots, celebrating the thing we are best known for and trying to emphasise that we care about what we do," says Mallinder. "To consumers, showing we care means the food will be good."
Although the frozen vegetable sub-category has shown no value growth over the past year, it has played an important role on the communication front, maintains Norman Soutar, chairman of the FDF's Frozen Food Group. "The message has got across that vegetables that are packed and quickly frozen are equally, if not more, nutritious than the fresh equivalent," he says. "Consumers understand this message and we need to work on it for other products. With fish, too, customers are getting the message about freshness."
Vallance suggests this may be because the public is more accepting of fish as a frozen product, rather than any specific trick employed by the brands, but Natasha Gladman, marketing director at Young's Seafood, claims that brands like Young's put a lot of work into their advertising. She highlights the recent launch of a campaign for breaded cod and haddock products run in conjunction with folk singing group Port Isaac's Fisherman's Friends.
This didn't stop Young's sales tumbling 9.9% in the year to 19 March [Symphony IRI]. Gladman insists that this year will be better. "The success of our breaded range, and our strategy of focusing on a whole category approach to fish and seafood, is driving growth since these figures came out and, with a strong pipeline of innovation, NPD and new initiatives, we're very optimistic about progress and success this year," she says.
NPD is key, she adds, citing the launch in February of Young's four Large Cod and Haddock Fillets in Kingsmill breadcrumbs. Birds Eye agrees and highlights its £7.5m investment in its fish and seafood products last year and the recent launch of Catch Fresh Prawns, which Jobling predicts will "provide the much needed reinvigoration the frozen sector needs".
That certainly seems to be needed when it comes to fish. Not only did its 2.3% growth lag behind overall grocery growth of 3.4%, it also belied a very weak performance by many players in the sector. Experts suggest that sales were flattered by a couple of products selling exceptionally well, while others floundered partly because of their relatively high price points.
Poor merchandising hasn't helped though and this continues to be an area where the whole frozen category falls down or where some would argue it is let down. "A major hurdle for frozen foods is that it's not a particularly nice shopping experience," says Mark Broughton, planning director at Life Agency. "It suffers from a degree of aisle avoidance unless you specifically need a product you will try and not go to that area."
Suppliers are trying to bring excitement to the frozen aisle through investing in eye-catching packaging. Young's has used see-through packs for its Gastro range, while Aunt Bessie's revamped its packaging last year, giving the range a new look and adding bigger product images to its packs of Yorkshire puddings. McCain has also been busy. In March, it unveiled a new brand identity for its frozen potato range, with the aim of reinforcing the 'It's all good' brand message and to help with product differentiation and in-freezer navigation.
The major frozen brands have also worked with retailers on better placement of products. Last year, Birds Eye experimented with block placing its Field Fresh range at Sainsbury's. The trial generated an initial 62% incremental category sales by encouraging Birds Eye Peas buyers to add new Field Fresh SKUs to their repertoire and repeat buy the range, it claims.
Some in the industry argue that brands should not have to work quite so hard to get noticed and that retailers should do more. "Frozen food by its nature requires freezers, which are not particularly attractive or flexible in display terms, and items need to be kept behind closed doors so it does impose some limitation," says the FDF's Soutar. "However, there is probably more that stores could be doing to optimise display of frozen products."
Needless to say, the retailers disagree. Waitrose says it has been working on various projects, including a summer ice cream festival, to ensure the freezer aisles reach their maximum potential. Sainsbury's claims it too has been working hard to improve frozen's appeal. Over the past 18 months, it has tried to improve the aisle's look with brightly coloured, permanent directional signage and pictorial point of sale material, says Phelps.
Aunt Bessie's Mallinder adds that retailers are starting to rethink how promotions are positioned and experiment with new ways to win over consumers.
"Retailers have come to us and we are working with them to find a way of solving the problem," he says. "Some are more progressive than others, but competition means that if one does something that is a success, the rest will follow."
Frozen meat suppliers will be hoping at least some of these energies are directed towards them.
Focus On Frozen Food
Frozen food remains out in the cold.
Last year's modest 1.6% value growth was bad enough for the category many wrongly assumed would come into its own in a harsh economic climate. But over the past 12 months [Kantar Worldpanel, 52w/e March 2011], this has dwindled to just 1% largely as a result of the dreadful performance of frozen meat.
Sales of frozen raw meat have slumped 9% more than double the decline experienced in 2009 to 2010 and processed meat products haven't fared much better, falling 8.4%. Hit by retail price hikes, their problems have been compounded by heavy promotional activity in the fresh meat category (see Fresh News, page 29), a lack of branded presence and mounting health concerns about red meat.
And their woeful performance has done nothing to help a category that for all the efforts of the big brands continues to struggle to communicate its health benefits effectively, merchandise itself well or keep the lid on aggressive promotional tactics. But the outlook may not be as bleak as it appears especially if meat can take a leaf out of the book of more successful sub-categories such as pizza.
A major reason meat is in the predicament it's in is the level of promotional activity taking place in the chillers at the moment. Frozen meat suppliers already faced an uphill task convincing consumers to buy products that tend to look less than appetising than their fresh counterparts and are widely perceived to be lower quality. Narrowing the price gap with fresh has only made matters worse.
Frozen meat also lacks big brands, say the experts, and this makes it much harder to add value or justify necessary price rises, which unfortunately have become inevitable thanks to import quotas, fluctuating currency rates, changes in diet in the Far East and high feed prices.
Simon Parnell, consumer insight director at Kantar Worldpanel. notes that the price of frozen lamb has risen over the past year. "In terms of proteins, lamb is the key driver of the sales decline for frozen meat in the last year," he says. "And it has a greater share of frozen meat than fresh meat and so any change in lamb sales has a greater effect on frozen meat sales."
The sub-category has also been hit by a fall in shopper numbers, he says, adding: "In terms of relative pricing, frozen meat prices have been growing faster than fresh for almost two years, meaning the competitive price advantage has been eroded."
Without a major brand to drive innovation and marketing, frozen meat has struggled to justify price rises or stop consumers gravitating to chilled. "The lack of brands means you don't have someone advertising, supporting, selling the benefits of frozen meat, so it faces a much harder challenge to compete than other areas of the frozen market," says Kevan Mallinder, sales director at Aunt Bessie's.
Another issue is that own-label meat propositions sit very much at the value end of the spectrum, so retailers have not exactly been pulling their weight when it comes to tempting shoppers towards the meat section of the freezer. They have, however, stepped up their merchandising efforts when it comes to other sub-categories reflecting their growing presence in the sector.
Sainsbury's, Asda, Tesco and Morrisons have been gradually expanding their own-label frozen ranges. In times of austerity, frozen becomes a more attractive option to consumers, explains Andy Phelps, Sainsbury's category manager. "The level of both our product innovation and quality and value customer communications is enabling us to grow our customer numbers," he adds.
Tellingly, traditionally upmarket Waitrose is also significantly upping its activity in this price-sensitive category and has enjoyed an 8.3% rise in its value share of the frozen market as a result [Kantar]. Experts believe that renewed interest in frozen from retailers augurs well for the overall category. Some add that although 1% category growth is low, the fact it is in growth at all is encouraging. They point out that in 2009-2010, growth had slipped from 6.7% the previous year far more than it has this year.
Brian Young, director general of the British Frozen Food Federation (BFFF), believes it is a sign that the market is stabilising and goes so far as to say: "We should be very positive".
There's certainly plenty to celebrate when it comes to the level of NPD in the sector (see right). Brands have obviously been key in driving this, though, which is why meat has had problems and the sub-categories that are enjoying some of the strongest growth boast some of the biggest and most competitive brands not to mention own-label players.
Take pizza. Dr Oetker's Chicago Town brand has seen sales rise 10.3% over the past year [SymphonyIRI 52w/e 19 March 2011]. Many experts have questioned the historically high levels of promotional activity, claiming it has been responsible for devaluing the category.
Dr Oetker, however, claims that promotions are precisely what is driving value growth for Chicago Town. "Frozen pizza is one of the heaviest-promoted categories in frozen," says Paula Wyatt, marketing manager for Dr Oetker UK. "The key behind our value growth is people buying more products, more often, because of the promotions we have been running."
Dr Oetker is clearly confident in the effectiveness of promotions, but there are concerns that consumers have got so used to cheap deals that they're no longer prepared to pay full price for their pizza.
Aggressive promotional tactics are an issue, believes Dorothy Mackenzie, chairman at branding agency Dragon Rouge. "The danger is that the consumer gets used to buying the brand at a reduced price point, which might compromise on the brand's long-term potential to earn a premium, and consumers may even end up feeling that brands continually 'on offer' are less inherently desirable than brands that are not."
The fact that seven of the top ten brands have reduced levels of promotional activity in the past year [Assosia] suggests the penny may have finally dropped. But promotions are a key way of getting consumers to try frozen products, and if brands are going to ditch them they need to find another way of getting consumers to buy their products such as advertising.
It is no coincidence that the drop in promotions has been accompanied by a 31.2% rise in advertising spend by the top 10 brands [Ebiquity 52w/e 31 March 2011, see p48]. As well as encouraging people to buy a particular brand, an effective advertising campaign can also convince shoppers that frozen is as fresh as chilled, if not fresher which is why the majority of this money has been spent on television adverts educating the public about the benefits of freezing food.
McCain has spent 24.4% more on advertising over the past year, 90.8% of it on television adverts, according to Ebiquity. Birds Eye, one of the three top 10 brands that actually increased its promotional activity, also massively increased its spend and its Willem Defoe-voiced Polar Bear campaign is widely credited with having best communicated the frozen freshness message. The sales figures bear this out, claims Margaret Jobling, marketing director for Birds Eye, who says that in October last year, it recorded a 3% uplift in value sales as a result of consumers who had seen the advert.
There is still a lot of work to do, however, believes Greg Vallance, co-founder of Embrace Brands. "The inherent health benefits associated with freezing food are rarely communicated across all categories and the frozen sections of supermarkets are often a bargain basement where all messaging is the same and nothing stands out," he argues.
Not all brands have McCain's or Birds Eye's deep pockets, either. The challenger brands, in particular, are unlikely to divert funds from product development and will be relying on trade federations such as the BFFF to relay frozen's quality message.
Fortunately, the federation's New Ice Age campaign stepped up a gear this year, putting the likes of celebrity chef Aldo Zilli in front of BBC Breakfast viewers to expound the benefits of frozen food. In August, the federation will run a pop-up restaurant called N-Ice where top chefs such as Simon Rimmer and Atul Kochhar will use frozen ingredients such as steak and lamb to demonstrate the category's credentials, hopefully providing a shot in the arm for ailing frozen meat suppliers.
The big prepared foods brands, meanwhile, are eschewing overt health messages for heavyweight campaigns with a more pop-culture bent. Dr Oetker has invested in cross-promotional activities with X Factor and 20th Century Fox, for instance, while McCain sponsored Film4 9pm films (see p48).
Others are sticking to a more traditional message but trying to refresh their advertising and branding at the same time. The eponymous Aunt Bessie, for example, has been given a makeover both on pack and on screen. "We have gone back to our roots, celebrating the thing we are best known for and trying to emphasise that we care about what we do," says Mallinder. "To consumers, showing we care means the food will be good."
Although the frozen vegetable sub-category has shown no value growth over the past year, it has played an important role on the communication front, maintains Norman Soutar, chairman of the FDF's Frozen Food Group. "The message has got across that vegetables that are packed and quickly frozen are equally, if not more, nutritious than the fresh equivalent," he says. "Consumers understand this message and we need to work on it for other products. With fish, too, customers are getting the message about freshness."
Vallance suggests this may be because the public is more accepting of fish as a frozen product, rather than any specific trick employed by the brands, but Natasha Gladman, marketing director at Young's Seafood, claims that brands like Young's put a lot of work into their advertising. She highlights the recent launch of a campaign for breaded cod and haddock products run in conjunction with folk singing group Port Isaac's Fisherman's Friends.
This didn't stop Young's sales tumbling 9.9% in the year to 19 March [Symphony IRI]. Gladman insists that this year will be better. "The success of our breaded range, and our strategy of focusing on a whole category approach to fish and seafood, is driving growth since these figures came out and, with a strong pipeline of innovation, NPD and new initiatives, we're very optimistic about progress and success this year," she says.
NPD is key, she adds, citing the launch in February of Young's four Large Cod and Haddock Fillets in Kingsmill breadcrumbs. Birds Eye agrees and highlights its £7.5m investment in its fish and seafood products last year and the recent launch of Catch Fresh Prawns, which Jobling predicts will "provide the much needed reinvigoration the frozen sector needs".
That certainly seems to be needed when it comes to fish. Not only did its 2.3% growth lag behind overall grocery growth of 3.4%, it also belied a very weak performance by many players in the sector. Experts suggest that sales were flattered by a couple of products selling exceptionally well, while others floundered partly because of their relatively high price points.
Poor merchandising hasn't helped though and this continues to be an area where the whole frozen category falls down or where some would argue it is let down. "A major hurdle for frozen foods is that it's not a particularly nice shopping experience," says Mark Broughton, planning director at Life Agency. "It suffers from a degree of aisle avoidance unless you specifically need a product you will try and not go to that area."
Suppliers are trying to bring excitement to the frozen aisle through investing in eye-catching packaging. Young's has used see-through packs for its Gastro range, while Aunt Bessie's revamped its packaging last year, giving the range a new look and adding bigger product images to its packs of Yorkshire puddings. McCain has also been busy. In March, it unveiled a new brand identity for its frozen potato range, with the aim of reinforcing the 'It's all good' brand message and to help with product differentiation and in-freezer navigation.
The major frozen brands have also worked with retailers on better placement of products. Last year, Birds Eye experimented with block placing its Field Fresh range at Sainsbury's. The trial generated an initial 62% incremental category sales by encouraging Birds Eye Peas buyers to add new Field Fresh SKUs to their repertoire and repeat buy the range, it claims.
Some in the industry argue that brands should not have to work quite so hard to get noticed and that retailers should do more. "Frozen food by its nature requires freezers, which are not particularly attractive or flexible in display terms, and items need to be kept behind closed doors so it does impose some limitation," says the FDF's Soutar. "However, there is probably more that stores could be doing to optimise display of frozen products."
Needless to say, the retailers disagree. Waitrose says it has been working on various projects, including a summer ice cream festival, to ensure the freezer aisles reach their maximum potential. Sainsbury's claims it too has been working hard to improve frozen's appeal. Over the past 18 months, it has tried to improve the aisle's look with brightly coloured, permanent directional signage and pictorial point of sale material, says Phelps.
Aunt Bessie's Mallinder adds that retailers are starting to rethink how promotions are positioned and experiment with new ways to win over consumers.
"Retailers have come to us and we are working with them to find a way of solving the problem," he says. "Some are more progressive than others, but competition means that if one does something that is a success, the rest will follow."
Frozen meat suppliers will be hoping at least some of these energies are directed towards them.
Focus On Frozen Food
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