Has the bubble began to thaw for the frozen category?
Fiona O’Shaughnessy, Prepared Consumer Foods
Photo by Lindsay Moe on Unsplash
The frozen category has been very well positioned to service the needs of consumers during the pandemic. As consumers were limited to less shopping trips, the closure of the hospitality sector and the introduction of remote working, the frozen category highlighted its many benefits during those uncertain times and consumers responded appropriately. Most notably, the categories repertoire of products across several meal occasions, its innovative and healthy products, and its ability to reduce household waste allowing consumer to ‘stock up,’ resulted in consumers returning to the category in high numbers.
As part of our Kantar report series for the prepared consumer foods category, we reviewed the performance of the frozen category in the Irish retail channel, and we asked the question: Did the frozen category bubble begin to thaw with the reopening of the country and the easing of restrictions? The answer is yes, however only a slight thaw, as the category delivered another strong result and solid performance for the 2021 calendar year. This Insightful article will explore the answer to this question in more detail and set out the outlook and implications for Irish frozen suppliers in 2022.
According to Kantar, the frozen category in Ireland is valued at €637m, +2% in value versus 2020, and accounting for an additional 12.7m to the category (Kantar, 2021). This is a very encouraging result, as the frozen category performed ahead of total grocery, and this is on top of extremely robust growth of +16% in 2020. The growth was driven by an increase in average prices followed by purchase frequency. Comparing the two areas we see that Brands are driving overall growth for the category, seeing robust growth across all metrics excluding volume +5.4%, however it is in share decline (Kantar, 2021).
When you drill down and look at the sub sector analysis, prepared foods (such as pizzas and ready meals), is valued at over two thirds of the market and is in value growth year on year of 1.4%, driven by increased average prices Declines in promotions overall alongside stronger branded growth of +4.9% has driven prices up (Kantar, 2021). Pizzas, ready meals, and Vegetables are in decline as shoppers leave post Covid, while existing shoppers spend less. Over one third of the market is frozen sweet (such as ice cream and desserts) and delivered the categories strongest value growth year on year of 5.9% or €10.2m in actual value (Kantar, 2021). This was driven by increased frequency and again by an increase in average prices.
Dunnes won back position of market leader for the frozen category, however Supervalu saw the strongest growth in 2021. Supervalu’s solid performance continued and most notably the strongest performance across private label category whilst Lidl, was the top performer for branded products. Older demographics are key for the category, which contributes to Supervalu’s growth. Large decline in pre-family is a concern across the retailers as this demographic holds a sizeable chunk of share within frozen.
So, what is the outlook as we look forward into 2022? As inflation continues to rise for the industry, we are also entering into a very uncertain time with food security and supply chain challenges at the forefront of the industries and consumers’ minds. The frozen category, yet again, should be well positioned to service the needs of consumers and has inclined to perform well during uncertain economic times. Consumers may yet again look to ‘stock up,’ minimise waste and switch to cheaper alternatives whilst also trying to recreate ‘out of home’ dining experiences.
The category will also need to work hard to hold onto the gains it has achieved over the past two years including continual expansion of its innovative offering in line with consumer trends, engaging ways to attract consumers as they return to the store, and continue to lure lunch-time consumers as the hybrid working model looks like it here to stay for a large cohort of consumers.
Reference:
Frozen Category Review, Kantar Ireland, 52 w/e data 26th December 2021