North American Frozen Food Sales
Holding up Despite the Recession

US retail poundage down slightly, but dollar volume up, even as Walmart takes business away from conventional supermarkets. Foodservice sector apparently still gaining.

Here’s the good news: retail frozen food sales in the United States are still going strong. Here’s the bad news: it seems to be anybody’s guess what’s happening with frozens on the foodservice side, although the restaurant industry is clearly hurting from the recession.

For some years now, the retail market has been a mystery because the largest retailer in the country, Walmart, had ceased reporting sales to market research firms. But last year, Walmart resumed taking part in Nielsen tracking – although it still doesn’t work with Information Resources, Inc. (IRI)
Nielsen data for 2008 show total retail sales of $31.024 billion for frozen foods, exclusive of ice cream, frozen novelties and bagged ice. Poundage comes out to 12.718 billion. Those are close to the figures Quick Frozen Foods International had worked out for 2007, applying a fudge factor to IRI data to allow for Walmart.

On the foodservice side, frozen food sales to restaurants and institutions must be around $75 billion at a minimum, but there is a great deal of uncertainty as to which categories account for how much of the overall volume. It has been nearly a decade since Technomic, Inc., reported that frozen food represented 33% of foodservice sales, and it isn’t even clear how much of the foodservice market it was tracking.

Source: Food for Thought. # All data refer to total final human consumption, including retail, catering/foodservice and artisanal/craft, thus excluding industrial and on-farm consumption.

North American data from FFT shows overall US frozen food tonnage down slightly from 15.720 million to 15.575 million, but dollar volume up a startling 34.5% to $88.546 billion. This obviously has to do with a change in the source data. Canada is shown with a slight tonnage loss at 1,123 billion, but a 5.2 dollar gain to $6.744 billion. Tonnage for Mexico is up 2.9% to 331.5 million, but value is said to have soared 95% to $2.998 billion.

FFT covers foodservice as well as retail; according to its data, frozen vegetables must be by far the largest component: total poundage is given as 21.235 million (nearly ten times Nielsen’s retail figure) valued at $45.839 billion (more than 16 times Nielsen retail) – and that’s not even counting potato products. Gauged against Nielsen retail data, FFT also suggests that foodservice frozen fish dollar volume is nearly twice that for retail, but that frozen fruit sales are predominantly retail.

Yet FFT doesn’t reflect the volume one might expect for frozen meat, based on sales at fast food chains that stress hamburgers – McDonald’s, Burger King, Arby’s and the rest. As in Europe, FFT doesn’t track sales of frozen poultry, a mainstay at other fast food chains like KFC and Popeyes. Tonnage figures for ready meals and pastry products come in below those for the closest counterparts in Nielsen retail data; it seems likely that foodservice volume is higher.

One thing that stands out in Nielsen figures is that Walmart has been cannibalizing sales from conventional supermarkets. Dollar volume for food, drug and mass merchandise outlets combined was up by 4.6%, even as poundage slipped a percent. Supermarket dollar volume alone inched up only 2.6% to $22.804 billion, and poundage was off three percent to 9.232 billion. Total poundage was 39.2% greater than for supermarkets alone in 2007; dollar volume was 33.4%. For 2008, ratios were 42.1% and 36%.

*North America: Canada, Mexico, USA. Source: Food for Thought (FFT). Based on detailed country and product volume and value forecasts available online.

Considering that people shop at Walmart for low prices, it seems odd that average prices for frozen food are increasing even as more and more shoppers forsake traditional supermarkets for the discount giant’s super centers. But there are other noteworthy trends in a rather static market. Unbreaded fish, for example, is up 1.3% in poundage and 11.5% in dollar volume, but traditional breaded products are losing ground. Unbreaded shrimp is widening its already enormous lead over breaded.

Frozen bread is a star performer in the baked goods department, up 2.6% in poundage and 10.1% in dollars. Biscuits, rolls and muffins showed a 3.4% gain in poundage and 10.2% in dollars. Entrees, far more popular than traditional dinners, showed respectable growth in 2008: up nearly a point in poundage and 5.2% in dollars – dinners showed a sharp decline of 8.2% in poundage and 4.7% in dollars. Poultry, perhaps because it is considered healthier than red meat, advanced 1.8% in poundage and 5.3% in dollars. Ground beef and other red meats took a beating. Frozen juice and drink concentrates also took a beating, but that was hardly news.

As it has for Europe, Food for Thought has projected the growth in the North American frozen food market through 2011. Frozen fish and convenience meats are seen as the biggest gainers, up an average of 4.5% and 4.3%, respectively, to $6.792 billion and $2.681 billion. But vegetables and ice cream alike face lesser prospects, with annual growth averaging only 0.2%. Ready meals are expected to post a 3.6% average gain, to $16.134 billion.

Sources: Nielson Company, total sales for supermarkets, drug stores and mass merchandisers, including Walmart. Some minor sub-categories omitted. Figures in others may not add exactly due to rounding.