Frozen assets

Convenience food profits are coming in from the cold

Profitable and successful convenience and impulse outlets are traditionally built on the back of solid sales of items such as tobacco, confectionery and cool beverages ... certainly not frozen food!

Yet, a successful C&I outlet increasingly needs to offer a complete range of product to its varied customer base, and frozen food can be an important part of the mix. While the typical on-the-go, on-the-run convenience customer may still prefer to grab a hot pie or bakery item for instant gratification, advances in technology and innovative frozen food offers have put it on the menu of a growing number of outlets.

Frozen meals and vegetables are useful in the impulse channels for consumers that are on the way home and need to 'fill a gap' through the week in their regular grocery purchase. And frozen food has also established itself as being able to play a part in contributing to a healthier lifestyle. It can provide an offer to people who are seeking healthier alternatives in conjunction with a proposition that is fast and easy to prepare.

In other words, it enables those that may not be as confident in the kitchen, or those who are time poor, to experience quality cuisine or a quick snack within a few minutes.

The fact remains however that while frozen food may be growing in the convenience space, it still makes up a very small percentage of overall sales. In convenience it would be petrol stations with cross-over supermarket offering that would stock the greatest share of frozen foods.

One of the giants of the frozen food world, McCain Foods, says that although it doesn't focus on impulse channels, its products do penetrate these channels to some degree via its 'supermarket' wholesalers.

"The majority of our volume comes from the supermarket channel, and in our experience, the volume of frozen products sold via the convenience and impulse route channels is quite low," said Greg Matheson, Group Product Manager, McCain Foods. "Therefore, our strategy is to focus the majority of our marketing activity at the supermarket route where the volume is."

Part of the reason that McCain Foods has a very low presence in convenience stores is because typically these outlets cannot store a wide frozen food product range. As previously stated, the exception would be petrol station / cross-over supermarket stores that supply a range of foods and ready-made frozen meals.

Nonetheless, McCain does say it is focused on providing all Australians delicious, convenient and nutritious meals.

Another company with the same aim is Simplot, which is responsible for the ever-popular Lean Cuisine brand of frozen meals.

Currently available at all good grocery outlets and independent grocers, Lean Cuisine says it offers a nutritious and tasty meal for people looking for convenient healthier alternatives without compromising on taste.

New users: the growth platform

"Like any other category the challenge lies with getting consumers to purchase more," said a Simplot spokesperson. "There is an opportunity here to encourage new users into the category which will provide a continual trajectory of growth and hold the brand in good stead for the future."

Simplot says that part of this challenge lies with removing some of the barriers associated with frozen foods. Whilst freezing is a natural preservative, which can lock in the goodness of vegetables in particular, she says it is still met with hurdles for consumers to participate fully in the category.

"The category can expect further growth if executed correctly particularly as it aligns with a number of key macro trends such as wellbeing, whereby people are becoming more and more concerned with what they eat," said the spokesperson. "Lean Cuisine as market leader is in a strong position to deliver against these trends and is expected to contribute heavily to the growth platform for the category moving forward."

Of course, the growth in frozen food will never challenge the importance to convenience and impulse outlets of hot snacks. Companies like Patties, which makes the popular Four'N Twenty pie, is in no doubt that snacking has become a key to driving growth in the channel.

Four'N Twenty Brand Manager, Mark Malak, says consumers are looking for high quality and great value snacking alternatives.

Snacking: the largest consumer trend

"Snacking has become the largest consumer trend within out-of-home, accounting for 60% of all purchase occasions," he said. "There's a strong trend towards eating on-the-go, so the market opportunity for us has been to provide a quick pick-me-up that's readily available."

While Four'N Twenty and its sister brand, Herbert Adams are supplied frozen to convenience outlets, they are served to customers in the channel hot and ready to eat. However, in supermarkets, the products can be bought frozen.

"Four'N Twenty recognises distinct differences in its audiences when it's marketing to out-of-home or in-home consumers," said Mr Malak. "Our out-of-home communications are speaking direct to the consumer who purchases and consumes the product, so there's an immediacy about the tone and message of our marketing."

He says that providing a diverse product range to satisfy the variety of consumer needs is another key driver for Four'N Twenty.

In September last year, Four'N Twenty released its new Four'N Twenty Snack Meat Pie, and Snack Sausage Roll, which has met with quick success.

"We are growing the category by having products that attract new users, by providing a broad range of products catering to specific consumer needs, and establishing cross category links and promotions" Mr Malak says. "Providing specific products to meet particular consumer demands helps introduce new buyers, and therefore category growth."

While the benefits of fresh food as a healthier eating option are constantly being trumpeted, there is a sense in some quarters that the strength of frozen food in this department is sometimes underplayed.

McCain Foods believes that frozen food will continue to grow in sales as the public becomes more educated about the benefits of frozen versus fresh foods.

"Frozen vegetables and potatoes retain most of the nutrients of their fresh counterparts," said McCain's Greg Matheson. "In addition, frozen foods can retain quality and shelf life that chilled, canned and dehydrated or even fresh cannot ... making them a far more convenient option for consumers, while helping to reduce waste."

Interestingly, it is widely believed that improving freezing technologies will continue to both enhance quality and reduce costs ... and that has got to be of interest to all food retailers.

"Furthermore, prices for fresh fruit and vegetables remain high and we believe this will drive consumers toward frozen vegetables and fruit," said Mr Matheson.

"Today's consumers want healthier alternatives that don't compromise on quality and taste, and we believe that all McCain products fit well as part of a nutritionally balanced diet and a healthy, active lifestyle."

The taste: the R&D continues

But while the cost, convenience and health benefits of frozen food are becoming ever more apparent, it is obviously absolutely crucial that the taste is right, as well. Companies such as McCain and Lean Cuisine are constantly seeking to improve and enhance the frozen food offering.

Lean Cuisine says it prides itself on being able to offer healthier traditional comfort meals and top sellers include variants such as Rich Beef Lasagne and Classic Beef Stroganoff with Pasta. It offers a large variety of meal solutions, ranging from hearty meals such as a Rich and Creamy Mushroom Tortellini to lighter meals within its steam range, such as Atlantic Salmon with pasta.

But as with all categories, it is clearly not enough to rest on your laurels, and Lean Cuisine has recently added to the range with the launch of seven wellbeing skus including Chicken and Spinach Risotto & Spaghetti Carbonara.

"The range is designed to help consumers maintain wellbeing every day by offering a variety of nutrients that they are familiar with and contribute to a healthier lifestyle," said the Simplot spokesperson. "For example, Beef Ravioli is rich in protein to maintain muscle and therefore lean body mass offering 32% of daily intake requirements within one serve, or alternatively Creamy Chicken Pasta Bake which offers a good source of calcium to maintain strong bones and teeth, contributing to 28% of recommended dietary intake in one serve."

Lean Cuisine says in order to maintain consumers' engagement and encourage new consumers within the brand it will constantly assess and reassess their variant offers within the range to ensure the proposition is relevant to consumers, and that it is aligned with current food trends and provides enough variety to generate growth within the category.

It's a similar story at McCain, which is the market leader in the frozen potato, vegetables, meals and pizza categories.

Its most popular products include Purely Potato, Healthy Choice Plus, Pizza perfection Thin Crust, and Superfries, but the company says it is always thinking of new ways to make delicious and nutritious meals which are quick and easy to prepare.

"McCain is responding to our consumers with an expanded range of Healthy Choice products that are lower in fat, sugar and sodium," said McCain's Greg Matheson.

"Following the launch of McCain Healthy Choice Plus last year, we have extended the range with three new delicious meal offerings – Beef Tortellini, Chicken Cacciatore and Sweet & Sour Chicken, and we are continuously refreshing the meal offerings that appeal to consumers."

The company will also be launching new products in snack-sized meals. For example, Frozen Fruit and Single Serve Pizza, and that is a development that could cause some excitement in small grocery outlets and convenience outlets.

Packaging: for information & appeal

Another way to cause excitement and generate sales in frozen food is obviously through packaging, and that is also the way in which a clear message about the product can be delivered. The appeal of packaging is then paramount in any category when marketing a food offer.

"We know that taste is a core driver within food; therefore our packaging is designed to heighten overall appetite appeal with tempting product shots displaying a meal solution for our consumers," said a Simplot spokesperson. "By clearly depicting delicious food shots on front of pack, consumers can be reassured products are made of the highest quality with ingredient integrity."

Lean Cuisine also provides reassurance to customers through relevant nutritional claims such as its product being low in cholesterol and 97% fat free … messages which are paramount to the positioning of the brand and that are said to be resonating with consumers.

"Packaging is fundamental to any brand's presence in store," said the spokesperson. "It is the combination of an appealing and appetising front of pack in conjunction with key nutritional claims that are key to encouraging and motivating consumers to purchase."

McCain has also long been a supporter of easy-to-understand nutritional labelling and has actively participated in the development of labelling changes.

"Our research has found that consumers are increasingly looking for nutritional advice on the foods they buy, helping them make better informed decisions in relation to their health and diet," said Greg Matheson. "Responding to this need, last year we launched Healthy Choice Plus, which features improved nutritional labelling on pack, together with a Daily Intake Guide."

It really is a case of giving the customer what they want.

"McCain believes it should provide both a wide variety of product choices and the information consumers need to make their purchase decisions," said Mr Matheson. "Packaging is very important in helping to market our products and brand, as well as to drive sales ... at the end of the day, first impressions count."

Well located & presented

Another way to make a good first impression is to be well located and well presented.

"In store presence is an important part of the marketing mix," said Mr Matheson. "The position of products in stores has the ability to greatly influence whether a shopper sees your product."

Mark Malak from Patties agrees, arguing that support of national market leading brands, attractive packaging, point of sale and product presence are all integral to success in growing sales.

A strong presence in store is then paramount to a product or range's success, and that can be even more relevant within the freezer section, given the difficulty consumers have with shopping the segment.

"Consumers need to be able to easily navigate the section which can be made easier by a strong presence and maximum distribution," said the Simplot spokesperson. "Products within the Lean Cuisine range should be displayed to best communicate the delicious product shots - ensuring consumers can find their meal preferences as easily as possible."

Simplot says that to assist in navigation, at times freezer door stickers and highlighters have been used to remind shoppers about the vast array of variants and reinforcing the ingredient integrity within the range.

It seems clear then that strong promotional activity and innovative new products is allowing frozen food to demonstrate good dollar growth through grocery ... and that will, to a lesser extent, be the case in convenience. It's a fact that most hungry customers shopping in the channel like their food hot, but some like it cold ... and an increasing number like it absolutely freezing.