Product innovation will benefit firms, but demand for fresh foods will limit growth
Los Angeles, CA (PRWEB) May 19, 2012
The Frozen Food Production industry has come into its own during the past five years. The industry has faced challenges along the way, especially as growing health and nutrition movements placed emphasis on fresh foods. Major players have responded to these challenges through timely and clever product introductions that incorporate consumer trends and promotional strategies. According to industry analyst Mary Nanfelt, “producers have begun to offer consumers frozen convenience foods with a plethora of options in terms of price, quality and taste.”
Given the economic volatility of the past five years, consumers have recognized two significant benefits of frozen foods: affordability and durability. Even during the recession, industry revenue still increased at annual rates of 2.2% in 2009 and 0.9% in 2008, reflecting frozen food's viability during adverse economic conditions. IBISWorld estimates that revenue will grow at an average annual rate of 0.5% over the five years to 2012. In 2012, an increase in input prices will hamper industry growth, and revenue is expected to drop 0.4% to $27.6 billion. Despite pressure from rising input prices and competition, most of the industry's major players (e.g. Nestle, Schwan Food Company, ConAgra Foods and H.J. Heinz) have managed to perform well and exhibited consistent revenue growth. In particular, strong portfolios allow industry leaders to command high brand recognition and retain customer loyalty. Also, according to Nanfelt, “access to large capital investment budgets has resulted in product innovations that address trends in health and convenience.”
In a world of compromises, the Frozen Food Production industry has sought to provide a healthy balance between cooking time-consuming meals and frequently dining out. Though modest, the future prospects of this mature industry present some growth opportunities. Product innovation and promotional strategies that aim to capitalize on current consumer trends will largely determine the industry's future success. Further, in-home food consumption increased in the recessive economy as cash-strapped consumers leaned toward cheap and lasting foods. However, in 2011, consumers slowly turned back to their previous fresh food habits. However, as the economy recovers, consumers are expected to revert back to valuing freshness and nutrition above low costs.
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This industry includes produces frozen food products such as frozen fruit and vegetables (including juices), frozen entrees and side dishes (excluding seafood), frozen whipped toppings (non-dairy), and frozen waffles, pancakes and french toast. Products made by this industry are then distributed to outlets such as grocery wholesalers, retail food stores and the hospitality industry.
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