Demand for Canadian products abroad declined as the dollar appreciated
New York, NY (PRWEB) March 05, 2014
Frozen food manufacturers have experienced growth over the past five years, albeit at a conservative rate due to depressed consumer spending. While frozen food often represents an affordable alternative to fresh food and prepared meals at foodservice establishments, lower disposable income in 2010 caused some consumers to trade down to private-label frozen food products and stock up on discounted items during promotions. Additionally, rising health concerns have caused some consumers to turn to fresh food and a variety of healthier alternatives to frozen food. According to IBISWorld Industry Analyst Hester Jeon, “To combat declining demand for frozen prepared meals, major manufacturers have reformulated their products by reducing fat, sodium and sugar content to appeal to health-conscious consumers.” As a result of these changes and higher consumer spending, industry revenue is anticipated to grow an annualized 1.0% to $3.5 billion in the five years to 2014, including expected growth of 1.8% in 2014.
While domestic demand for frozen food continued to strengthen during this period, demand for Canadian products declined abroad, placing downward pressure on the Frozen Food Production industry's performance. An appreciating dollar made Canadian goods more expensive in foreign markets, while foreign goods became more affordable in the domestic market. “As competition from foreign competitors intensified, quick-service restaurants and retailers providing prepared meals, in addition to frozen food manufacturers, focused on imbuing their products with better taste and on delivering convenience and higher-quality prepared meals to entice consumers to the frozen aisle of the grocery store,” says Jeon. Despite renewed spending on frozen prepared meals, rising ingredient costs lowered industry profitability during the five-year period.
As more Canadian consumers return to the workforce over the next five years, their need for convenient, ready-to-eat food will help drive demand for frozen prepared meals. Also, as per capita disposable income rises, some consumers will opt for substitute products at quick-service restaurants and retail stores, whereas others will trade up varieties of branded and premium frozen food. Export growth will be supported by rising income levels and the desire for convenience in foreign markets, which will help boost industry revenue. IBISWorld anticipates industry revenue to grow in the five years to 2019.
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IBISWorld industry Report Key Topics
Establishments in the Frozen Food Production industry produce frozen food products, such as frozen fruits, vegetables and juices; frozen entrees and side dishes (excluding seafood); frozen whipped toppings (excluding dairy); and frozen waffles, pancakes and french toast. These products are subsequently distributed to outlets such as grocery wholesalers, retail food stores and operators in the hospitality industry.
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