ConAgra Foods will join other major packaged food manufacturers including Heinz, Kellogg, Nestle USA and General Mills on a $50 million advertising campaign designed to promote a positive image of frozen foods, a sales category that has stalled industrywide.
The campaign will challenge shoppers' thinking that frozen food is fattening and highly processed, which ConAgra's polling shows are beliefs held by the majority of consumers.
ConAgra has a lot at stake in frozen foods. In recent years the Omaha-based packaged food company has expanded its freezer-section offerings both through acquisitions and through adding on to existing brands and product lines. The recent acquisition of Ralcorp store-brand food manufacturer takes ConAgra further into frozen, with new lines of frozen breakfast items, bread and dough.
In the 2012 fiscal year, retail sales of frozen foods made up 15 percent of all ConAgra sales, a value of $2 billion, which does not include any Ralcorp income. But frozen foods were ConAgra's slowest-growing major consumer food category that year, at just 1.3 percent growth, compared with 4.7 percent consumer foods sales growth overall.
IBISWorld estimates ConAgra's frozen sales will show 4 percent growth in its 2013 fiscal year, which ends this month, a figure that would include several newly developed and acquired products not available during some or all of the 2012 year.
Slow or no growth among existing products is a trend seen across the industry.
“It's not that we're not buying frozen foods, it's that we're not buying more frozen foods,” said Harry Balzer, chief industry analyst for the NPD Group.
The manufacturing giants, united as the “Frozen Food Roundtable” through the American Frozen Food Institute industry association, say 98 percent of frozen products have flat or declining sales, according to AdvertisingAge magazine, which obtained proprietary research and advertising proposals from the companies. ConAgra declined to comment for this story. Some product lines are faring worse than others.
Sales of frozen meals, the largest category, fell from 2008 to today, according to a report this month from Mintel, and are expected to continue to slide into 2017, as the economy improves and consumers increase spending on restaurants and home-cooked meals. Slow growth is ahead for frozen snacks and appetizers.
“Brands will have to step up their healthy and flavor offerings to truly recapture interest in the market and reverse the downhill slide,” Mintel concluded.
The research firm said manufacturers will have to focus on healthful products, innovate on convenience and speed and create more restaurant-style appetizers to offer an alternative to eating out.
One of the fastest-growing categories is frozen hand-held food, such as breakfast sandwiches and burritos. People who buy these products tend to be more interested in convenience and price than in health benefits, Mintel said.
Many factors are working against growth in frozen food, according to market research firm Packaged Facts.
Those include the nation's slow economic recovery, changing eating habits, shifting demographics, negative perceptions, “sterile” frozen food aisles and competition from fresh food, in-store prepared food and quick-serve restaurants.
ConAgra's own research highlights the health concerns. A survey conducted for the company in March by Braun Research found that 80 percent of consumers agreed that “frozen foods are highly processed” and 62 percent believed “frozen meals are fattening.”
Food makers' own research, too, shows consumers have a negative perception of frozen foods as high in sodium, fat, calories and preservatives, AdAge said, especially with frozen dinners.
Frozen food makers are still irritated by Wendy's 2007 advertising campaign that promoted its beef as “Fresh, never frozen.” More recently, popular author Michael Pollan's new book “Cooked” urges people to stop outsourcing meals to food manufacturers and to return to home cooking.
ConAgra has a lot of investment in marketing, product development and acquisitions at stake in trying to spur sales of frozen food.
In 2011, the company bought Marie Callender's lines of full-size and single-serve dessert pies and added Banquet frozen fruit pies. In 2012, it acquired Odom's Tennessee Pride, with lines of frozen sausage and breakfast sandwiches, and Bertolli and PF Chang's lines of frozen dinners that come in a bag and can be cooked in a skillet.
The company's Healthy Choice line has expanded with Cafe Steamers and Baked microwavable entrees, and recently 100-calorie containers of Greek frozen yogurt. IBISWorld said in a March industry report that Cafe Steamers is the fastest-growing new product in frozen foods.
“New items like these are a key reason for our confidence in our company's future,” ConAgra CEO Gary Rodkin told investors this spring.
ConAgra has been fighting slow frozen sales growth on fronts beyond concern about health. The company is trying to show that frozen foods are convenient, tasty and affordable.
In March, during “Frozen Food Month,” it created a shared campaign for its Healthy Choice and Marie Callender's brands, with a video showing two busy, health-conscious urban women shopping for frozen meals. The company said it is “helping consumers to better understand the benefits of frozen meals and experience frozen foods in a new way.”
Phil Lempert, a supermarket expert and consultant for ConAgra, said frozen food has come a long way in flavor, nutritional quality and freshness. But it's hard to show customers the bright colors of vegetables that have been blanched and frozen right out of the fields when they're held behind glass.
“Food is very primal,” he said. Consumers like to be able to hold, see and smell it.
He pointed to a Food and Drug Administration statement that there is virtually no nutritional difference between fresh and frozen produce, and said frozen dinners including Healthy Choice use ingredients like red wine, sea salt and spices to lower the amount of sodium.
“We really have to do a good job of educating people so they shop the entire store,” Lempert said.
Hy-Vee nutritionist Elisa Sloss agreed it's a misconception that all frozen foods are unhealthy. She tells shoppers at her Omaha store that while there are things to avoid, there are “really good options” in the freezer case.
“People think frozen food is very processed, and really that's not true,” she said. Frozen dinners can be helpful for people trying to lose weight, she said, as they are portion-controlled and contain a balanced variety of foods including protein, grains and vegetables.
Changing shoppers' attitudes is not something ConAgra can do by itself. The firm has the third-biggest market share in frozen at 7.4 percent, according to IBISWorld, behind Schwan and market leader Nestle, whose brands include Lean Cuisine, Hot Pockets, Stouffer's and Tombstone pizza. Packaged Facts lists ConAgra as second behind Nestle but doesn't share figures.
Frozen food manufacturers don't want to settle for what Packaged Facts predicts will be a “sluggish” 2 percent annual growth in frozen food over the next five years.
So they're uniting in an unusual shared campaign that may kick off late this year or early next year, said Corey Henry, spokesman for the American Frozen Food Institute.
The Roundtable's new advertising campaign will target baby boomers, millennials and Hispanic shoppers, AdAge said. It will combat “apathy” toward frozen food and fight consumer concerns that frozen food is not as nutritious or as fresh.
“There's a very significant national debate on food and nutrition, and consumers are being bombarded from numerous sources on what they should eat and buy and what they shouldn't eat and buy,” Henry said. “We think they need to hear from the frozen foods makers themselves. We want consumers to understand the full range of options that are available to them in the frozen food aisle and how frozen food can help them meet any kind of nutritional or culinary need they're looking to fill.”
Will it work?
Shoppers have told ConAgra pollsters that their attitudes could be improved with more information about how frozen food is made and with an improved shopping experience, including better organization and stronger visual appeal.
But all the focus on nutrition may not be the best way to hook shoppers. Balzer said shoppers are more concerned with saving time and money.
“We want to eat healthy,” he said, but “health plays such a little role in what we do. We like things that we like and we like things that are easier.”
Packaged Facts' surveys show the same thing. More than two-thirds of people who bought frozen foods said “taste appeal” was the top consideration, followed by price, quality and convenience. Nutrition and calorie control were the least important factors.
That suggests more shoppers are like Cathy Harland of Omaha, who had a big stack of inexpensive frozen pizzas in her cart at Hy-Vee.
A bartender, Harland said she usually finishes work at 7 p.m., and frozen food is easy and convenient.
“When you're working, you can come home and just throw one in the oven.”
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Frozen foods is one of ConAgra's largest categories, but one of its slowest-growing in 2012. Net sales for the category grew 6.4 percent in 2011, but growth slowed to 1.3 percent in 2012.
ConAgra Foods net sales by category
|Grocery||$3.26 billion||$3.36 billion||3.00%|
|Frozen||$1.97 billion||$1.99 billion||1.30%|
|Snacks||$1.21 billion||$1.24 billion||2.30%|
|International||$714 million||$842 million||17.80%|
|Store brands||$529 million||$632 million||19.50%|
|Other||$325 million||$317 million||-2.50%|
|Total||$8.00 billion||$8.38 billion||4.70%|
Source: ConAgra Foods 2012 annual report