The frozen-food aisle is about to get a makeover as food companies look for ways to cater to emerging food trends and make frozen-food staples, like fruits and vegetables, as attractive to consumers as their fresh counterparts.
Kate Gallager, a research and development manager for the frozen-produce brand Green Giant, told The Wall Street Journal there's a belief among consumers that choosing frozen foods is an undesirable "shortcut" when compared to using fresh produce. This perception is also associated with the view that frozen foods are less nutritious or fresh.
General Mills (NYSE:GIS), owner of the Green Giant brand, is currently looking at ways to make frozen meals look better and taste better. Ms. Gallager told the Journal that Green Giant is considering frozen options that are cooked in a skillet rather than a microwave.
The frozen-foods segment for General Mills falls under two business segments -- U.S. retail and international. For U.S. retail, fiscal 2014's second-quarter net sales decreased 1% to nearly $3 million compared to 2013. The frozen-foods division was one of four divisions that led to the decline in sales, with the second-highest drop in sales during the quarter of 3%.
For the first six months of fiscal 2014, sales slowed down 2%. In addition to its presence in the U.S., Green Giant vegetables are also shipped to the company's international segment, and the two segments with the highest sales -- Europe and Canada.
Sales of frozen veggies stall, but frozen fruits soars
Texture is another issue that can be a problem for frozen vegetables, which can become mushy due to the freezing process. However, frozen veggies do have their virtues -- they tend to be inexpensive, most varieties are available year-round, and they are easy to cook. While frozen vegetables and frozen meals' sales have been flat, frozen-fruit sales have continued to grow as more people try at-home juicing and smoothies.
Frozen foods presented to look more like fresh foods
The Journal reported information from several studies that show frozen foods are, for the most part, nutritionally equivalent to fresh foods. Nestle (NASDAQOTH:NSRGY), maker of Lean Cuisine and new Honestly Good frozen meals, emphasizes minimal processing by mixing eye catching, brightly colored vegetables.
Nestle's frozen-foods category performed well in North America in the nine months ended on Sept. 30, 2013. Zone Americas had 5.2% of organic growth and 1.5% of real internal growth despite the tough economy. The company noted that its Stouffer's frozen-food line posted gains, but its new Lean Cuisine line Honestly Good "...was affected by the continued contraction of the category."
During Nestle's 2013 nine-month sales call, Chris Johnson, head of zone Americas, addressed the bad image associated with frozen foods in the diet-related frozen-food segment and its negative impact on the Lean Cuisine line. Nestle is focused on promoting the benefits of frozen foods by associating freezing as a method of keeping food fresher longer. The company is working on innovative products, like its new Honestly Good line, which consists of six meal options made with "100% all-natural, wholesome ingredients."
Emerging food trends show continued interest in frozen meals
During ConAgra Foods' (NYSE:CAG) fiscal 2014 second quarter, the consumer-foods segment reported flat sales of $2 billion, which reflect a decrease of 0.4% from the same period last year. One of the company's frozen-food brands, Marie Callender's, did post sales growth during the quarter, but Healthy Choice posted a sales decline.
In December 2013, the company introduced 23 new restaurant-quality frozen meals from Bertolli and P.F. Chang. These new products are meant to cater to emerging food trends identified by Phil Lempert, a consumer-trend watcher. One of these trends is the "Indiewoman," a segment comprised of about 31 million single, independent women who spend about $50 billion a year on supermarket food and drinks. Another is the growing consumer interest in international flavors in foods available outside of restaurants, such as frozen meals available at supermarkets.
My Foolish conclusion
Frozen foods have come a long way from their aluminum-packaged, frozen meat loaf and mashed potatoes days. While the interest in fresh, whole, and less-processed foods is on the rise, the convenience of frozen meals should continue to appeal to many consumers. If food companies can show consumers that frozen and fresh are very similar, sales of frozen meals for the diet-conscious could stage a comeback.
Eileen Rojas has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.