BREAKING THE ICE 2003

Barbara Murray

Frozen dinners aren't just for dinner anymore.

Entrees, which tally $6 billion in annual sales, are also being consumed as after-school snacks by kids, fast office lunches by their parents, and quick pick-me-ups by just about everyone, SN has learned.

The names reflect the concerns of their consumers, whether it's weight control, convenience or appetite: Stouffer's Lean Cuisine, Hot Pockets, Lean Pockets, Weight Watchers, Healthy Choice and Swanson Hungry Man, to name a few.

The influx of new frozen products developed to cover all dayparts has manufacturers busy, but retailers are busier trying to place all these items in existing fixtures, which are sometimes woefully inadequate given the number of stockkeeping units.

"That's the No. 1 concern for me as a frozen food buyer, and I find the same problem with dairy -- where to put it all," said Mike DiGeronimo, frozen food buyer and category manager for Victory Super Markets, Leominster, Mass. DiGeronimo, who also manages the dairy department, said he had just finished cutting in 15 new Stouffer's items, six new Weight Watchers and eight new Healthy Choice dinners and entrees.

So many new products have entered the segment that retailers are challenged to find space to stock them, and manufacturers are more carefully evaluating a product's likely success before launching it.

Bob Smith, division vice president of customer development, prepared foods and baking for Nestle USA, Solon, Ohio, said retailers are finding themselves in a squeeze with no expansion in the number of frozens doors, while manufacturers keep coming out with new items.

"It makes you evaluate [every new and existing product] a heck of a lot more," said Smith, who's also the chairman of the National Frozen & Refrigerated Foods Association. "[Yet] we can't walk away from the consumers who are shopping [for it]. It's like a restaurant changing the menu. Consumers expect new items; they expect the menu to change."

In North America, demand is stronger than ever. For the two years ending April 2003, some 1,462 new products debuted under the frozen meals label, second only to Europe, according to Lynn Dornblaser, editorial director of the global New Products Database for Mintel Group, based in London.

Although new products can help create excitement and spur demand, they also can cause headaches for retailers.

"It seems like they come out with more and more, and there's not enough room," said Todd Phag, buyer for Carter's IGA in Petosky, Mich., a six-store independent.

DiGeronimo at Victory said his most recent category review showed many new items in the snack and handheld segments. Such growth in the ancillary categories is enough, but entrees are still the mainstay of the frozens department. Frozen dinners and entrees rank seventh in the top 10 categories in U.S. supermarkets, behind cold cereal and ahead of cigarettes, according to Information Resources Inc., Chicago.

"The frozen food business is up, people are looking for convenience and looking to spend the least amount of time cooking. And the product quality is good," said DiGeronimo.

Frozen dinners -- including entrees, pot pies and sandwiches -- make up 2% of all meals eaten at home, up from 1% in 1985. Frozen dinners make up 5% of all suppers eaten at home, up from 3% in 1985, according to the NPD Group, Port Washington, N.Y., a market research firm.

To that end, DiGeronimo noticed that Swanson Hungry Man sales have improved since the brand started targeting men with the bigger portion 16-ounce Hungry Man Minute Dinners. Sales are a bit slower in the price-sensitive items under labels like Banquet, Budget Gourmet and Michelina's, he said.

However, dinners for two seem to be gaining interest among consumers. For example, Bertolli has been testing such products like chicken parmesan and dishes with shrimp in New England with a retail of up to $8. The brand is doing well despite the relatively high ring, DiGeronimo noted.

"I was a little skeptical, but now I see good turns," he said. "People will always remember the taste, even after the price is forgotten."

Kids' favorites are moving well in his market, too. Smuckers' Uncrustables pre-made peanut butter and jelly sandwiches reached New England this past winter, and are selling very well, DiGeronimo said. Additionally, frozen pizzas for $5, $6 and $7 are selling, he said. "The Freschetta Brick Oven frozen pizza is over a $7 ring. If the kids like it, people buy it."

To be sure, plenty of consumers are still using their frozen entrees and dinners the old-fashioned way: for dinner. The NPD market research says that 15% of in-home suppers include frozen food as a main dish, up from 12% in 1993. Eleven percent of all main dishes for supper are ready-to-eat. So, that means that one out of every four main dishes served in the home at suppertime is a convenience food sourced from a third party, according to the NPD Group's "17th Annual Eating Patterns in America."

Keith Shannon, frozen category manager for St. Louis-based Schnuck Markets, agreed that there are more frozen foods moving out of his cases, and that consumers who are buying them are upgrading to better quality.

"Entrees are down slightly, and dinners are up slightly," he said. "I think there's been some trading up by consumers, to the more expensive dinners and better-for-you products."

Manufacturers are getting a lot of credit for better use of technology and ingredients to make higher-quality meals than in the past.

"It's much easier to go home than stop off on the way," Shannon said of the decision-making process whereby consumers forgo getting fresh food every night in favor of frozen items already in their home freezer. "So that makes [frozen food] convenient," Shannon observed.

Among the items that Shannon sees as popular in his stores are the Mixed Grills dinners introduced last year by Healthy Choice, with varieties like teriyaki steak, and chicken with honey. He said he has taken nine of this year's 12 new items from Healthy Choice's new Flavor Adventures line, including dishes like Princess Chicken, Chicken Chardonnay and Whiskey Steak.

He said he's waiting now for entree makers to upgrade the combinations of foods, such as the new Michelina's Lean entrees, which Schnuck's has added. They cost less than dinners, and that brings some concern about trading the consumer down, but "you may get someone to try it and gain new customers," Shannon said.

Schnuck's recently held a major two-week demo of new Dining In frozen dinners from Topco Associates, and it seems to Shannon that people are willing to pay a little more for quality products.

Shannon expects entree manufacturers to focus more on health as adverse publicity about fat, sodium and calories takes center stage.

In New York, FreshDirect founder Joe Fedele, who started an online grocery service in Manhattan last year, does "tons more fresh than frozen," but still, the frozen department is about 6% of sales, and half of frozen sales is in dinners or entrees. Dietetic dinners are 30% to 40% of the frozen entrees, and the rest are natural and organic, he said.

"I see organic and natural and dietary growing more than the Stouffer's turkey dinner, as a generic response," Fedele said.

Indeed, the further segmentation of the frozen dinner/entree category will likely see the addition of organic, natural and even items compatible with specific well-known diets. Schnuck's plans to try the Atkins diet line of frozen bread to see how it goes; it will be officially rolled out in about a month, Shannon said.

Too, look for low-carbohydrate offerings to be another big trend in frozen entrees, reported retailers and industry observers. Some smaller companies are quickly gaining attention with their specially formulated meals as retailers scramble to fill gaps in an increasingly specialized category.