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Shoppers want more frozen food: how have supermarkets reacted?

frozen food symbol

Frozen food is increasingly becoming the convenient, popular choice for busy professionals and families alike.

Its cheaper price tag, which was once an obstacle in the category’s growth, is now a positive for those looking to eat higher quality food on a budget, while its convenience continues to drive growth with professionals.

The increasing popularity of frozen food has been driven by brand and retailer campaigns focusing on high quality and luxury frozen food products. For example, in the past year frozen whole lobsters have been introduced to Asda and Morrisons’ ranges.

In the 52 weeks to 13 September 2015, the value of the retail frozen food market grew by 0.4 percent year on year to nearly £5.8 billion (Kantar Worldpanel). A recent survey also found that British households will consume three freezer meals a week.

With time such a scarce resource in today’s society, shoppers are increasingly looking for meals that offer time saving options, as well as good value for money.

Changes in supermarkets’ ranges

Brand View has reviewed range changes in the Frozen Food category and the total number of SKUs available over one year, between 22 July 2015 and 22 July 2016, in Asda, Morrisons, Ocado, Sainsbury’s, Tesco and Waitrose.

Morrisons significantly increased its range of frozen food this year from 486 to 774 SKUs. The increase (59.3 percent) in its frozen food offering was significantly greater than the supermarket’s increase in the total number of SKUs across the whole store.

frozen food - number of SKUs

Despite significantly increasing its range, Morrisons still had the smallest frozen food range of the six retailers at the end of the analysis period.

Tesco increased its number of frozen food SKUs by 2.4 percent. This is particularly significant, as the company decreased its total number of SKUs in all categories* during this period.

Tesco’s decrease in the total number of SKUs in all categories, as part of its ‘Project Reset’ strategy, has been well publicised by the media. Tesco is following the lead of discounter retailers Aldi and Lidl that have proven popular by providing shoppers with fewer, simpler choices. The increase in the range of frozen food, while decreasing its total range across all categories, highlights the importance of frozen food in Tesco’s strategy.

percentage increase in the number of frozen SKUs 2015 to 2016
*The total number of SKUs data equates to all products from the Beers, Wines and Spirits, Grocery, Health & Beauty and Home Care Brand View categories.

 

Has the pricing of frozen confectionery changed since last year?

Sales of frozen confectionery have been particularly strong, growing 7 percent year on year in the 52 weeks to 19 June 2016 (Kantar Worldpanel).

Brand View has compared the pricing of ice cream and frozen desserts in Asda, Morrisons, Ocado, Sainsbury’s, Tesco and Waitrose, on 22 July 2016 to 22 July 2015.

The number of ice cream SKUs priced between £3 and £4 increased the most; from 19.3 percent of the range last year to 22.6 percent this year. The greatest decrease in the number of products was those priced between £1 and £2, which decreased from 27.5 percent of the range last year, to 26.5 percent this year.

The Frozen Dessert category also experienced an increase in price – the percentage of products priced at £3 or above increased from 33.7 percent of the range last year to 35.5 percent this year.

ice cream and frozen desserts year on year comparison of price 2015 to 2016

Were higher prices influenced by the introduction of ‘premium’ NPDs?

As frozen foods grow in popularity with shoppers, manufacturers will likely expand their ranges with NPDs.

Brand View has compared the pricing of products introduced in the past year, with the pricing of products which have been available the entire year, to see if NPDs or general price increases in the range have influenced the increase in products in the higher price brackets.

Ice cream items newly listed this year had a greater percentage of higher price products than those listed for the entire year. Some 50.2 percent of new products were listed at a price of £3 or more, compared to just 31.3 percent of products that were listed for the entire year.

new frozen listings and products 2016

This trend towards introductions of more expensive products was also seen in the Frozen Dessert category, although it was less severe. Products listed at a price of £3 or more accounted for 36.1 percent of new products introduced in the past year, compared to 35.1 percent of products that were listed for the entire year.

The move towards a greater choice of frozen confectionery, with more premium products available to consumers, may have contributed to this sector’s strong sales growth in the past year.

Trends in the frozen food market

The analysis shows that in four of the six retailers analysed, the range of frozen foods has increased over the past year.

Brian Young, former chief executive of the British Frozen Food Federation (BFFF) stated, “as consumers continue to seek out great tasting, convenience foods that can be eaten quickly and on-the-go, they now also expect more luxurious fast-food options on their menus.”

A greater percentage of new listings fell into higher price brackets than products listed throughout the year, which clearly illustrates the trend toward more premium frozen food.

Retailers will be keen to increase their ranges even more, if the upward trend in shopper demand continues.

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