The frozen category hasn’t had it easy in recent years, but many convenience retailers are now seeing rising demand for premium products
The frozen category has faced the hardest of challenges in recent years, with 2013’s horsemeat scandal sending sales plummeting and consumer trust hitting an all-time low. Frozen ready meals saw an almost 8% drop in value and volume sales over 2012-13 (Mintel/IRI), with Mintel noting that the scare appeared to act as a trigger for consumers to leave the category; and frozen meat sales also dropped significantly, with volume sales declining an estimated 13% within the same period (Mintel).
But fast forward to 2015 and consumers’ hearts are gradually thawing. Frozen powerhouses Birds Eye and Iceland have been pouring money into the sector, with the aim of not only growing consumer trust, but also building value back into the market by honing in on the quality of frozen products.
Iceland’s new ‘Power of Frozen’ campaign is a far cry from the cost-focused message of previous adverts. The current creative shows consumers that by freezing food as soon as it has been picked, caught or prepared, the taste and quality is at a premium.
Meanwhile, Birds Eye has also been reinforcing the idea of high-quality frozen food. The firm promises to provide busy consumers with “superior” evening meals with the launch of its Inspirations range last year. It invested a hefty £10m into marketing the chicken and fish products, with the aim of changing the view of frozen from ‘fall back’ to ‘first choice’.
75% of c-store retailers say the frozen food category is important to the overall success of their store
Source: HIM CTP 2015
It was a bold move, but consumers voted with their feet and the range was announced best-selling grocery product launch of 2014 by consumer insight expert Kantar Worldpanel, which claimed that Inspirations had achieved £31.3m in its first year. “In-depth consumer research we’ve conducted has continually highlighted that consumers are willing to pay a little extra for a high quality, premium product that is easy to prepare and suitable for a range of meal occasions,” says Birds Eye UK sales director Neil Barker.
Simon Aubrey, manager of Spar Deal in Kent, believes there is an opportunity to sell more upmarket products within frozen. “With recent advertising from frozen brands, the message is getting across that products are caught fresh and then frozen at the height of their quality - people are thinking it’s good to buy frozen produce,” he says.
“We try to offer a budget range and a premium range. We have five Cook freezers and we also stock local curries. We do between £600 and £900 orders every week on Cook. The margin is just over 30% on those. The meals are an ideal solution for date nights and weekends, but also for older customers who want a single portion.”
Budgens Stadhampton in Oxfordshire recently introduced the Cook range following a refit and has seen good sales. “After 4pm we have a busy four hours of people finishing work and buying dinner,” says owner Mohammed Farooq. “Our Cook meals are very popular.”
Of course, Cook meals don’t have a place in every outlet. Paul Cheema, owner of three Malcolm’s Stores in the West Midlands, claims that upmarket meals wouldn’t appeal to his customers. “Cook wouldn’t work in my stores because it’s not the right locality - you have to tailor it for your demographic.” However, he still offers premium frozen options where viable.
“We offer regular, value and premium options within chips, with Heritage chips priced at £1 and small bags of McCain Gorgeous chips priced at £2.39.”
Bay Bashir, who owns Belle Vue Convenience Store in Middlesbrough, is so impressed by sales of his frozen ranges that he now intends to explore the potential of premium. Up until 18 months ago, Bay had so little faith in frozen food that he didn’t even stock it. “I never really thought of frozen as an essential category: our store is 800sq ft and we just felt we didn’t have the room,” he says.
But having finally decided to give frozen a chance, he was pleasantly surprised. “We’ve now got two upright freezers and it’s going really, really well. We had a 50% uplift after the first three months and then steady 8-9% growth month-on-month for the first year.”
Bay has analysed sales, and while he started with value ranges and pricemarked packs, he is convinced that there is an opportunity to stock higher-end products. “This year, I’ll implement another 2m freezer along with another 2m of fresh and chilled,” he says.
“We’ll re-establish the cheaper lines in one freezer and house the more upmarket lines in the second freezer. I’ll be looking to stock the Birds Eye Inspirations range and possibly World Foods too.”
Heath Stores in Horsmonden, Kent, also offers frozen options for every pocket. “Depending on your demographic, you need to make sure you have something for everyone,” says owner Kate Mills. “We still stock Birds Eye frozen beef ready meals - not everyone can afford Cook meals.”
But it’s the upmarket frozen offerings that are driving growth at her store. “There’s a huge surge in frozen high-end meals,” she says. The store has a 4m Cook chest freezer and Chai Stop curry 1m upright freezer, as well as 6m of additional freezers, including 2m of local sausages and frozen pastries, which are made in-house. “Between Cook and the curries I’m taking £400 a week. I’m also considering another local Thai frozen meals supplier. The people who wouldn’t touch a standard frozen ready meal are opting for these because they are high quality. They are as good as, and sometimes better than, what people cook at home.”
She claims that stocking high-end frozen products helps to provide a point of difference. “A really good frozen offering can make your store stand out. People don’t want to cook and it can replace a takeaway.”
Sukhjinder Gill, who owns two Nisa stores in Staffordshire, has also seen his premium frozen foods achieve strong sales. “World Foods have done well and Birds Eye Inspirations have also performed well. Suppliers are putting the effort into packaging and making quality products and people are buying into these ranges.
“I’m enquiring about Cook for my Hatton store, I’m hoping to get a freezer of products. I’ve seen it in a few stores on my travels and I think it will appeal to my customers.”
Warner’s Budgens Moreton-in-Marsh store in Gloucestershire has stocked premium frozen offerings, including Cook and locally-sourced Cotswold Traiteur frozen meals, for several years. In fact, Cook has sold so well that Moreton-in-Marsh is introducing a store-within-a-store concept (see panel, p16). “Frozen food is in resurgence,” says manager Jerry Tweney. “Our freezer department is our best performing department, up 5% this year in terms of sales and 3.5% in terms of margin.”
Jerry believes that the quality of frozen food has genuinely improved. “You try a frozen product that you haven’t bought for a while and the firms have really upped their game. I think consumers realise that frozen has changed. It’s a well-shopped section in our store: it’s been in growth for more than three years.”
He claims that frozen products are ideal for people who want a quality meal, but who don’t have to time to chop and prepare it. “Cook has capitalised on a market that is right for them. The trouble with a fresh ready meal is that you have three or four days to use it. In today’s lifestyle consumers don’t want to be tied down. People are coming in at 4pm and 6.30pm - we have to cater for them. They’re looking for a meal solution and frozen food is part of that.”
HIM Research & Consulting agrees that consumers are ready to invest in upmarket frozen products, and urges c-stores to take advantage. “Frozen food can be a great way for retailers to offer a credible and quality ‘meal for tonight’ solution,” says insight director Kate Littler.
“Retailers, like Iceland, are promoting the quality and convenience of frozen, rather than just the price. Convenience stores can take advantage of this premiumisation of the category to drive sales in their stores.”
Frozen food is more likely to be purchased post-5pm
10% of ‘meal for tonight’ shoppers buy frozen
Frozen food also features heavily in the ‘planned top-up’ shoppers basket
Older shoppers are most likely to buy frozen
Convenience shoppers buy 8% of their total frozen needs in convenience stores
Source: HIM CTP 2015
Taking Cook to the next level
Warner’s Budgens in Moreton-in-Marsh, Gloucestershire, has just introduced a Cook shop-within-a-shop concept. Manager Jerry Tweney reveals how it’s going so far:
“Planning the Cook shop was a challenge, but it’s been in operation since the end of May and it’s worked really well for us. We’ve taken the maximum number of freezers, which is 14. It probably takes up 400sq ft of space in the shop, with new lighting and a low level frame with drop lights and spotlights around. We sell more than 300 lines. In the launch week we took over £6,000 and gave a 25% off launch deal. The deals have diminished now, but we’re monitoring sales and they are still strong.
“Autumn and winter is the prime time for hot meals, so we’re confident we’ll make £7,000 a week during these periods. We’re very excited - it’s fantastic for us and people travel a long way for Cook meals. We have one guy who spends £200 a fortnight on them. We’re also working really hard with tastings - we do between four and five hours of tastings a day to let people try it for themselves.
“It’s very difficult in the ready meals sector to convey the quality without offering samples, so tastings are key to driving sales.”