The freezer aisle is getting fewer visitors these days.
Over the last several years, U.S. sales of frozen meals leveled off and began a slow decline. Since 2009, sales of freezer-aisle items fell 3 percent to $8.92 billion, according to Euromonitor International, a consumer-market research center. Euromonitor predicts a decline of an additional 2 percent this year.
Big-name companies are struggling to produce growth on their bottom lines in their frozen-food divisions. Nestlé's Lean Cuisine low-calorie frozen-meals brand lost more than a quarter of its sales over the past five years, The Wall Street Journal reported last month. ConAgra Foods has discontinued several of its Healthy Choice dinners altogether because of poor sales.
One would think that microwaveable dinners' reputation for being cheap and convenient makes them popular with budget shoppers. Indeed, a few years ago experts thought frozen meals would be recession-proof. In 2009, market researcher Mintel predicted that the industry would benefit from the recession, forecasting higher sales than ever. Instead, overall sales by volume have taken the biggest hit. Simply put, people aren't buying frozen dinners as much they once did.
But what's weighing down the industry has nothing to do with cost—and everything to do with content.
The decline of frozen-food sales in the last few years has coincided with a rise in public interest in nutrition. Packaged-food companies' competitors, along with health experts and cooking-show hosts, began trumpeting the benefits of fresh over frozen, and consumers listened. Nowadays, more Americans like to know just exactly what's in their food—and whether it's gluten-free, organic, and non-GMO (whether those labels are meaningful is a separate debate). "Fresh" denotes more nutrients and better taste, while "frozen" has become synonymous with high sodium and hard-to-pronounce preservatives.
Frozen-food producers are well aware that this change in consumer tastes is contributing to falling sales. "Within this foodie culture the last few years, I think there has been a change in how some people define healthy foods," Rob McCutcheon, president of ConAgra's consumer frozen-food division, told The Wall Street Journal in June. "There is definitely a push toward products that are more real, higher quality, more homemade, and closer to the source."
So the frozen-food industry is playing catch-up. In May, eight frozen-food producers, including ConAgra and Nestlé, launched a three-year, $90 million marketing campaign to change consumer perception of their products. Its national TV ads borrow from the lexicon that made fresh and natural foods popular, with tag lines such as "Frozen: How fresh stays fresh" and "Freezing is nature's pause button." The campaign's goal, according to the American Frozen Food Institute, is to make consumers take a "fresh look at frozen."
The future of frozen isn't all bleak, however. While a heightened awareness of nutrition has spelled trouble for TV dinners, it has been a boon to frozen fruits and vegetables, the stars of smoothies.