Patterson Frozen Foods - Market Trends

Innovation

Frozen Meals - Growth in a Mature Market

Estimated $7.6 billion in '03, and the meal market is mature! Still competition coming from meal kits, refrigerated foods sold in supermarkets, restaurants and take-out meals.
Consumers want convenience due to less time and desire to cook, decline in traditional cooking skills. Suppliers need to concentrate on value, taste and health benefits.
What determines desire for convenience and quality? Answer: Household size, large households will look to value.
There are three major purchasing groups:
1. Purchases based on nutrition and calorie count, with less concern for price. People who buy for themselves are most likely to fall into this category.
2. Purchases based on portion size and brand name with little concern for nutrition/calorie count, or convenience.
3. Purchases based on price with little concern for family preferences. Key drivers are household income and number of children.
Frozen meals are bought overwhelmingly for convenience (88%).
Frozen meal buyers are willing to experiment with 3 out of 4 interested in new products. Calorie content is important with buyers less concerned with portion control, preferring larger portions of healthy products.
Market breakdown of three segments - entrees, dinners, and pot pies:
1. Entrees are 70% of market with sales almost three times that of dinners and thirteen times that of pot pies.
2. Frozen entree sales are up 9% per year since 1988; frozen dinner sales are up 3% per year and frozen pot pies are up 4.5% during the same period.
Higher dollar sales growth that unit sales growth, along with increased unit pricing, indicate that growth is the result of pricing rather than increased market penetration.
Summary: Flat unit growth and increased value sales means that future dollar growth depends on manufacturers maintaining premium pricing and continuing to develop new products.

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