After years of little or no growth, the frozen food sector is enjoying a strong growth spurt. In the year to February 24, sales jumped 4.2% to £4.7bn, according to the latest data from TNS.
Some of this can be accounted for by higher prices, but the volume of frozen food sold was also up 1.1% to almost two billion kg.
The category is dominated by fish, which is benefiting from customer demand for healthy food at an affordable price. The credit crunch and associated national belt-tightening are encouraging consumers to reassess frozen food across the board.
With frozen food's perceived value for money, people are more likely to eat in than out as money becomes an issue. Frozen food also benefits from its intrinsically low waste profile compared with chilled or fresh equivalents.
However, heavy promotional activity could seriously undermine any new-found consumer confidence in the value and nutritional worth of frozen food.
So will the sector continue to thrive as the economy weakens, or will it be dragged down with it?
Over the past year or so, the category has undergone a welcome renaissance. The two fastest-growing categories last year were fish, sales of which were up 11.1% to £654m giving it a 14% share of the market, according to TNS, and poultry & game, sales of which were up 11.2% to £242m, 5.2% of the sector.
Anne Murphy, general manager of Birds Eye UK and vice chair of the Food and Drink Federation's frozen food group, says 87% of households now buy frozen food, the highest number in the past three years.
"I see a positive outlook for the category, with this growth maintained by manufacturers communicating the benefits of frozen food, greater levels of innovation and general movement of consumers towards the freezers," she says.
Murphy points to the rising sales of vegetables and fish and notes that the growth in the sector is spreading to parts previous upturns could not reach.
"Even problem areas such as frozen ready meals are flattening out after years of significant decline," she says.
"Consumers are more aware of the importance of fish and vegetables in our diet and there is increasing recognition that frozen delivers both in a way that is fresh, great-tasting and convenient."
McCain marketing director Simon Eyles agrees. Though the sector still needs to promote itself better, it has started to shake off the image of being the poor relation of chilled and fresh, he believes.
Retailers have moved away from the bogof mentality, adds Brian Young, director general of the British Frozen Food Federation (BFFF), citing their investment in own-label premium frozen ranges. So far, the sector has also resisted food price inflation more effectively than the fresh and chilled areas, he adds.
"The average price per kilo paid for frozen food sales has risen by 2.8% year-on-year [to March 23]," says Young, citing TNS data. "That's down from the 3.2% growth in December and the 3.6% growth in September.
"The inflation issue will not go away and retailers, manufacturers and importers are facing real challenges to keep prices at acceptable levels to consumers," he adds.
However, the sector's low-cost reputation is a double-edged sword. Though its image is not as tarnished as it once was, frozen fruit and vegetables still suffer from consumer misconceptions about quality, taste and nutrition, believes Mintel.
"This has been exacerbated by promotional discounting effectively devaluing the market and produce being sited in unappealing aisles at the backs of stores," says a Mintel spokesman.
"Frozen and canned have struggled to break away from their image as second best to fresh and it's debatable whether this can ever change."
If the economy worsens, retailers could resort to even heavier discounting, warns Vidar Engen, managing director at
Findus UK. "I just hope the credit crunch doesn't make retailers desperate again," he says.
The potential return of the economy price point with the reduced consumer expectations it brings is the biggest cloud on the horizon, agrees Young.
But will it come to that? Birds Eye trading director Nick Johnson doesn't think so. Retailers may compete to offer the best value, but it's not in their interests any more than it is in the interests of the manufacturers to indulge in aggressive promotional activity, he says.
"It is a careful balancing act. This upturn is not just because of our commitment as manufacturers but because of the commitment of retailers, too," adds Young.
"There is no appetite for them to discount too hard. If you look at what they are doing with their own premium ranges, like Tesco Finest and Sainsbury's Taste The Difference, the opposite seems to be true."
Celebrity chefs are also offering a helping hand. Delia Smith has done wonders for some brands, while other chefs have put their name to ranges to help develop an image of quality in frozen foods.
Even celebrities who aren't chefs are included. Sir Paul McCartney has given the thumbs-up to a revamp for the Linda McCartney ready meal range.
Time will tell whether all this activity and optimism is well placed. One thing is certain though, the frozen sector looks more robust than it has for a while.
Any concerns are outweighed by the potential for the sector to build on the past year's growth, says Young.
"Everyone is concerned that we will get actions that are inappropriate," he says. "We would hate to see price points re-engineered in that manner.
"It is a danger, but it's one of dozens of factors that could affect frozen and if you look at the big picture, we are still placed very well." n