Sales of frozen food through retail reached USD226 billion worldwide in 2022, comprising 8% of global packaged food sales. Frozen food performed particularly well during the pandemic, with sales up by 12% in 2020 (versus 10% for shelf-stable and 8% for chilled) as consumers looked for products they could stockpile as they hunkered down at home. However, hopes that this would be the beginning of a new era of frozen dominance proved to be short-lived, as frozen has underachieved since. Reversing this trend will require a more effective leveraging of consumers’ concerns about the rising cost of living.
Pandemic gains are fading, moving pricing into focus
Among major markets, only in Japan and Mexico is frozen food expected to comprise a significantly larger share of overall packaged food in 2027 than it did in 2019. In most countries, frozen now performs largely in line with overall food sales or is losing ground. In the status quo, this is what can largely be expected: retaining a marginally elevated post-pandemic baseline but no massive consumer shift in sentiment towards frozen food as an overall category.
Analysis of the top performing categories for frozen shows most growth is in affordability-focused areas: frozen processed meat and produce (substitutes for fresh) and ready meals and pizza (substitutes for foodservice). The leading growth category, ice cream, is also interesting in this regard. Ice cream has performed well during the current inflation wave as a “permissible indulgence” - a non-essential treat but one that is still relatively inexpensive.
Leveraging cost advantages for future growth
74% of consumers worldwide in 2023 report that they are concerned that the cost of everyday items they buy is going up
Source: Euromonitor International’s Voice of the Consumer: Lifestyles Survey
This level of concern should work to the benefit of frozen food, which has historically been a more affordable option than equivalent chilled or shelf-stable options. Slow post-pandemic growth rates though, suggest that the category has not fully leveraged its advantages.
While the inflation rate should record significantly lower growth in the coming years than it did in 2022, food costs remain elevated compared to pre-pandemic levels, and in the future, the effects of climate change, shrinking labour forces, and de-globalisation all threaten to make long-term inflation rates higher than they have been for most of recent history. There is little prospect of food prices becoming less of a challenge to consumers in the short term.
The best prospect for frozen food going forwards is for the category to strongly emphasise its ability to present a more affordable alternative to other options.
Options for frozen beyond affordability
One of the main reasons to be optimistic about the future of frozen food is the rate at which consumers around the world are installing freezers. Unlike with many appliances, sales remained high after the lockdown period of the pandemic into 2021 and 2022.
27% of households globally are expected to own a freezer in 2027, up from 24% in 2022
Source: Euromonitor International
Much of that gain is being driven by developing countries, with Turkey, India, and Indonesia adding freezers at a particularly rapid rate.
This shows a growing consumer interest in stockpiling; not of the frenzied kind evident in 2020, but simply of wanting to be well-prepared for whatever an uncertain world brings. The long lifespan of frozen products is an advantage, not only in the context of stockpiling, but also for sustainability reasons. Food waste is a major environmental issue and wastage of frozen food is much lower than other formats, particularly fresh food. With 56% of consumers reporting that they are actively trying to reduce their food waste in 2023 (according to Euromonitor International’s Voice of the Consumer: Sustainability Survey), this is an advantage that producers of frozen food could be emphasising more strongly.
Learn more about the global frozen food category in our report: A New Era for Frozen Food