‘Gourmet’ Dishes Credited for Surge : Frozen-Food Industry Booming

Despite television lore that the Jolly Green Giant grows his own vegetables, Bob Lundberg was in Anaheim last week buying gobs of them for him.

Lundberg, a senior buyer for the Green Giant division of Minneapolis-based Pillsbury Co., says he ordered millions of pounds of corn, peas and carrots during the American Frozen Food Institute’s Western convention that gathered at the Disneyland Hotel.

But even his purchases are small potatoes in the fast-growing frozen-food industry. In 1984, the industry posted sales of more than $30 billion, a 10.2% improvement from the year before, according to Alan Miller, vice president of sales services at Selling Area-Marketing Inc., the New York-based subsidiary of Time Inc. that tracks retail food sales.

Frozen foods such as Green Giant vegetables accounted for sales of $12.8 billion in 1984. The other large segment of the industry is food service; sales to restaurants and cafeterias accounted for about $16 billion in 1984, with ice cream and frozen poultry making up the rest.

Growth May Plateau

Frozen dinners with fancy prices and fancy names--such as Campbell Soup Co.’s Le Menu brand--are fueling the industry’s resurgence that began in 1981 with low-calorie offerings.

Manufacturers now are scrambling to sell the best-tasting quiche instead of the lowest-priced chicken pot pie. The upscale one-serving entrees that are today’s hot sellers typically cost about $2.50, whereas a pot pie is still less than $1.

“But much of the cream may have already been skimmed off the top,” Miller said. “The tremendous growth may plateau in the foreseeable future.”

Even with its gourmet offerings, the frozen-food industry--which boasts an estimated 1,500 different items--still faces an image problem, experts say.

American consumers are on a natural foods binge and many consumers view frozen food as less wholesome than fresh. Some still equate all frozen foods with TV dinners, the Model T of the industry.

To overcome this image, manufacturers are not only producing gourmet products but other, so-called tailored food offerings, according to Tom House, president of the American Frozen Food Institute.

Not only are the new dishes tasty, but many are lower in calories. They appeal to specific consumer niches, including working women, dieters, fast-food eaters and the newest but fastest-to-spend segment, Yuppies.

To get these tailored frozen foods into consumers’ shopping carts, frozen-food makers are testing snazzy packaging and catchy names and offering unusual frozen products such as microwave popcorn.

Battle for Space

With microwave ovens now in nearly 40% of America’s households, frozen foods are being zapped like never before. The industry quickly latched onto this phenomenon, replacing much of the aluminum packaging with plastic. More than half of its foods are ready for microwave use.

As the popularity of frozen foods grows, manufacturers are also waging a bitter battle for the limited freezer space at grocery stores. Typically, freezer space is far more costly to maintain than traditional shelf space. Even so, frozen food once filled only a few cases among the shelves; in today’s grocery stores, the variety of offerings often stretches down two or three aisles of tall freezer compartments.

“They’re not just bucking for a place in the store but for a place in the case,” said Charles Rizutto, president and chief executive of Southland Frozen Foods Inc. Rizutto’s Great Neck, N.Y.-based company supplies frozen vegetables to chain groceries, which then market them under their own brand names.

Meanwhile, smaller frozen-food companies continue to be gobbled up by food industry giants. Mrs. Smith is baking pies for Kellogg Co., while Mrs. Paul is breading fish for Campbell Soup Co. Similarly, Stouffer’s is owned by Swiss-based Nestle S. A., Morton’s is a division of Del Monte Corp. and Birds Eye--the industry leader--is a division of General Foods Corp.

At the same time, imports of frozen fruits and vegetables from Mexico, Canada, Spain and Israel are battling for U.S. market share and shelf space.

The local grocer is only part of the frozen-food market. Fast-food restaurants increasingly rely on the frozen-food industry to supply everything from chicken nuggets to french fries. An estimated 4 billion pounds of frozen french fries were sold last year, most of them to fast-food restaurants, according to Al Rosenfeld, publisher of Frozen Food Age, a New York-based industry trade magazine.

The industry’s greatest attribute is the convenience of its products, but many customers are still unwilling to pay the premium price, which can be as much as 25% more than fresh food, to save themselves the trouble of preparing the food.

And, although the industry has had some success in dispelling its TV-dinner image, it is still trying to convince a health-conscious generation that frozen is as good as fresh.

“A lot of shoppers still won’t walk down the frozen-food aisle,” Southland’s Rizutto said. “The fact is, most frozen foods are as good as fresh,” he said, pointing out that his company, which sold 80 million pounds of frozen food in 1984, adds no preservatives, salt or coloring to its frozen vegetables.

Still Has Drawbacks

But nutritionists contend that the processing, freezing and thawing of frozen foods does take a toll on quality.

Paula D. Meigs, a nutritionist at Health Care Options, a Newport Beach-based nutritional clinic, said that, while frozen food is nutritionally “much superior” to canned foods, it still has its drawbacks. For example, frozen corn loses nearly one-third of its potassium and one-quarter of its vitamin C, she said.

Not only are consumers asking about nutrition, they’re also concerned with calories. Among the first of the major brands to react, Stouffer’s introduced its Lean Cuisine frozen dinners in 1981 and virtually created a new market.

Although the segment didn’t even exist five years ago, Lean Cuisine sales approached $400 million last year, according to one industry expert. Even Birds Eye recently detoured from its sauce-laden vegetable selections by offering seven sauce-free mixtures that are lower in calories.

It was 55 years ago this week that Clarence Birdseye began marketing frozen fruits and vegetables under the Birds Eye brand. Others soon followed and the industry enjoyed steady growth that rocketed during World War II, when metals that had been used to make cans were suddenly needed to make weapons.

But, when the war ended, consumers once again returned to canned goods and industry sales slipped. The industry’s most recent surge is generally credited to the new life styles of consumers who want to eat hassle-free, quick meals that are good for them.

Despite all the recent industry changes, Green Giant’s Lundberg says the basics are pretty much the same. “Corn is corn and peas are peas. There’s not a lot of ways to change that.”