Frozen Fruits, Fruit Juices, and Vegetables

SIC 2037

Companies in this industry

Industry report:

This classification covers establishments primarily engaged in freezing fruits, fruit juices, and vegetables. These establishments also produce important by-products such as fresh or dried citrus pulp.

Industry Snapshot

Frozen foods became available commercially beginning in 1930, making this category a comparative newcomer to the U.S. food industry. In 2008, the overall value of shipments for this industry, according to U.S. Census Bureau figures, was $10.62 billion.

Consumers receive frozen fruits, fruit juices, and vegetables through two main sales outlets: grocery stores and food service. Grocery stores include supermarkets, other retail stores, and the emerging warehouse clubs, while food service is a highly fragmented market including restaurants, lodging and recreation outlets, separate eating and drinking establishments, health care institutions, colleges and universities, primary and secondary schools, airlines, business and industry, and the military, among others.

The frozen fruits, fruit juices, and vegetables industry has been influenced greatly by changes in the needs of the U.S. consumer. To compete in this changing marketplace, processors of commodity frozen vegetables extended their product lines with value-added items such as prepared meals, vegetables in sauce, frozen entrees, pasta, and vegetable mixes. Changing demographics affected more than new product introductions. Single-serving frozen vegetables are an example of packaging that targeted changing demographic patterns, but they sell well only in stores with a high proportion of single people or younger and elderly couples for customers.

In the late 2000s, demand within what was considered the "mature" frozen vegetables market was projected to decline because of increased competition from substitute choices enticing consumers' preferences in other directions. However, Food Production Daily in February 2010 suggested "the possibility of a 'growth niche' for frozen vegetables packaged in self-ventilating pouches" that may help spur demand. Higher priced fruit juices kept a lid on sales because of the weakened economy, but frozen fruit was gaining ground when it came to exotic fruit introductions.

Organization and Structure

The major producers of frozen fruits, fruit juices, and vegetables are subsidiaries or divisions of diversified, multinational, multibillion-dollar conglomerates. Ore-Ida, a leading producer of frozen potato products, was a subsidiary of H.J. Heinz until it was purchased by McCain Foods USA, another fast-growing frozen food company. Minute-Maid, the top frozen orange juice concentrate, was produced by a division of Coca-Cola. Birds Eye, named for Clarence Birdseye, the "father" of the U.S. frozen food industry, is a Kraft General Foods (KGF) brand in the Philip Morris family of companies. Green Giant is a subsidiary of Pillsbury Co. J.R. Simplot and its Food Group division are the lone privately held companies among the major ones. Alongside these industry giants, smaller newcomers and regional processors carved out significant markets for themselves. There is limited vertical integration of the industry, with some fruit and vegetable producers also controlling the flash-freezing and shipping aspects of their produce.

Background and Development

History.
Humans have used cold temperatures to preserve food quality for as long as they have been eating. More than 100,000 years ago, food was stored in caves, where the temperatures were naturally low. Ice and snow were used to preserve food when they were available. It was not until the twentieth century, however, that scientific research into freezing foods began in earnest. The ability to deliver frozen food to consumers is generally dated from October 14, 1924, when Clarence Birdseye received a patent for a revolutionary apparatus called a plate freezer. A few more years passed before M.A. Joslyn and W.V. Cruess reported the need to blanch vegetables prior to freezing.

The industry has advanced steadily from that time. In 1930, June peas and spinach were the first commercially available frozen vegetables, making their debut in Massachusetts supermarkets. A shortage of tin for cans during World War II spurred the growth of frozen foods. Mechanically refrigerated railroad cars came into use in 1949, and the early 1960s saw the development of individually quick frozen (IQF) foods.

All food preservation systems are designed to prevent deterioration and spoilage during storage. Lowering food temperatures decreases or inhibits the speed of chemical and physical reactions that result in spoilage. Microorganisms are a factor in the deterioration of food quality, but microbiologic growth stops when food temperature is reduced to less than negative 10 degrees Celsius. Foods frozen at temperatures as low as negative 40 degrees Celsius were not unusual toward the end of the twentieth century.

In 1989, the Chicago-based Institute of Food Technologists (IFT) named the ten most significant food science innovations to have taken place during its 50-year history. Third on its list was the development of frozen concentrated citrus juices at the U.S. Department of Agriculture research laboratories in the mid-1940s. The addition of approximately seven percent fresh juice to the concentrate was the key to the product's success. Since that time, processors have further refined the process with the addition of essential oils and natural flavors to the concentrate before it is packaged and frozen. Also making IFT's top-ten list was the development of freezing methods that enabled the prediction of optimal freezing and storage conditions, an important advance because nutrient loss is negligible when foods are properly frozen and stored.

Manufacturing.
Processors used several methods of freezing foods. High quality is achieved with individual quick freezing. Its advantages are rapid freezing rates and the fact that, because food pieces do not cohere into a solid block, individual portions can be stored in large containers. This makes it particularly suitable for food service. In blast freezing, fans pass cold air over the food. Food can also be frozen between plates containing freezing coils or by immersion into freezing liquid such as salt solutions, liquid nitrogen, and liquid carbon dioxide.

In 1998, the U.S. Food and Drug Administration (FDA) declared that frozen fruits and vegetables were just as beneficial as their fresh counterparts. Since most frozen vegetables are individually quick frozen within hours of harvest, they offer home cooks and food-service operations the advantages of labor-saving convenience plus nutrient value, no waste, speed and ease of preparation, and year-round availability. The federal government also launched a campaign to motivate citizens to consume at least five servings of fruits and vegetables a day.

Sales of frozen fruits, fruit juices, and vegetables totaled $9.58 billion in 2005, representing an increase over $8.66 billion in 2002. Rising sales of frozen vegetables accounted for this increase; revenues from frozen vegetables rose from $5.8 billion in 2002 to $6.9 billion in 2005. Frozen fruits, juices, ades, drinks, and cocktails remained almost even, dipping slightly from $2.4 billion in 2002 to $2.3 billion in 2005. Products not otherwise classified accounted for $390 million in 2005.

In its 2004 report, the U.S. House of Representatives Education and Workforce Committee reaffirmed the FDA's 1998 conclusion that frozen fruits and vegetables "are nutritionally comparable to raw fruits and vegetables and can be used interchangeably in the diet. Overall, processed fruits and vegetables do not lose nutritional value, are cost effective, and inhibit the growth of some pathogens." Many consumer periodicals also lauded the nutritional benefits of eating frozen foods, the vitamin content of which was shown to be higher than that of fresh produce, which may have lost some during the time spent in shipping and distribution.

Vegetables.
Retail sales for frozen vegetables reached $3.69 billion by 2004, according to Progressive Grocer's "Progressive Grocer 2004 CES" report. More than 90 percent of those sales were through supermarkets and mass supercenters. The most popular frozen vegetable in both supermarket and food-service markets has long been the potato. However, according to Spudman, potato and potato product surpluses in the early 2000s led to declines in frozen fry exports. By market year 2007, however, total U.S. exports were valued at $550 million, up 15 percent from the previous year, a jump that was attributed to increased consumption as well as short supplies in Europe. Japan is the largest export market, followed by Mexico, Canada, and China.

The American Frozen Food Institute reported 2003 mixed vegetable sales of $455 million; corn, $324 million; beans, $220 million, peas, $203 million, and broccoli, $194 million. It reported overall 2003 frozen vegetable sales at $2.8 billion.

Sales of organic frozen vegetables continued to climb as organic foods gained in popularity. Organic frozen food sales in natural-product outlets were estimated to have grown to more than $250 million by the mid-2000s. Sales included organic frozen french fries, peas, corn, broccoli, and green beans.

Fruits.
Americans consumed 4.96 pounds of frozen fruit per capita in 2005, down from 6.29 pounds in 2001. The U.S. Department of Agriculture (USDA) provides voluntary grade standards for fruits and vegetables to help processors achieve uniform product quality. The best-quality fruit is usually either sold as fresh produce or individually quick frozen, which results in a product close to fresh fruit. In the latter process, no sugar is added, and the speed of freezing minimizes ice crystal damage. Factors affecting fruit quality are color, size, blemishes, flavor, firmness, and unwanted portions such as skin, pits, or leaves. In bulk freezing, the fruit is filled into containers and then frozen. Such fruit can be frozen alone or with sugar or syrups added, and sometimes fruit is frozen in its own juice.

Among the most popular fruits are strawberries, raspberries, and blueberries, with berries accounting for 67 percent of all frozen fruit consumed in 2005. Blueberries significantly grew in popularity as their antioxidant properties were heavily promoted. Cold storage (frozen) stocks of both wild and cultivated blueberries was up nearly 20 percent in November 2004, but fairly equal to November 2002 holdings. Following a significant crop loss in Maine due to winter damage, packers replaced wild berries for cultivated ones in order to keep stock high. The 2003 processed total for North America was nearly 200 million pounds, but the 2004 number was about 50 million pounds less. Frozen exports of wild blueberries reached 17.9 million pounds in 2004, compared with 12.6 million pounds in 2003.

Frozen sweet and tart cherries are sold in large quantities in the United States and carry significant export numbers as well. By far, most frozen cherries are of the tart variety, while nearly 60 percent of sweet cherries are consumed fresh. The total value of U.S. tart cherry production in 2004 reached $70.8 million. U.S. exports of frozen sweet cherries totaled 1.8 million tons in 2004, with a value of $2.6 million. Exports of frozen tart cherries totaled 7.8 million tons, valued at $4.6 million.

Fruit Juices.
The frozen juice segment continued to suffer through the early and mid-2000s as consumers opted for aseptic chilled and shelf-stable container juices, both of which provided greater convenience to time-constrained shoppers. Additionally, the "low-carb" diet fad of the 2000s caused many consumers to cut back on fruit juices in general, especially orange juice. Finally, orange growers experienced significant crop loss from 2003 to 2005, first due to hurricanes, then to viral canker disease.

Overall, 2.34 billion gallons of fruit juices were produced in 2004, down from 2.4 billion in 2003 and 2.5 billion in 2000, according to Florida's Beverage Marketing Corporation. Frozen juices and juice concentrates as well as shelf-stable concentrates fared the worst. Frozen orange juice brought in $263 million in sales; frozen grape juice brought in $38.7 million; and frozen apple juice brought in $35.7 million.

To bolster slow frozen juice sales, manufacturers turned toward strategies such as cross merchandising, new packaging, new products, and marketing. Some juice companies attempted to boost the convenience factor of frozen juices in order to lure consumers. Welch's, the grape juice leader, marketed a new frozen juice container that could be thawed in a microwave, decreasing the time needed to mix a container of juice. Other manufacturers focused on one of the strongest selling points of frozen juice--price--and also introduced new flavors. Cross merchandising, such as pairing frozen juices with such items as frozen breakfast items, was also a tactic employed by frozen juice manufacturers.

Current Conditions

The Annual Survey of Manufacturers reported that overall shipments for the industry were valued at $10.62 billion in 2008. Frozen vegetables were valued at $7.86 billion that year, representing the bulk of total shipments, and frozen fruits, juices, drinks, and cocktails were valued at $2.49 billion.

Vegetables.
For Birds Eye, the product launch of its frozen steam vegetables Steamfresh in 2006 was a success, reaching $580 million in sales in 2009. In fact, 15.4 percent of the company's sales were generated from new product introductions in 2009.

Of the total (397.7 million cwt) U.S. potato crop, over half were used for frozen french fries in 2008. Other frozen products increased 7.4 percent. Per capita consumption of frozen potatoes fell to 50.3 pounds in 2009. Based on units, frozen french fries and other frozen potato products were up 13 percent; that, in turn, increased the value for frozen potato products in 2009-2010. According to the USDA, frozen per capita potato consumption was expected to fall to 49.7 pounds in 2011.

Frozen fry exports were valued at $666.4 million for the 2009-2010 growing season. Other frozen potato products increased 14 percent to $76.2 million, frozen fry exports were valued at $565.1 million, and other frozen potato products were valued at $79.3 million.

Fruits.
Although the frozen fruit sector has trailed frozen vegetables, the industry was making inroads with various new fruit sensations hitting retailers' freezers, such as tropical fruits and imported exotic fruits. In fact, according to Global Industry Analysts, Inc. the emerging frozen fruit market would increase by some 247,000 tons between 2008 and 2012. The health benefits continue to fuel growth, especially blueberries, with their elevated levels of antioxidants.

Fruit Juices.
The Florida Department of Citrus reported frozen orange juice fell 20.3 percent for the period ending February 20, 2010, compared to the same period a year earlier, as did refrigerated orange juice by 1.7 percent.

The ongoing recession could lower consumer demand for fruit juices into 2013, according to research firm, Mintel. In one survey, consumers revealed they were purchasing less juice because of the increasingly higher prices. The April 2009 Beverage Report noted that 2008 was the first year refreshment beverages saw a decline.

Industry Leaders

J.R. Simplot Company, with 10,000 employees and annual sales of about $2.53 billion in 2009, was one of the largest processors of frozen potatoes. Best known as a major supplier of french fries to the McDonald's restaurant chain, Simplot also processes fruits and vegetables at plants in California, Washington, Iowa, and Mexico, with more than half of them destined for food-service use. The privately held Simplot sold its Quincy, Washington, processing plant to Norpac Foods, Inc. (a cooperative of 240 family farmers) in mid-2004, supplementing a marketing and sales alliance to cooperatively develop frozen fruit and vegetable businesses. New Brunswick-based McCain Foods, which bills itself as the world's largest producer of frozen french fries and is known for supplying french fries to Burger King restaurants, also sold frozen vegetables through its Ore-Ida subsidiary. In 2009 the company employed 18,000 people worldwide and had sales of $3.1 billion.

Another frozen vegetables and fruits leader was ConAgra, one of the largest and most diversified frozen food manufacturers in the United States. ConAgra offered frozen potato items as well as frozen prepared foods. Its family of brands included Healthy Choice, Banquet, Kid Cuisine, and Marie Callender's. ConAgra's 2010 revenues were $13 billion, and the company had 24,400 employees. The company shed its agricultural, meat, and commodity products operations to focus on branded packaged foods.

Another giant, Agrilink Foods Inc., became larger with the 1998 acquisition of the vegetable operations of Dean Foods, a purchase that included Birds Eye, a top frozen vegetable brand. In 2003, Agrilink changed its name to Birds Eye Foods; the company's 2006 sales were approximately $928 million. Birds Eye Foods was acquired by Pinnacle Foods for $1.3 billion in 2010. Pinnacle was owned by Blackstone Group of New York, one of the largest prominent packaged food companies. Birds Eye, with an estimated 25 percent market share in the frozen vegetables sector, employed 1,700 people. Its brands include Swanson and Hungry Man frozen dinners, Celeste pizzas, Van de Kamp's and Mrs. Paul's seafoods, and Lender' bagels.

Many of the industry giants in the canned fruits and vegetables industry also offer frozen vegetable and juice products, such as Kraft Foods, Dole Food Company, Del Monte Foods, General Mills, and Schwans Food Company.

America and the World

Manufacturers of frozen fruits, fruit juices, and vegetables looked overseas for opportunities to expand. As the U.S. market for orange juice matured, the three leading producers, Minute Maid, Citrus Hill, and Tropicana, were looking to Europe and Japan for increased sales. Frozen potatoes especially enjoyed growing popularity overseas. The leading market for frozen french fries was Japan, which accounted for about half of total frozen potato exports, followed by Mexico, Canada, and China.

Research and Technology

A breakthrough in the twentieth century was the development of plastic packaging. Plastic is advantageous because it can be heat-sealed, is microwavable, is resistant to corrosion, and is easily made. More than 80 percent of U.S. households have microwave ovens, and makers of frozen vegetables and fruits use dual-purpose plastics in packaging that enable consumers to use either traditional stove-top cooking methods or popular microwave ovens. In the mid-2000s, manufacturers began offering frozen vegetables in packaging that would allow the contents to steam-cook in the microwave, increasing convenience and playing to consumers' desire for a simple, healthy method of preparation.

Agriculturalists in the field of plant breeding focused on improving the taste and nutritional value of vegetables used in frozen products, particularly onions, carrots, cucumbers, and garlic.

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