Packaged Frozen Foods

SIC 5142

Companies in this industry

Industry report:

Included in this category are establishments primarily engaged in the wholesale distribution of packaged quick-frozen vegetables, juices, meats, fish, poultry, pastries, and other "deep freeze" products. Establishments primarily engaged in the wholesale distribution of frozen dairy products are classified in SIC 5143: Dairy Products, Except Dried or Canned, and those distributing frozen poultry, fish, and meat that are not packaged are classified in SIC 5144: Poultry and Poultry Products, SIC 5146: Fish and Seafoods, and SIC 5147: Meats and Meat Products, respectively.

Industry Snapshot

The packaged frozen foods industry remained healthy throughout the 2000s due to robust product innovation and lifestyle demographics favoring convenience foods, particularly those with a healthy image. Still, like wholesalers in general, those distributing frozen packaged foods were increasingly squeezed by the intensifying demands of manufacturers and retailers alike as well as the trend toward eliminating the middleman. Wholesalers in this environment faced increasing pressure to bolster their operations with value-added services.

Dun & Bradstreet reported that about 1,548 establishments operated in this industry in 2010, employing 39,864 workers and generating revenues of around $10 billion. The largest category in terms of sales was packaged frozen meat, fish, and poultry, which together accounted for almost 30 percent of total revenues. California had the most establishments in the industry, with 259, followed by Florida with 142 and New York with 127. Florida was the number-one state in terms of revenue, accounting for $1.9 billion, followed closely by Georgia with $1.3 billion. Texas had $825.2 in sales in 2009, and Michigan and California rounded out the top five, with $716.8 and $690 million in sales, respectively.

Organization and Structure

Some packaged frozen food wholesalers are specialty wholesalers offering just a few products--premium frozen novelties or frozen diet foods, for example. Besides selling frozen food, these wholesalers generally provide point-of-sale merchandising material, display suggestions, and offer product servicing such as stock rotation and product display monitoring.

For the most part, however, frozen foods are provided to retailers by full-service wholesalers, businesses that offer complete lines of grocery and nongrocery products and help the retailers with advertising, merchandising, and getting products they do not warehouse. Competition increased in this sector during the 1990s, and many large companies introduced sophisticated computer programs to track orders and deliveries.

Some frozen foods are distributed through the wholesale/retail chain by retailer-owned wholesalers, retailers who operate their own warehouses and shipping lines. The cooperative effort makes it possible for retailers to obtain merchandise at the lowest possible cost. The retailer-owned wholesaler also supplies group advertising, merchandising, and other services. These types of arrangements were becoming more and more common in the early twenty-first century.

Background and Development

The father of the frozen food industry, Clarence Birdseye, began experimenting with frozen food products in 1915; by 1930, General Foods Corp. began marketing a line of frozen poultry, meat, fish, fruit, and vegetables in retail grocery stores under the Birdseye name.

After World War II, the industry began to reach a mass market and quickly began to diversify and segment to boost profits. By the 1950s, frozen foods were the fastest-growing sector of the food business, according to Business History Review. The distribution network caught up with the mass market's pace in the mid-1950s, as technology was developed to mechanically keep rail car contents frozen across long distances, linked together with strategically located centralized automated cold-storage warehouses.

In the industry's infancy, frozen food processors marketed their wares through company-owned branches or regional wholesale distributors. This distribution pattern was expanded in 1945 when the Snow Crop Marketers Co. (New York City) introduced a direct sales program to chain stores, voluntary groups, and retail cooperatives. Frozen food products were then distributed through public warehouses or private distribution centers.

Frozen foods were profitable for both manufacturers and wholesalers. They became the primary players in a category supermarket industry analysts called "meal replacement"--that is, food for people who were too busy to cook. From 1996 to 1997, frozen food sales increased 3.2 percent. According to a 1997 survey conducted by Frozen Food Age, a family with teenagers spent an average $58 a week on frozen foods. The Great Lakes and the Plains had the greatest growth in frozen food sales for the time period covered by the survey.

An increasingly health-conscious yet extremely time-pressed U.S. public looked to frozen foods to provide quickly prepared yet delicious and wholesome meals. Though boasting convenience, the industry was traditionally beset by a reputation for product that was generally of lower quality than fresh alternatives. By the late 1990s and early 2000s, the industry had spawned a niche specializing in gourmet, restaurant-quality foods that could be prepared quickly at home. Leading brands such as ConAgra's Healthy Choice and Stouffer's Lean Cuisine marked the trend by pouring money into major marketing campaigns positioning their products to capitalize on the growing consumer hunger for nutritious, and even exotic, frozen foods. This trend bled into the rise of ethnic categories, including French, Italian, and Asian. Asian-style packaged frozen foods, riding the wave of health-conscious consuming, led the segment, increasing 7.8 percent in 2002, according to ACNielsen.

However, the industry faced marketing problems in its very display, as shoppers routinely rated the frozen-food aisle the most uninviting section of the supermarket, forcing retailers to use price promotions as a primary means by which to draw customers, thus impeding profit margins. Meanwhile, frozen packaged foods faced emerging competition from refrigerated foods, especially meat and produce, that copied frozen foods in their claims to convenience. While the refrigerated segment remained a minor threat to frozen foods in the mid-2000s, the industry was growing rapidly.

Current Conditions

The economic recession of the late 2000s brought good news for private-label frozen food makers, as Americans chose the lower-priced alternatives to major brands, according to Private Label Buyer. According to the publication, in the 52 weeks ending June 13, 2010, sales of private-label frozen breakfast foods increased 27.7 percent in value and 27.1 percent in number of items sold. In addition, "although many consumers are becoming increasingly interested in purchasing fresh, local meal ingredients, they remain uncertain about when the economy will recover. Therefore, many of these consumers will turn to more economical options." The industry responded to the rise in demand for fresh and wholesome options, according to a report by Euromonitor, by introducing such products as flash-frozen foods and reduced-sodium items.

Figures from Information Resources that detailed frozen prepared meal sales (excluding Wal-Mart) showed that breakfast entrees remained a popular item, garnering $382.4 million in sales between June 2009 and June 2010. Handheld breakfast items showed the largest growth in the category and accounted for $360.6 million in sales during that time period, representing an increase of 12.5 percent. About $1.3 billion worth of nonbreakfast frozen handheld items were sold, and frozen single-serve dinners/entrees accounted for $3.5 billion. Other categories included multiserve dinners/entrees ($1.3 billion) and frozen pot pies ($269.2 million).

Despite the increased popularity of frozen foods in the early 2010s, wholesalers continued to be increasingly bypassed, with retailers obtaining products directly from the manufacturer or serving as both retailer and wholesaler in one. According to a 2010 report by IBISWorld, "The industry is relying on product innovation, value-added products and increasing economies of scale for growth in the future."

Industry Leaders

SYSCO Corp. continued its reign as the largest foodservice marketer and distributor in North America in the early 2010s. Based in Houston, Texas, SYSCO was chiefly a supplier to the food service industry, specializing in the wholesale distribution of more than 275,000 types of prepared frozen meals, condiments, and deli meats. SYSCO employed about 46,000 workers in more than 180 facilities throughout North America in 2010 and distributed to more than 400,000 customers, including restaurants, hospitals, schools, and other business and industry foodservice operations. Value-added services SYSCO regularly supplied to customers included product usage reports and other data, menu-planning advice, food safety training, and inventory-management assistance. The firm expanded rapidly via strategic acquisitions throughout the 2000s, edging into the market for frozen Asian cuisine with its purchase of Asian Foods Inc., North America's largest Asian food service distribution company. SYSCO's revenues jumped from $21.8 billion in 2001 to $26.1 billion in 2003. By 2009, the firm was recording annual sales of $37.2 billion. In 2010 SYSCO continued its tradition of acquisitions with the purchase of wholesale foods distributor Lincoln Poultry & Egg Co.

Trailing SYSCO was U.S. Foodservice Inc. With a customer base of about 250,000 and particular strength among schools, the Rosemont, Illinois-based firm was owned by KKR & Co. and Clayton, Dubilier & Rice. Like SYSCO, U.S. Foodservice was on an acquisition spree in the 2000s. With 26,000 employees, U.S. Foodservice recorded sales of $19.8 billion in 2009.

The third largest foodservice distributor in the United States in 2010 was Performance Food Group Company, of Richmond, Virginia. The firm employed 3,200 and distributed more than 60,000 products to hotels, restaurants, and other clients. As was the case with its rivals, the acquisition of key regional players was among Performance Food Group's key growth strategies in the 2000s, and the firm's revenues jumped from $5.5 billion in 2003 to $9.3 billion in 2009.

Ben E. Keith Company, based in Fort Worth, Texas, employed 2,700 and served about 22,000 customers. The firm's sales more than doubled between 2003 and 2008, from $1.3 billion to $2.7 billion. In addition to frozen food, Ben E. Keith distributed produce, dry groceries, and beer to restaurants, hospitals, schools, and other institutions.

ConAgra Foods Inc. of Omaha, Nebraska, was also an industry leader in packaged and frozen food distribution, generating $12.0 billion in 2009 sales with 24,400 employees.

© COPYRIGHT 2018 The Gale Group, Inc. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. For permission to reuse this article, contact the Copyright Clearance Center.

News and information about Packaged Frozen Foods

Supermarket Smart
Dayton Daily News (Dayton, OH); May 10, 2017; 640 words
...our money. Here are some things your readers may not know: - If you find large ice crystals on the outside of packaged frozen foods, it means the items were thawed and then refrozen. Never purchase this type of product. - Jars that are sticky...
Gongbei Customs Destroys 115.95 Tons of Smuggled Frozen Foods
States News Service; August 1, 2016; 411 words
...a fleet of trucks escorted by customs officers entered the garbage power plant. Afterwards, thousands of well packaged frozen foods were dumped into a deep pit and then conveyed into a blast furnace to be burned to ash. The process continued...
'I Don't Know What to Believe about Food Any More'
Hindustan Times (New Delhi, India); January 11, 2015; 489 words
...the week, Neeru says, adding with a pause, "the children do call for pizzas quite often, and snack on pre-packaged frozen foods, soups and instant noodles."When eating out, the family prefers burgers, fried chicken and hot dogs. "I...
Bia Diagnostics Named Vermont Micro-Enterprise of the Year
Vermont Business Magazine; June 1, 2011; 700+ words
...recognize it as a foreign substance," said Grace. Bia Diagnostics analyzes cereals, beers, wines, pre-made packaged, frozen foods and ready-to-eat foods like sausages. In addition, the business makes and sells nutritional labels, provides...
Going with the grain ; Conglomerates as well as smaller players backed by dollops of private equity are investing big bucks in processing food and taking it to the consumer.
Business Today; August 8, 2010; 700+ words
...wastage and increasing margins. At the front end, organised retailers are seducing consumers with attractively-packaged frozen foods and desserts; that, in turn, call for the setting up of a cold chain to transport, warehouse and store such...
Dinner on ice
Deseret News (Salt Lake City); June 18, 2008; 700+ words
...tailor the meals to your family's tastes and diets. "Making your own meals is healthier than fast food and pre-packaged frozen foods," said Stanger. -- Portion control. You can package the meals for your family's size and avoid waste...
Boise Weekly; March 19, 2008; 700+ words
...6). I, for one, couldn't pass the opportunity to try the chicken pot pie ($15). I was raised on packaged, frozen foods and simply had to taste Barbacoa's interpretation of one of my all-time favorite comfort foods. When our...
Healthy growth: frozen fruit is selling like hotcakes, as more consumers adopt a healthier diet and more companies bring new products and higher sales volume to the category.(FRUIT)
Frozen Food Age; November 1, 2005; 700+ words
...volume dramatically. Frozen fruit brands like Wyman's and VIP Sales have been joined in the category by Dole Packaged Frozen Foods and Europe's Best, which seeks to duplicate its successes in Canada here in U.S. markets. Senior executives...

Search all articles about Packaged Frozen Foods