Frozen Food Brands Tempt Consumers With D2C

Consumers expect their food faster than ever. Food delivery sales have soared since the start of the pandemic, remaining elevated even as consumers returned to restaurants. Channels that offer speed and convenience — mobile order-ahead, curbside pickup and drive-thru — have also benefitted from the shift. It is not only restaurants reaping the rewards. Time-saving meal solutions — meal kits, subscription services and heat-and-eat options — have also had the opportunity to seize on consumers’ rising need for speed, convenience and flexibility.

“Right now is a great time to be in frozen food — we see the category growing at, over the last two years, over 10%,” Bryan Freeman, CEO of health-focused frozen food brand Real Good Foods, told PYMNTS in an interview. “When you think about frozen food it really solved two or three really important trends in how consumers consume food and one is obviously convenience. Two, is, you have a long shelf life associated with frozen food … And then finally, the beautiful thing about frozen food is we’re able to offer what I call complicated food to consumers.”

Expanding on the latter, he noted that, for nutrition-conscious consumers, health-focused frozen meals can offer the opportunity for these consumers to eat the foods they would like to be eating without sinking hours each week into cooking. He added that frozen food’s performances in the health food category outpaces its overall growth, with the healthy frozen food category growing 15% over the past two years.

The Lifecycle of the Frozen Meal

In trying out new products, the brand first generates insights from its followers, with “literally hundreds of conversations happening every day,” occurring largely through its social channels. Then, after developing new products, the company first launches these options to its direct-to-consumer (D2C) online shop, testing how the product does with the engaged customers who frequent this channel. Finally, if the product performs well, the company will launch in grocery stores through its brick-and-mortar partners.

“We can see firsthand the success or lack of success of an item from the feedback that we get selling directly through the website,” said Freeman, “and then from there we’ll go into retail grocery, so by the time our items show up on shelves, we have a very good sense of their success.”

PYMNTS’ study D2C And The New Brand Loyalty Opportunity, created in collaboration with Sticky.io, which surveyed around 2,200 United States consumers in June 2020, found that D2C shopping is still fairly uncommon for food and beverage shopping, compared to other categories. Only 16% of consumers reported that they had used D2C channels to make food and beverage purchases, while 55% had shopped D2C across categories.

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With Real Good Foods’ D2C strategy, which keeps the product innovation coming, the brand has the opportunity to combat consumers’ meal fatigue. As Ken Venturi, CEO and founder the Martha Stewart Kitchen brand of frozen foods, told PYMNTS in an interview, many of the top brands in the frozen foods space “are kind of stale,” giving brands with a fresher take the chance to seize on the demand for new options.

“Folks have been eating at home for the last year and a half — they’re kind of burned out on all of that same stuff,” Venturi said.

See also: Martha Stewart Aims To Take On Every Aisle Of The Grocery Store

Less is More

Freeman said the growth in online grocery overall seen since the start of the pandemic has boosted the frozen food category, with consumers making fewer trips with bigger basket sizes, making it easy for them to throw in a few frozen meals to have on hand when they need a quick meal.

“People are prebuilding their baskets online before they step foot in the store, whether it’s Instacart or Walmart.com or whatever,” he said. “They’re building larger baskets and taking fewer trips.”

The online grocery space is growing, but it remains far from the norm. Data from the PYMNTS study What Consumers Expect From Their Grocery Shopping Experiences, a collaboration with ACI Worldwide, finds that only 34% of consumers are buying groceries online, and only 18% report that online shopping is their preferred grocery buying method. However, the share of consumers utilizing ecommerce grocery options leaps up for millennials and bridge millennials — 57% and 56%, respectively.

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While the trend of fewer trips and larger baskets may be holding true in the short-term, many in the grocery and restaurant industries are noting a shift from the latter to the former, in direct contradiction of the trend that Freeman highlighted.

“The dynamic of the 1950s, where somebody would cook six square meals a week and maybe go out once a week, is going to be totally the opposite,” Marc Choy, president of Ghost Kitchen Brands, told Karen Webster. “This is how people are going to know how to get their food — by ordering.”

Read more: In-Store Ghost Kitchens Turn Walmart Into Uber Eats Competitor

The Streaming Boost

Freeman noted that the rise of streaming services has generated demand for options that offer concerned consumers a quick and convenient option to meet their dietary needs, widely disseminating information about nutrition.

“You think about streaming services and the huge amount of documentaries are informational things that are available to consumers online and through streaming services,” he said, noting that this boom in educational materials has driven up demand for health foods.

In fact, a Technavio report finds that the global health food market is expected to grow 8% each year between 2020 and 2024. For its part, the global frozen food category, per an HNY Research analysis, is expected to grow 4% each year from 2020 to 2027.

“Consumers’ awareness of what’s possible with food is greater than any other time,” said Freeman, calling back to the demand for convenience, longer shelf lives and nutritious options. “Now, regardless of socioeconomic situation, you’re aware of what’s possible and you want it froze as a great solution for those three durable trends.”