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September 1st 2004 >> Source: Frozen
Food Age Backed up by years of double-digit sales growth and similar projections for several years to come, natural and organic frozen food companies are attracting an ever-larger customer base and laying claim to a greater share of shelf space in traditional retail stores. A growing number of consumers are basing all or part of their shopping decisions on ingredient panels because of their concerns about nutrition, specific ingredients and food safety. And their commitment to these types of products is being reinforced by the ever-expanding number of choices in natural and organic foods. This pattern of growth is being further strengthened by the expanded position that many traditional supermarkets have taken in this category, as they compete for sales against successful specialty chains such as Whole Foods Market and Wild Oats, among other natural food stores. Leading brands such as Amy's Kitchen, Cedarlane Natural Foods, and Van's International Foods are building on their earlier successes with aggressive new product programs that address consumer demand for natural and organic foods for every meal occasion. Other companies in the category such as Seapoint Farms, with its edamame line and Laura's Lifestyle brand of low-carb, all-natural frozen entrees, and Kashi, a well-established cereal brand that recently expanded into the natural frozen waffle category, are contributing their own momentum to this pattern of growth. A sampling of new and existing products from these companies illustrate the breadth and depth of natural and organic food choices. Amy's Kitchen is rolling out several new products that include Indian-style meals such as its Mattar Paneer, a traditional dish made with Indian cheese, rice and chick peas, Palak Paneer, a spinach dish with rice and beans, and a Samosa Wrap, made from organic potatoes, peas and tofu, and wrapped in a wheat tortilla. Also new are Amy's Cheese & Pesto Pizza with Whole Wheat Crust and a 3 Cheese Pizza with Cornmeal Crust. "Our Indian meals are still very, very new because they were introduced in natural food stores, but they are wildly successful and could be among our best sellers," says Steve Warnert, director of sales and marketing for the Santa Rosa, Calif.-based Amy's Kitchen. "Our two new pizzas address the shift back to whole grains, which is big in natural food stores. And our new bowls, the Pesto Tortellini and the Mexican Casserole bowls are just smoking-they are very successful." Cedarlane made new product news of its own this year with the introduction of seven new natural frozen entrees containing between five and 11 carbs. The new line, dubbed Cedarlane Carb Buster includes: Vegetable Lasagna, Spinach and Feta Enchiladas, Chili Relleno Pie, Eggplant Parmesan, Broccoli Cheddar Quiche, Four Cheese Quiche, and a Spinach Artichoke Quiche. "Carb Busters is not making a low-carb statement, it's a net carb approach," explains Terry Mayo, vice president of sales and marketing for the Carson, Calif.-based company. "We know the federal government is coming out with [low-carb] guidelines and we wanted to make sure we are in compliance. We were very careful to produce products that stand on their own merit and not on their low carbs. We have a line of four quiche entrees that do the same. They are very good-tasting and also provide the low-carb benefits." Cedarlane's current top sellers include a three-layer enchilada, which is a Mexican version of lasagna, as well as a lower-fat enchilada and a lower-fat burrito. "Although the low-fat trend died many years ago, these products have the capability of standing on their own as great-tasting, quality products. We want our customers to buy our products day in and day out because they are good quality, regardless of the specific product feature," he adds. Van's International Foods recently introduced its new Gourmet Buckwheat Waffles and its Gourmet Flax Waffles, along with a new Van's Carb Manager line of low-carb waffles in Butter Pecan, Homestyle and a Flax. "We are a premium frozen waffle company; we are not a low-carb waffle company," says Kim Kelly, CEO of the Torrance, Calif.-based company. "We developed items that are very good-tasting, all-natural, and with four net carbs per waffle. Our low-carb items have been well accepted by consumers, but I don't think everyone is going to go low-carb." With these new products, Van's is also addressing growing consumer interest in specific product features such as having Omega 3 and being gluten-free. "There is a growing awareness among baby boomers to the benefits of Omega 3 and more of them are incorporating products containing Omega 3 in their diets. There is also growing interest in wheat-free products for those with Celiac disease who have problems digesting gluten. I've read articles reporting that some three million people have Celiac disease, which produces a deterioration of the stomach lining and makes it difficult for the body to absorb nutrients in the food they eat," he notes. "We think we have great-tasting products and we have the No. 1 brand in the natural food, frozen breakfast category. We are in the sweet spot to grow for many years to come," Kelly observes. Laura's Lifestyle brand of low-carb, all-natural entrees has attracted a loyal consumer following since the line was introduced earlier this year. The product line consists of Chicken Puttanesca, Chicken Chow Mein, Thai Chicken, and Chicken Santa Fe. "Unlike the Seapoint Farms line, which we have placed in the all-natural category from day one, in retail outlets like Whole Foods Market, with the Laura's Lifestyle line we didn't want to pigeonhole ourselves within the all-natural segment. We wanted to emphasize the low-carb feature of our entrees," says Laura Cross, president of Laura's Lifestyle and Seapoint Farms, based in Costa Mesa, Calif. Distribution of the new line is currently concentrated on the East Coast and West Coast and expanding into the Midwest, she says. "We are having several successful tests with multiple national retailers. We are already in Pathmark, Stop & Shop, Price Chopper, Ralph's, Food Lion, and Kroger's in the Midwest," says Cross. "The most important things about our Laura's Lifestyle line are the quality and deliciousness of the products. There are a lot of really bad-tasting products out there, but we are offering a delicious product that will continue to do well if this low-carb craze begins to have a diminished effect. Without the low-carb trend, we can still present these entrees as being great-tasting, all-natural and convenient," she observes. Based on the success of the initial launch, Cross says she is already working to develop new products and expand the line with more entrees, as well as breakfast and snack items. With an eye on expanding distribution, she says the company is concentrating on gaining acceptance with supermarkets and grocery stores to achieve the highest sales volume, but not to the exclusion of other, more specialized retailers such as Whole Foods Market and Wild Oats. Seapoint Farms has something of a pioneering role in introducing a full line of products featuring edamame, a specialty soybean which contains eight essential amino acids, is high in essential fatty acids and contains no cholesterol. "We have seven SKUs and their success has been phenomenal. It took us five years just to get people to pronounce the word, but now, with the Atkins and South Beach diets, Edamame sales have soared. It's the everything vegetable," she notes. The product line includes four rice bowls: in Kung Pao Vegetable, Szechwan Vegetable, Teriyaki Vegetable, and Vegetable Fried Rice. In addition, the rest of the line offers Soybeans in Pods, Shelled Soybeans, Ready to Eat, Organic Pods and Organic Shelled. "Edamame was not a consumer-driven item 10 years ago. We started this company almost on a dare, but we believed in it enough. Now the market is coming to us," says Cross. One of the newest natural frozen foods was launched by in July by Kashi, best known for its cereals, bars and crackers. Its newest product is Heart to Heart frozen waffles, which builds on the success of its GoLean frozen waffles launched last year. "Kashi GoLean Waffles are the No. 2 natural frozen waffle brand. In July Kashi introduced Kashi Heart to Heart Waffles as an extension. It makes sense to extend a strong brand into a category where we already have a strong position," explains David de Souza, vice president of marketing for the La Jolla, Calif.-based company. Kashi's newest frozen waffles have a long list of product features. They help lower cholesterol with one gram of soluble fiber from oats and contain antioxidants and vitamins ranging from Vitamins C, E, A, and B, along with Grape Seed Extract, Green Tea Extract and Lycopene. "Kashi consumers look for great tasting, healthier, all-natural foods. They are more urban, affluent and discerning when it comes to making food choices. Consumption of waffles indexes very high against older adults. This is the age group that is most at risk when it comes to heart disease, the number one killer in America. Heart to Heart waffles have more heart healthy ingredients than any national waffle to make taking care of your heart easy and enjoyable," de Souza observes. The newest product will be sold through both traditional retail chains and natural food stores. Advertising and promotional support for the launch will kick in this fall, and will include print advertising and some couponing, he says. Evidence of continuing, strong sales growth in frozen natural and organic foods comes from multiple sources. Some of it is anecdotal, with individual companies reporting several consecutive years of 15% to 20% gains. Other measurements, though perhaps broader and therefore less precise, nevertheless support the conclusion that this category is growing quickly and will continue to do so for years to come. For example, total organic food sales for 2003 were up 20.4%, according to the Organic Trade Association, but that measurement includes all organic food categories such as dairy, fresh fruit and vegetables, and beverages. In a May 2004 survey of total organic food and beverage sales in the U.S., The Natural Marketing Institute reports 22% sales growth for 2003 and projects the same 22% growth for 2004. All these positive sales trends beg the questions: Who's buying these products, and where do they prefer to shop for them? "There is a core group of consumers who are buying 100 percent of their requirements in natural and organic foods, but there is also a much larger audience-the occasional buyer who is coming in, shopping these products, and gaining more confidence and enjoyment," says Warnert, of Amy's Kitchen. While specialty chains are destination stores for these products, traditional supermarkets are increasing their commitment to this category, he notes. "In markets where there is a fair amount of competition from specialty stores, the supermarkets are integrating the natural foods into their regular assortments, instead of segregating them. And in markets where the category has not developed, they use a boutique-type approach. Most traditional retailers have acknowledged that natural and organic foods represent a real opportunity, especially with the competition they are facing from dollar stores and club stores. Many of these traditional stores have also invested in additional space. We are writing schematics for some traditional stores that call for eight doors of natural organic foods, compared to Whole Foods Market, which has 60 doors," says Warnert. "Consumers are becoming more label savvy, and there is more media attention to food ingredients. Natural and organic products provide more nutritious foods and they give more comfort, more peace of mind to those consumers interested in food safety issues and the basic ingredients of the products they buy," says Mayo, of Cedarlane Natural Foods. "The natural foods business is also growing from the new stores being added by companies like Whole Foods Market and Wild Oats, and a lot of the sales growth in [traditional] supermarkets is the result of new placement of these foods and gaining new customers," he adds. Looking a year or two into the future, and this category's potential to sustain its current growth rate, Warnert sees "10 percent to 15 percent growth for the next couple of years, at least, and it could continue for the next three to five years. The federal regulations on organic foods that went into effect in October 2002 have gone a long way toward giving the retailer and the consumer peace of mind." He also predicts that the success of specialty food chains will pose more of a competitive challenge to traditional retailers. "They are waking up the retail community to a new and different way to merchandise food. They have aggressive expansion plans. These stores are morphing into retail settings where health and gourmet foods merge," he adds. + Read Full Article | << Back to 2004
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