Fresh Convenience Foods in the U.S.

During 2008 and 2009, as the “Great Recession” took hold, many consumer product marketers and retailers acted as if the walls were closing in on them, in many cases resorting to rampant price-slashing. But not fresh convenience food marketers and retailers, who instead saw an opening. Wisely gauging their main competition as coming from the restaurant industry instead of less costly unprepared food, they continued the innovations in quality and convenience that had been underway in the market for several years, and simultaneously began aggressively competing on price with the foodservice industry in an effort to woo customers away.

According to Packaged Facts, these efforts proved successful, spurring a shift by many consumers from restaurant meals to prepared food purchased at retail outlets. As a result, the market for fresh convenience foods grew by 5.1% in 2009 to reach sales of $22.3 billion. Packaged Facts expects these marketing and merchandising efforts to continue to prove successful over the short term, driving sales of fresh convenience foods up another 28% by 2014 to $28.5 billion.

Fully updated from the December 2007 edition, Fresh Convenience Foods in the U.S. offers a comprehensive look at this complex market. It examines the both myriad types of fresh convenience foods and the myriad retail channels through which they are obtained—from traditional outlets such supermarkets and supercenters/mass merchandisers to such increasingly dynamic segments as convenience stores, delis and local food outlets, drugstores, the Internet, and even food carts.

This full updated report details the complex changes that have taken place in the market since the previous edition, with new attention to competition by retail sector. Using Symphony/IRI mass-market sales tracking data, it offers detailed accounts of sales and marketer/brand activity across 17 refrigerated product segments, from lunch kits and dinners/entrees to fresh soup and side dishes, while diving into selected segments using SPINSscan data for natural supermarket channel. The report projects sales, market growth drivers, and competitive opportunities, including an extensive account of the battle with the foodservice industry for consumer dollars that details the staggering—and still growing—assortment of menu and marketing trends shaping the industry.

A special feature of this report is custom survey data by Packaged Facts specifically addressing consumer purchasing of fresh prepared foods, including vis-à-vis the down economy. Additional demographic analysis derives from data compiled by Experian Simmons, New York, NY, including demographic indexing of consumers most or least likely to often eat store-made, pre-cooked meals.

Market Insights: A Selection From The Report

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Local Food Holds Broad Appeal

In Packaged Facts’ opinion, nothing is hotter at the moment in the food industry than the trend towards locally sourced or produced food.  While locally produced food has long appealed to the LOHAS (Lifestyles of Health and Sustainability) consumer, by now the concept has definitively expanded to the general populace, achieving a following among a broad spectrum of consumers for different reasons.  It bears noting, however, that one drawback to locally sourced food as it applies to fresh prepared convenience food is that local sourcing is not terribly convenient.  Most notably in this regard, product availability is restricted by growing region and season.

Obviously, this poses less of a problem for a local chef operating a single-unit restaurant specializing in locavore cuisine than it does for the food retailer trying to retain a constant offering of customer favorites in its prepared food sections.  But retailers should keep in mind that many consumers who are interested in buying local food products are not committed locavores, but merely see the idea of a locally sourced food as a plus. In other words, while they would prefer to eat local in-season food, they are also happy to purchase similar products when the first choice is out of season or otherwise unavailable.

Recessionary Decline in Restaurant Traffic a Plus for Fresh Convenience Foods

The results of Packaged Facts’ consumer survey support the conclusion presented earlier in this report—that key to fresh convenience food market growth in the face of the 2008/2009 “Great Recession” and still-iffy U.S. economy is the trend whereby consumers have traded down from restaurant meals in favor of fresh prepared foods.  Since the recession began, 49% of the adults surveyed reported that they had eaten less at fast-food restaurants and 50% said they’d eaten less fast-food takeout, while 61% said they’d eaten less at sit-down restaurants. Conversely, the percent of adults who strongly agreed that they were spending less on groceries because of the economy was only 15%, while another 28% somewhat agreed.  In other words, restaurants experienced a significant drop-off in consumer demand even as relatively few consumers cut back on grocery spending.  [Figure 1-2]

In the News

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New York, July 22 2010 — By most accounts, Americans slowed their spending on consumer products as a result of the economic downturn. However, market research publisher Packaged Facts has found one product that enjoyed a recessionary boon - fresh convenience foods. According to Fresh Convenience Foods in the U.S., the market for fresh convenience foods grew by 5% in 2009 to reach sales of $22 billion. Packaged Facts expects these marketing and merchandising efforts to continue to prove successful over the short term, driving sales of fresh convenience foods up another 28% by 2014 to $29 billion.

During the height of the recession, fresh convenience food marketers and retailers spotted an opening. Seeing their main competition coming from the restaurant industry (instead of less costly unprepared food), many retailers began to compete more heavily on price without cutting back on the process of innovation in quality and convenience that had been underway for more than a decade. According to the report, these efforts proved successful, spurring a shift by many consumers from restaurant meals to prepared food purchased at retail outlets.

“The big question of course is, can growth be sustained? Although the bruising recession that began in 2008 is technically over, its fallout seems certain to affect the economy for some time into the future,” says Don Montuori, publisher of Packaged Facts.  “In the short term it seems likely that consumers will have less mad money jangling around in their pockets than they did in the past decade or two.  This does not mean that supermarkets will have less money in their cash registers than they did in the past decade or two, but it does mean they will have to work harder for every dollar. Throughout the recent rough patch retailers have been able to incorporate a level of price competition into what was already a groundswell of innovation in the concept of fresh prepared foods.  It’s that interaction between innovation and price competition that has worked so far, and both sides of the equation must be maintained if the market is to continue growing.”

The report examines the U.S. market for fresh prepared convenience foods sold refrigerated or hot to consumers, through myriad retail channels including supermarkets, supercenters, warehouse clubs, small food marts and delis, convenience stores, and drugstores.  As defined by the report, a fresh convenience food is a prepared food that is ready-to-eat, or almost ready-to-eat—a salad with dressing on the side, for example.  These products include prepared meals, entrees and side dishes. 

Fresh convenience foods are sold through a broad and still growing spectrum of retail channels.  Nevertheless, the majority of sales continue to take place in supermarkets and grocery stores, which account for an estimated 68% share of 2009 retail dollar sales.  Supercenters and mass merchandisers are the second most popular channel, ringing up 13% of sales, followed by natural/health food stores, warehouse clubs and convenience stores. 

Fresh Convenience Foods in the U.S. details the complex changes that have taken place in the market since 2007, with new attention to competition by retail sector. Using Symphony/IRI mass-market sales tracking data, it offers detailed accounts of sales and marketer/brand activity across 17 refrigerated product segments, from lunch kits and dinners/entrees to fresh soup and side dishes, while diving into selected segments using SPINSscan data for natural supermarket channel. The report projects sales, market growth drivers, and competitive opportunities, including an extensive account of the battle with the foodservice industry for consumer dollars that details the staggering—and still growing—assortment of menu and marketing trends shaping the industry.

About Packaged Facts - Packaged Facts, a division of MarketResearch.com, publishes market intelligence on a wide range of consumer market topics, including consumer goods and retailing, foods and beverages, demographics, pet products and services, and financial products.  Packaged Facts also offers a full range of custom research services.