Dive Brief:

• Naturally positioned frozen meals and those with healthy attributes are resonating with millennials, offering an opportunity for grocers in private label development, according to Store Brands. A new report from market researcher SPINS, shows that sales of naturally positioned products in the frozen department increased 16.6% in 2011 and 11.1% in 2016. This is compared to the overall frozen department’s 2017 growth of 1.7%. 
• SPINS’ report indicates that frozen foods that include claims such as natural, organic, clean label, free-from and functional resonate strongly with millennials, who have driven the growth. The top-performing natural frozen segments include plant-based frozen entrees, gluten-free pizza/crust, and products with prebiotics. 
• Aldi offers a frozen vegan line called Earth Grown, which includes quinoa burgers and kale veggie burgers. Trader Joe's, meanwhile, offers a variety of naturally positioned frozen offerings, including a cauliflower crust pizza.  

Dive Insight:

This is the year when millennials are expected to wield the most buying power of any generation, with about $1.3 trillion in annual spending. Frozen foods have directly benefited from this demographic’s uptick in spending, as they offer the ease and convenience — and increasingly, the flavors — they crave. 

Millennials also tend to be more environmentally conscious than their predecessors and may be attracted to the potential for waste reduction with frozen foods. A 2017 survey found that among all food categories, frozen is the least likely to be thrown away by consumers. 

But it’s much more than convenience and sustainability that is spurring growth in the category. Many frozen manufacturers are leveraging millennial-driven trends like healthy, natural and organic in ways that have diminished frozen foods' stale image and attracted more shoppers to the category. According to RBC Capital Markets, “frozen-food companies are catching up to align their frozen offerings to the attributes consumers demand.” As a result, volume growth for the category has turned positive for the first time in five years.

Plenty of opportunities remain, however. The plant-based category, according to SPINS, has “incredible momentum,” with no signs of slowing down. According to some estimates, the plant-based meat market is set to make up one-third of the market by 2050. Some manufacturers have taken advantage of this demand, including Nestle’s Sweet Earth Natural Foods, which offers vegan and vegetarian frozen entrees.

As private label offerings continue to grow at a staggering pace – more than three times the rate of branded products –  retailers should consider investing deeply in the frozen aisle, like Aldi has done with its new Earth Grown frozen vegan line. Research from Daymon found that 60% of consumers want private brands to have more of a presence in the $3.7 trillion global wellness market. If more consumers are seeking these better-for-you offerings in the frozen aisle, that’s where retailers need to be.