While chilled processed food sales are booming, the European frozen food market barely grew in 2006. Maria Lindahl, analyst at Euromonitor International, believes brands must revamp the image of frozen food and shake off negative consumer perceptions if they are to wrest some of the initiative back from the chilled aisle.

Chilled processed food may be a booming market in Western Europe, but at the same time the performance of the frozen food market has been sluggish to say the least. With the relationship between food and health more publicly debated than ever, an image of health and quality can take a food product a long way. But while manufacturers of chilled food have successfully played on the 'natural' and 'fresh' concept, frozen foods have had a hard time shaking off an image of being 'cheap' and 'unhealthy'.

According to latest research from Euromonitor International, the market for frozen processed food in Western Europe is expected to register slight growth of just over 1% in 2006, having been flat in 2005.

New product developments and buoyant sales of products such as frozen pizza and frozen vegetables have contributed to healthy growth in smaller markets such as Norway and Finland. 

However, they have been unable to offset the decline seen in major markets such as the UK. The UK currently accounts for 29% of all frozen food sales in Western Europe and therefore to a large extent dictates the overall performance of the European market.

In terms of sector performance, frozen poultry and frozen ready meals have suffered the worst. Although at a slightly lower rate than last year, sales of processed frozen poultry are expected to continue to fall in 2006 following declines in Austria, Italy, the UK, Denmark, Germany, France, Switzerland and Turkey. This can be in part attributed to health scares such as avian flu, but it is also part of a longer term trend, and consumer perceptions of frozen food as a whole will need to be drastically changed if manufacturers are to boost profitability.

Frozen ready meals have witnessed a similar pattern, with overall sales stagnant in 2006 following a decline of over 3% in 2005. Most alarmingly, the frozen ready meal market in the UK, which has the highest per capita consumption of these products of any European country, fell by close to 4% in 2006.

Faced with bleak growth prospects, manufacturers have begun to abandon what they apparently consider to be the 'sinking ship' of the packaged food industry. Private equity group EQT sold the Findus brand to American CapVest in January; Heinz offloaded the Linda McCartney business to Hain Celestial in June; and in-late August Unilever sold off its frozen food businesses in all European countries but Italy, thereby parting company with iconic brands such as Bird's Eye.

However, the picture is not entirely discouraging. Further south, major markets such as Spain and Italy have witnessed above-average growth over the past year, in particular within frozen processed vegetables and frozen fish/seafood. Spaniards in particular seem to trust frozen food, and regularly purchase these products. According to a survey on consumption habits undertaken by the Spanish Society of Dietetics and Food Science (SEDCA) and the Spanish Confederation of Consumers and Users (CECU) for Mes del Congelado (Frozen Food Month), 81% of the people interviewed considered convenience the most favourable characteristic of frozen food, followed by price and quality. Figures from Euromonitor International show that frozen fish/seafood is forecast to grow by an impressive 10% in Spain in 2006.

In Italy, the most valuable sector within the frozen food market - and one of the fastest growing - is vegetables. Euromonitor International estimates the Italian frozen vegetable sector to be worth over EUR550m (US$724m), growing at a rate of over 4% in 2006. Manufacturers have been able to sustain consumer interest through innovative launches such as Bonduelle's Tutto Vapore!, a new line of frozen vegetables that can be cooked directly in the microwave.

Looking forward, Euromonitor International takes a cautious view on the future growth prospects of the frozen processed food market in Western Europe, forecasting annual growth of 0.8%. While the highest growth rates are expected to be seen in Scandinavia, Italy will account for the largest proportion of these gains in actual terms. The regions that are expected to see most development are therefore central and southern Italy, where frozen products have a low penetration rate.

Looking at a broader level, the question however remains: can frozen food become 'hot' again? Frozen food manufacturers should be able to play on health credentials and premium quality, just like any other category. The problem does not lie with the concept of 'frozen'. After all, many people freeze chilled food once they get it home.

However, changing consumer perceptions is difficult. Many manufacturers have certainly tried, with mixed results. The most noteworthy marketing campaign in 2006 has been Unilever's 'frozen is fresh' campaign. The company invested over GBP20m (US$39m) in a bid to persuade consumers that frozen food is just as fresh - if not more so - than chilled food, highlighting how frozen stays fresh for longer without the need for preservatives. How successful such campaigns will ultimately be, however, remains to be seen. All in all, the frozen food sector needs a complete revamping of its image - or it will forever be considered the budget alternative to its chilled counterpart.

Click here to download Euromonitor International's report Frozen Processed Food in the UK.