Dive Brief:
- In a move that has potentially far-reaching implications for the frozen food industry, Pegasus Foods, a U.S. frozen foods manufacturer, has announced it will build a $10 million production facility in Rockwall, TX.
- The Los Angeles-based company joins companies across many industries escaping the high cost of living and doing business in California. Construction on the new 80,000-square-foot facility will create around 300 jobs and is expected to begin "as soon as possible," according to a statement.
- Pegasus manufactures branded and private-label frozen appetizers, entrees, and bakery products for national retail and foodservice industry customers.
Dive Insight:
Last year, Nielsen data pegged sales growth for frozen foods as being on a downward trend in the U.S., with growth being stagnant at less than 1% on average for the past four years. Unit sales for frozen foods have fallen 2%. Before its recent revamp, Lean Cuisine, a major frozen foods brand from Nestle, had reported 20% sales declines in the previous two years.
However, the industry hasn't given up on frozen foods, as evidenced by Pegasus' move, Nestle USA's global frozen foods R&D center opening last July, and Nomad Foods' intentions to seek out frozen food company acquisitions in the U.S.
Part of the problem for frozen foods is battling the consumer perception that frozen foods are not as healthy as their fresher counterparts. Manufacturers are battling the consumer assumption that frozen foods need additives to prevent spoilage and maintain quality.
In September, a ConAgra frozen foods exec told The New York Times that this wasn't the case. But getting that message across to consumers is what manufacturers are focusing on now. Mentions of healthy ingredients and functional attributes are becoming more common on frozen food labels as a result.
Smaller companies focused on making frozen foods healthier, such as Luvo and Amy's Kitchen, are becoming more popular among consumers and have increased their market share of frozen entrees, according to a 2014 report from Jeffries investment bank. Meanwhile, larger companies have lost over 5% of their share.