Buoyed by the increase in uptake of frozen foods, brands launch newer variants and expand retail presence
Currently, potato-based frozen products, such as fries and wedges, are the most sought after.
The pandemic has provided a big boost to the frozen foods category in India. With the rise in at-home consumption of food, this segment too, like other packaged foods, has witnessed growth. BigBasket saw a fourfold increase in the sales of frozen foods on its platform, which, it says, has now settled to twice that of the pre-pandemic period. Godrej Yummiez reported a 60% growth in the July-September period, while Mother Dairy-owned Safal claims to have seen a 100% increase in sales in FY21 as compared to FY20.
According to RedSeer Consulting, the frozen foods category in India was valued at Rs 1,500 crore in 2019, and was slated to see growth to the tune of 17% in 2020. “With the pandemic-fuelled demand, we expect the growth to have been higher than our projection,” says Rohan Agarwal, director, RedSeer Consulting.
McCain, Venky’s, Godrej Yummiez and Sumeru are the top brands in the frozen foods category, and together command about 60-70% market share according to industry experts. These brands attribute the upsurge in demand to increased interest from consumers, most of them first-time buyers. “Though the frozen foods category is a small one, its uptake went up sharply last year,” says Prashant Vatkar, CEO, Godrej Tyson Foods, which owns the Yummiez brand.
Brands operating in this category have launched several products in the past year to cash in on the increased demand. Safal, for instance, extended its frozen products range by launching Frozen Okra Cut, Frozen Drumstick and Frozen Haldi Paste Cubes, and Innovative Foods, which owns Sumeru, introduced Lasagne Paratha. BigBasket, too, entered the category with products such as frozen pizza and frozen peas under its private label Fresho, as it witnessed “need gaps” in the assortment being offered by other brands.
“We have priced our products competitively. For instance, the Happy Chef large pizza comes at Rs 299, as compared to Rs 599 for a large pizza from popular QSR chains,” says Seshu Kumar Tirumala, national category head, BigBasket.
Most of these brands rejigged their retail strategies to focus on general trade. This was necessitated by the decline in footfall in modern trade stores — which contributed around 50% sales for brands like Sumeru and Godrej Yummiez pre-pandemic — during the lockdown.
Vatkar of Godrej Tyson Foods says the company expanded its retail presence last year — from 7,000 outlets pre-Covid, the company is now present in 7,700 outlets. “We undertook several initiatives for last-mile connectivity and started supplying directly to outlets without distributors,” he adds. Sumeru, too, added new stores last year, and is now present in over 12,000 stores.
That apart, e-commerce took precedence as companies saw high sales from the channel. “On e-commerce, we saw our sales increase around 25% during the pandemic period (April-June 2020) as compared to the same period last year,” informs Pradipta Sahoo, business head – Safal, Mother Dairy Fruit & Vegetable. This later stabilised to a growth of around 18%, he adds.
Despite the newfound consumer interest in the category, frozen foods largely remain an urban phenomenon and this, experts say, could be limiting its growth. “It is yet to become a mass category due to supply chain challenges as well as pricing,” says Ankur Bisen, senior vice president, retail and consumer products, Technopak.
A pack of Safal’s Frozen Peas is priced at Rs 240 per kg, whereas the fresh variant of the product when in season could be purchased at as low as Rs 50. Similarly, products from Godrej Yummiez are priced in the Rs 250-300 range, while those from Sumeru in the Rs 150-200 range. While bringing down prices could drive mass adoption, it is a challenging prospect given the high costs associated with processing these foods.
Furthermore, other factors such as the lack of infrastructure (freezers) in general trade stores, and the perception that ‘frozen foods aren’t healthy’ are also likely to hinder the growth of this category, experts say.
Currently, potato-based frozen products, such as fries and wedges, are the most sought after. Agarwal of RedSeer Consulting says these brands need to identify and promote more occasions for the consumption of these products, and launch more variants to grow their reach.