This month, we've been taking look at how consumer preferences are changing the food industry. Check out the posts on beverages, bakery and snacks, dairy, and meat, poultry, and seafood. In this final installment, we explore what consumers want when it comes to prepared foods.
Fresh is where it's at
The prepared foods market has several segments, and, right now, fresh prepared foods are blowing the rest of them right out of the water. Over the past few years, sales of frozen foods have taken a nosedive and even quick-service restaurants are feeling the pinch as consumers turn to deli cases and “grocerants” for grab-and-go meals.
- In 2014, 37% of consumers reported buying prepared ready-to-eat or ready-to-heat foods from grocery stores at least once a week, a 15% increase from the previous year.
- FMI research shows that growth in the fresh prepared foods market increased from 6.7% in 2012 to 9.8% in 2015. The institute expects the market to double in the next three to five.
- Fresh frequently also means “less processed.” Mintel's most recent trends report called “Artificial: Public Enemy No. 1.”
As with trends in other sectors, the push toward fresh, less processed foods is being driven in large part by Millennials. Historically, people in this age group would be more likely to eat at restaurants, but recent NPD Group research shows that they are now less likely to visit restaurants than the over-50 crowd.
People want to make healthy choices, most of the time
For the most part, consumers seem to want healthy choices, and they're willing to pay more for them. We've heard that from many of the experts we've interviewed about current trends across the industry, including prepared foods.
But, not everyone wants healthy food all of the time, even at main mealtimes. For example, one study found that even with price and availability factors being equal, consumers tend to choose less healthy RTE cereals.
Implications for food processors
Today's younger food-buying generation, aka Millennials, are different from the previous generations at that age. They're less likely to cook, but they're also less likely to eat at restaurants — instead, they're turning to grocery and convenience stores for RTE foods.
In addition, because they want to eat healthy (usually), they're drawn to fresh, rather than frozen, prepared foods.
Food processors are responding to this new reality in many ways, including reducing the number of ingredients that go into their products, emphasizing clean labels, and providing a wide variety of tasty prepared foods that are easy to grab and go.
Over the next several years, expect to see these markets expand as freshness and convenience come into even higher demand.