Affected by the pandemic this year, frozen food has seen astonishing yet expected growth. According to Tmall, frozen food sales on the platform exploded, with a 4x year-on-year increase (April-November 2020).
According to ECdataway data, from February to November 2020, categories such as seafood balls, pancakes/hand-grabbed pancakes/pies, buns/pastries/you tiao fried items, rice cakes/ci ba, dumplings/wontons, tangyuan/yuanxiao, and seafood balls (mostly frozen food) saw average sales growth of 431% year-on-year, with average volume growth of 332%. Among them, seafood balls saw the highest monthly sales growth of up to 6217.1%, with volume growth of 2582.3%.
The frozen food track, which had been "quiet" for a long time, suddenly attracted attention.
Take Sanquan Foods as an example. In the first half of 2020, Sanquan Foods achieved revenue of 3.73 billion yuan, a year-on-year increase of 22.60%. Net profit reached 452 million yuan, a year-on-year increase of 409.61%.
Frozen food is not only booming, but it is also making its way to young people's tables, gradually becoming a dietary habit for them.
The growth of frozen food has also attracted the attention of CCTV Finance. According to reports, "The proportion of users under 25 is clearly increasing, and creative cooking videos of frozen food are widely spread on social media."
According to the "Online Convenience Food Industry Trend Insight Report" released by CBNData and Tmall, post-80s and post-90s young people have become the main consumers of online convenience food, laying a solid foundation for the continued recovery of convenience food.
The pandemic accelerated consumers' habit of consuming frozen food. As the pandemic's driving effect on the frozen food industry weakens, where is the long-term growth space for frozen food? In the future, young people are becoming an important consumer group for frozen food. So, how can frozen food brands communicate with young people?
-01- Where are the opportunities and development space for frozen food?
What is frozen food? Frozen food refers to food that is quickly lowered to below -18°C in a short time, thus requiring no preservatives or additives, preserving the nutrition and taste of the food to the maximum extent, and at such low temperatures, microorganisms basically do not reproduce.
In short, frozen food can preserve the freshness of meat, the fullness of soup, and the softness of starch from thousands of miles away and deliver them to consumers' mouths. This advantage allows frozen food to meet consumers' needs for dumplings, tangyuan, zongzi, wontons, pastries, soup dumplings, and so on.
According to China Commercial Industry Research Institute, the market size of China's frozen food is expected to reach nearly 350 billion yuan by 2025, with a compound annual growth rate of 10.5%, undoubtedly a star track.
In addition to data insights, we can see some phenomena and changes in daily life, revealing the development opportunities and potential of frozen food.
1. Challenges for traditional "dumpling shops": frozen is a necessity
Starch and fresh meat are undoubtedly human favorites.
But fresh meat spoils quickly, and some starch foods are difficult to store at room temperature. For a long time, due to the lack of cold chain logistics and frozen storage infrastructure, the operating cost of "freshness" for merchants and the acquisition cost for consumers were relatively high.
If this obstacle to business efficiency is resolved, it can be predicted that market demand will be released to a certain extent.
Since Chinese consumers' purchase of frozen food categories is dominated by dumplings and wontons, accounting for 73.4%, let's take traditional dumpling shops as an example.
Have you ever felt that dumplings are delicious (or any food with starch wrapped around fresh meat), but there seem to be few dumpling shops near your office? When you finally find one, not only is the service slow, but the flavors are always the same few?
As a category or "a dish," adding dumplings has relatively high costs. During the golden lunch hour, in ten minutes, a self-service fast-food restaurant with three dishes and a soup or a Western fast-food restaurant might sell 50 dishes, but dumplings, unlike stir-fried dishes, cannot be pre-cooked and kept in a warmer, so in ten minutes, they are likely still boiling in the pot.
Why does it take so long to cook? Because dumplings are highly dependent on frozen storage; otherwise, their counting unit would not be "one" but "a lump." In fact, besides dumplings, rice cakes/ci ba, dumplings/wontons, tangyuan/yuanxiao, and some seafood balls with high fresh meat content... any food that relies on freezing has additional considerations of cost and efficiency.
There are ways to spread costs and increase efficiency. For example, hiring staff or machines to make fresh dumplings on the spot, intensive logistics and warehousing, concentrated advertising resources to promote sales... But under these considerations, the result is that the entire store or brand is planned around it from the beginning (specialized dumpling shops, such as chains like Da Niang Dumplings), meaning the entry barrier is extremely high.
But even if these obstacles are overcome, merchants still find it hard to satisfy everyone's taste preferences—consumers can choose less sugar, more ice, or add sago in a milk tea, but if they say "put less corn in the corn and pork dumplings," merchants cannot perform a "surgical" removal on the dumplings.
As for more "grand" new product development, feasibility is even lower.
In short, for dumpling shops, "low efficiency, high barriers, and single flavor" are not the operators' fault, but an inherent defect that is hard to escape. It is not surprising that they are few in number and all taste the same. But behind this pain point lies the most imaginative space for frozen food: more diverse categories, more efficient hot meals, and more personalized choices, precisely addressing the pain points of increasingly busy young people's lives.
2. New opportunities for frozen food driven by the lazy economy and eating alone
According to Tmall's "2019-2020 National Taste" report, eating alone and lazy convenience food have become one of the six major food trends of 2020.
The rise of the single economy
Image source: 2019-2020 National Taste
Singles and lazy homebodies have become a portrayal of young people's lives. Convenience food, including frozen food, meets young people's basic needs for delicious food: no need to go out, no need to cook, simple to prepare, and even satisfies the ritual of a proper meal.
Currently, young "lazy homebodies" are showing great consumption potential. According to Taobao's "Lazy Consumer Data" released in 2018, Chinese people spent 16 billion yuan on "being lazy" in 2018, with the post-95s showing the fastest growth in "lazy demand," an increase of 82%. According to QuestMobile's Z Generation Insight Report, Generation Z is the main group in the "lazy economy."
In addition, China's single population has reached 240 million, and the adult population living alone exceeds 77 million. The single economy has not only given rise to eating alone but also to the demand for frozen food.
Nestlé, together with the Chinese Nutrition Society, released the "China Residents Breakfast Diet Survey Report," which showed that 35% of respondents cannot eat breakfast every day, 55% consume fewer than three types of food at breakfast, and 42% finish breakfast within 10 minutes. As for the reasons for not eating breakfast, "time constraints" accounted for as high as 49%. This shows that the accelerated pace of society has significantly changed people's living habits.
With the acceleration of life pace, young people have less and less time to prepare meals at home, which determines that they need faster meal solutions. The continuous compression of housework and cooking time has become a major driver of consumption growth in the C-end market for frozen food. At the same time, as the variety of frozen food products and flavors becomes more diverse, more young people are willing to choose frozen food as a meal.
-02- When frozen food begins to appear on Generation Z's tables
In fact, we find that many brands have started to reach out to young people and communicate with them in young people's ways.
As early as 2018, Wan Chai Ferry invited the girl group SHN48 to endorse, sponsored the e-sports team EDG, and cooperated with the domestic anime "Wu Liao Poetry Society" to launch co-branded products.
Perhaps having tasted the sweetness of rejuvenation, on November 20, 2020, Wan Chai Ferry's official Weibo announced that young actor Yang Yang became its new brand spokesperson. In an official response to an interview, they said, "This is an important measure for Wan Chai Ferry to accelerate brand rejuvenation and digitalization."
According to the data report on the effect of Yang Yang × Wan Chai Ferry advertising spokesperson released by Aimeng Data, within two days after the announcement, brand heat increased by 75.7 times, exceeding the average level of endorsements in the same category in October and the average level of all new endorsements in October, with the artist's heat contribution accounting for 92.36%.
In addition to inviting spokespersons to attract young people's purchases, launching rejuvenated products and continuous product innovation are more important for attracting long-term purchases from young consumers. For example, Wan Chai Ferry recently launched colorful-skinned xiaolongbao, with the skins infused with natural vegetable juice, including vegetable juice, carrot juice, and pumpkin juice, meeting young people's dual needs for health and aesthetics.
Wan Chai Ferry colorful-skinned pork xiaolongbao
Image source: Wan Chai Ferry Tmall flagship store
Recently, under the domestic plant-based trend, Wan Chai Ferry launched plant-based meat dumplings to meet consumers' demand for low-fat, low-calorie plant protein.
Plant-based meat
Image source: Wan Chai Ferry Tmall flagship store
Another traditional giant, Sanquan Foods, has made a diversified product layout to meet consumers' diverse needs. In addition to classic frozen dumplings, it also offers frozen thin-skinned fresh meat pies, thousand-layer hand-grabbed pancakes, buns, spring rolls, and other products. It has also launched children's dumplings, children's wontons, colorful small tangyuan, fruit-filled yuanxiao, and other product series for the children's breakfast scenario.
Sanquan taro small tangyuan
Image source: Sanquan Foods Tmall flagship store
In addition to traditional brands racing on the path of rejuvenation, young new-generation brands are also emerging rapidly.
New consumer ice cream brand Zhong Xue Gao recently launched the mid-to-high-end dumpling brand "Li Xiang Guo." The dumplings continue Zhong Xue Gao's high-end positioning. The dumplings are currently available in the Tmall flagship store, with flavors including black pork and cabbage, black pork with three delicacies, scallop and chives, and chicken and matsutake.
Large matsutake series dumplings
Image source: Li Xiang Guo Tmall flagship store
We found that since Li Xiang Guo posted its first Weitao on September 16, it has gained nearly 250,000 Tmall store followers in three months.
From the current sales situation, as of December 17, the best-selling product in Li Xiang Guo's Tmall store, the "San Xian Kai Tai series elephant dumplings," had monthly sales of 2,609 units. If calculated at a unit price of 200 yuan per item, this single product can generate over 500,000 yuan in monthly revenue.
In addition, the "Whole Scallop" series and "Large Matsutake" series, through their unusual selection of ingredients compared to ordinary dumplings, unabashedly show their strategic intention to seize the high-end market.
Besides the familiar local dumpling brands, foreign brands also have a presence in the frozen food market. Korean brand CJ is a representative. CJ focuses on Korean-style crispy fried dumplings, with flavors including Korean traditional, Korean glass noodles, Korean BBQ, and Korean kimchi. It is worth mentioning that Li Jiaqi also recommended CJ's instant rice products in his live stream. CJ won the Tmall 2020 Food Ceremony Annual Benchmark Brand.
Korean kimchi crispy fried dumplings
Image source: CJ Tmall official flagship store
Among frozen food categories, hand-grabbed pancakes must be mentioned, with the most famous being Liang Quan Qi Mei, endorsed by Jay Chou himself. Liang Quan Qi Mei was founded in 2004, and in 2005 it created and named "Taiwan hand-grabbed pancake," making it a "national snack" across the country.
Hand-grabbed pancakes have a natural advantage over other frozen foods: a single pancake offers more room for culinary creativity. Consumers can purchase various hand-grabbed pancake sauces on Liang Quan Qi Mei's official website, as well as meat such as BBQ, chicken, and octopus, and even tremella soup and mung bean soup, providing a one-stop solution for a fine late-night snack or breakfast.
In addition, soup dumplings also perfectly demonstrate the advantages of frozen food.
Because soup dumplings are rich in soup, even with a 30-minute delivery time limit on food delivery platforms, soup dumplings inevitably suffer from long waits, shrinking soup, and in the worst case, broken wrappers and leaking soup during transportation.
However, Lao Sheng Chang soup dumplings use a frozen process. Consumers only need to microwave for one minute to "personally" produce a classic soup dumpling with stable quality, just like dining in. To meet young people's preferences, Lao Sheng Chang has also launched innovative flavors such as Sichuan pepper chicken soup.
Lao Sheng Chang fresh pork xiaolongbao
Image source: Lao Sheng Chang Tmall flagship store
-03- How can frozen food brands rejuvenate?
Rejuvenation is a core pain point for countless traditional brands.
This is not only because young people are the main consumers in the market, but also due to changes in the entire internet environment, coupled with the rapid development of China's infrastructure, especially cold chain logistics. Frozen food brands need to adapt to the new era with new business models.
Several important trends are clear:
With the maturity of the logistics system, the quality of frozen food delivery is increasingly stable and timely. And when the price of a meal of dumplings can be controlled at around 20-30 yuan, it means the boundary between frozen food and takeout or regular meals is becoming blurred.
Currently, China's marriage rate is declining, and eating alone has become the new normal among young people. Moreover, because many people work away from home, their tastes as wanderers often cannot perfectly match local offline restaurants.
According to China Merchants Securities' "In-depth Report on Sino-US Dining Taste Comparison," the current prominent feature of Chinese dining tastes compared to the US is the trend of eating spicy food... Contemporary young Chinese people face greater pressure, and eating spicy food has become an effective means to relieve stress.
Based on the cases of representative frozen food brands, the rejuvenation of frozen food brands has the following upgrade directions:
1. Convenience
Although many companies provide frozen storage conditions for employees, since most people are not "Office Xiaoye," it is basically impossible to cook at work. Therefore, if brands want young people to choose frozen food as a regular work meal, they need to make products that can be simply heated and eaten using microwaves, air fryers, small ovens, and other equipment.
Brands can even use co-branding to bundle small household appliances and kitchenware for marketing.
2. Scenario-based
In the past, convenience food only existed in traditional family scenarios, but now more and more consumers are developing the habit of eating frozen food as breakfast, or even as afternoon tea and late-night snacks.
Brands can further upgrade products based on specific consumption scenarios. For example, in addition to the convenience of processing for office conditions mentioned above, brands can also lay out multiple scenarios such as eating alone, afternoon tea, and children's breakfast, through methods not limited to changing packaging, planning meal combinations, and controlling nutritional ratios.
Consumers buy not just food, but an experience.
3. Diversification
A diverse range of flavors is itself one of the important advantages of frozen food compared to offline stores. Especially for northerners in the south who miss spicy hot pot, or southerners in the north who miss Cantonese pastries... For example, Wan Chai Ferry has Sichuan pepper and spicy flavors of dumplings, and Sanquan Foods has launched taro and sweet potato balls.
Since ancient times, niche flavors have been difficult to satisfy in the commercial market, but in fact, "niche" is the real "mass"—everyone has their preferences; one person's hellish dish is another's Chinese Little Master. Spicy and sour stimulating flavors are somewhat addictive and are also widely favored by young people.
-04- Conclusion
What is the big trend behind the rise of frozen food?
On the warehousing side, data from the Ministry of Commerce shows that from 2015 to 2019, China's total cold storage capacity increased year by year. In 2019, the national cold storage capacity was about 60.53 million tons, with a new capacity of 8.145 million tons, a year-on-year increase of 15.6%.
On the logistics side, the market size of the cold chain logistics industry reached 339.1 billion yuan in 2019, a year-on-year increase of 17.5%.
When the time comes, heaven and earth work together.
In fact, even if you don't buy frozen food on Tmall, our lives are already full of it—many well-known fast-food restaurants, based on cost and efficiency considerations, use pre-made dishes (ready meals) that are simply processed from frozen food, such as KFC's you tiao.
Although the overall industry trend is optimistic, in the context of consumption upgrade and consumer group iteration, traditional brands cannot stick to old ways. Instead, they should actively embrace new business ideas and seize the dividend period of frozen food given by the times.
Returning to the question at the beginning of the article, with the rejuvenation of frozen food, can they leverage a new consumption scenario and make frozen food a regular on young people's tables?
We will wait and see.
Source: FBIF Food & Beverage Innovation (ID: FoodInnovation)
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