---
title: "Worst Year in Over a Decade: Even Veteran Frozen Food Distributors Are Baffled! Why Is This Year So Tough?"
description: "Frozen food distributors are baffled as sales drop 20%-30%. Wang Bing, who had seen continuous growth for over a decade, faced his first major downturn starting in March, with declines across all channels except closed systems like group meals. Despite efforts, sales continued to deteriorate in April and May, reflecting a broader industry slump."
author: "关关"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2024-07-18"
language: "en"
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# Worst Year in Over a Decade: Even Veteran Frozen Food Distributors Are Baffled! Why Is This Year So Tough?

> Frozen food distributors are baffled as sales drop 20%-30%. Wang Bing, who had seen continuous growth for over a decade, faced his first major downturn starting in March, with declines across all channels except closed systems like group meals. Despite efforts, sales continued to deteriorate in April and May, reflecting a broader industry slump.

**Sales down 20%-30%, frozen food distributors baffled!**

"Our company has been growing continuously for over a decade, but suddenly in March this year, sales began to decline sharply!" After more than ten years of entrepreneurship, Wang Bing's frozen food business had always been smooth sailing. Even during the special period of city-wide lockdowns due to the pandemic, the company's performance continued to grow positively. But this year, the situation took a sharp turn for the worse. This is his first "Waterloo," and he is completely bewildered. "It shouldn't be like this! Our company mainly serves fast food, group meals, and other catering channels, closely related to people's three daily meals—these are essential products." This time, not only did sales decline, but they declined across almost all segments—except for closed systems like group meals, both chain restaurants and independent restaurants saw varying degrees of decline. Despite multiple rounds of discussions with his team, several market research trips, and various strategies, Wang Bing was unable to halt the decline. In the following months of April and May, the company's performance continued to deteriorate.

Li Chao (pseudonym), a distributor in Northeast China, felt the industry's chill even earlier than Wang Bing. Li Chao's trading company began to see sluggish growth last year, especially in the circulation wholesale and e-commerce channels. E-commerce sales halved last year, and in the first half of this year, they halved again compared to the same period last year. Only the catering channel performed slightly better, but it is not optimistic either—this year, the number of customers increased by several hundred, but sales did not grow correspondingly.

The business difficulties encountered by the above two distributors are not isolated cases. In my research, **from a national perspective, distributors primarily engaged in circulation wholesale and e-commerce have almost all seen sales declines this year, ranging from 20% to 30%.** Distributors focusing on the catering market also performed poorly this year, mostly flat or slightly down compared to last year.

**Why is the frozen food business so difficult this year?**

"Why is it so hard to make money in the frozen food industry this year?" This phrase has struck a chord with many in the industry. So why is it so difficult this year? Have you thought about it?

**1. Supermarket and retail channels are retreating step by step.**

Retail and catering have always been the two most important pillars of the frozen food market. Among them, the retail industry, represented by supermarkets, has been criticized for years. In the first quarter of this year, supermarkets continued their decline, with at least 322 supermarkets closing among 13 listed supermarket companies.

**2. A large number of restaurants have closed, and average spending per customer has dropped sharply.**

Seeing that the retail channel is temporarily unreliable, the catering channel naturally became the hope of frozen food distributors. But this year, the catering market has also been hit hard and is barely holding up. On one hand, a large number of restaurants have closed. According to relevant statistics, **from January to June 2024, more than 1 million catering-related enterprises exited the market, far exceeding the same period last year.** On the other hand, people are more cost-conscious when dining out, leading to a continuous decline in average spending per customer. The operational pressure to demand cheaper ingredients quickly transmitted upstream to distributors.

"In previous years, chain restaurant systems typically negotiated prices once a year. **In the first half of this year, many chain restaurants have already approached us 4-6 times to negotiate prices, all asking for cheaper options.** " Wang Bing explained. Li Chao also faced great pressure. To boost sales, many irregular promotional offers in previous years have become regular discounts this year, naturally compressing profit margins step by step. The distributors' demands for price reductions further transmitted upstream to manufacturers, ultimately leading to endless involution across the entire frozen food supply chain, from raw material suppliers to catering end-users.

**3. The e-commerce channel is no longer attractive, with slowing growth.**

As mentioned earlier, Li Chao's e-commerce channel has halved for two consecutive years. But he put great effort into e-commerce, not only joining mainstream community group-buying platforms like Meituan Select and Duoduo Maicai, but also operating stores on Taobao and Pinduoduo. Despite multi-dimensional efforts, he still couldn't stop the decline. The slowdown or decline in e-commerce business may not be limited to small and medium players like Li Chao. According to data released by Xingtu, the cumulative sales of comprehensive e-commerce platforms and live-streaming platforms during the 618 shopping festival in 2024 were 742.8 billion yuan, a 7% decrease compared to 798.7 billion yuan in the same period last year. **The era of high growth in e-commerce may be gone forever.**

**As the most important sales channels for frozen food ingredients, retail, catering, and e-commerce are either slowing down or declining. It is almost inevitable that upstream frozen food manufacturers find it difficult to do business.**

**Under the new normal of a shrinking market**

**Where is the way out for frozen food distributors?**

As the saying goes in the industry, the 20 years of rapid growth in China's frozen food industry were not because the industry was great, but because it rode the elevator of the times. But since 2023, China's economy has entered a new cycle, transitioning from an incremental market to a stock market. The main indicator is that China's per capita GDP reached $12,700 in 2023, exceeding the upper-middle-income country threshold of $12,500 set by the World Bank in 2019. Looking around the world, you'll find that major economies after World War II have all experienced a transition from high-speed incremental growth to stock market economies. China has just entered this period, **but in the eyes of many frozen food industry players, the current situation is more severe than a stock market; it feels more like a shrinking market,** because the stock of many enterprises is continuously shrinking.

Facing this brutal new normal, frozen food manufacturers and distributors are trying new paths and methods. Wang Bing recently collaborated with upstream manufacturers to develop a new sugar cake product for the breakfast scene. The filling is generous, and the dough has been improved, making it very popular. Moreover, the gross margin of this new product has increased by two to three percentage points, marking a successful attempt. "It's hard to say about long-term goals right now. But we have a clear direction for the future: to deepen and refine the breakfast scene, launching more innovative products that consumers love, focusing on steaming, boiling, and frying cooking methods," Wang Bing introduced.

Li Chao's new attempt this year is bolder. He has basically cut all low- and mid-end products, concentrating the company's efforts on high-quality products, with the goal of building a small but exquisite enterprise. So far, progress has been relatively smooth. When SKUs were first cut, sales did decline significantly, but some new high-quality products have been launched, and the decline is narrowing.

Marketing expert Liu Chunxiong even stated directly: **In the future, only two types of distributors will exist long-term.** One type is the B2B platform provider for one-stop ordering and delivery. Currently, this seems more suitable for those born in the 1980s and 1990s, while those born in the 1960s and 1970s may find it difficult to adapt. The other type is the brand promotion distributor—those who can undertake the promotion of new products for manufacturers when brands "return offline."

The era of shrinking markets has just begun. When we lament "why is this year so difficult," this year might be the best year of the next decade. Friends in the frozen food industry, are you ready to face the industry's winter head-on?

**From August 20-22, 2024, the "2024 6th China FMCG Conference" with the theme "Crossing the Shrinking Market Era," along with the "3rd China FMCG Hard Discount Conference" and the "3rd China FMCG Distributor Conference," will be grandly held in Shanghai.**

At this conference, all roles in the FMCG industry chain will gather, allowing you to grasp industry trends at a glance, understand hot track indicators, penetrate industry resources, and precisely connect with top brand manufacturers, leading retail platforms, and excellent distributors with over 100 million in sales nationwide. It provides you with precise decision-making, efficient cooperation opportunities, and on-site learning of exclusive methodologies from FMCG giants! Keynote speeches, roundtable dialogues, report interpretations, closed-door salons, and networking dinners—this thousand-person event is sure to have something for you!


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