A new report shows that over the past year, retail sales of frozen foods have grown by 7.9%, reaching $74.2 billion, with growth exceeding $10 billion over the past three years.

Like most grocery categories, the dollar growth in the frozen food category is driven by price increases caused by inflation. In turn, the way consumers purchase frozen foods is also evolving.

According to a new report titled "The Power of Frozen Retail 2023," commissioned by the American Frozen Food Institute (AFFI) in partnership with the Food Marketing Institute (FMI), consumers are paying an average of $4.99 per unit of frozen food, an increase of $13.5. This represents a % increase from a year ago and a 29.6% increase from three years ago.

Meanwhile, the report found that over the past 25 months leading up to August 2023, sales of frozen foods have declined monthly. Last year, the category saw an average unit decline of 4.9%. Seafood experienced the highest unit decline at 8.4%, followed by meat/poultry, which declined by 8.1%.

The report attributes the 2023 sales decline to a reduced frequency of consumers purchasing frozen foods, while high levels of out-of-stocks were the reasons for the sales declines in 2021 and 2022.

Frozen meals and desserts are the largest frozen food categories, bringing in $26.6 billion and $15.4 billion in revenue respectively last year. Fruits/vegetables, seafood, and meat/poultry follow closely behind with sales of $8.1 billion, $7 billion, and $5.7 billion respectively.

Processed meat/poultry had the fastest-growing sales in the frozen food category last year, reaching $5.2 billion, an increase of 19.6%. Fruits/vegetables and bakery products followed closely behind, with growth rates of 10.6% and 9.3% respectively.

To cope with inflation, most consumers are switching brands of frozen foods they purchase (43%) and the frozen food products they buy (41%). In fact, over three-quarters (76%) of shoppers compare prices of different brands in-store before making a choice.

Consumers are also changing package sizes to deal with rising prices, with 44% opting for larger/bulk packaging and 20% choosing smaller packages to save money.

Unsurprisingly, price is the primary driving factor for purchasing frozen foods. 40% of shoppers list price as one of the top three reasons for buying frozen foods, an increase from 35% in 2018. Convenience and taste are the other top reasons for consumers to purchase frozen foods.

The frozen food category also attracts consumers seeking nutritional options. The report found that nearly three-quarters of shoppers occasionally or often look for characteristics that better suit them when purchasing frozen foods.

Consumers most commonly rely on frozen foods for dinner, with as many as 81% of consumers stating that they occasionally or often use frozen foods as the main ingredient for dinner. This number drops to 61% of consumers occasionally or often relying on frozen foods for breakfast, and 64% for lunch.

When it comes to expanding the frozen food aisle, most (89%) shoppers say they are willing to try new frozen foods based on recommendations from recipe sources. However, only 69% of shoppers choose new frozen foods on their own.

Consumers are most willing to try new products when the price is right or there are promotions (66%), when familiar brands launch new products (47%), or when recommended by family or friends (38%).