
Germany is one of the dominant markets in the European frozen food industry, but as many other regions around the world, it has also faced several challenges recently. To find out how these were tackled and more, I spoke to Dr. Sabine Eichner, managing director of the German Frozen Food Institute (dti).
Frozen Food Europe: How did the frozen food industry in Germany perform in terms of market growth and revenue in the past year?
Dr. Sabine Eichner: The frozen food market in Germany continued to develop positively in 2023 despite weak consumer sentiment and high inflation rates. According to our half-year report, which we published in mid-September 2023, we can expect a volume growth of 3.5% to 4.044 million tons for 2023. For total sales in 2023, the dti is forecasting growth of 15.3% to EUR21.383bn. This is particularly pleasing as we were already able to announce record results for 2022: Germans consumed more frozen food in 2022 than ever before, as our 2022 dti sales statistics show!
Despite the positive forecast, however, the market development in the frozen food sector must be viewed in a differentiated way. Frozen food is also suffering from poor consumer sentiment, increased price sensitivity among customers and the simple need to save money in many households; all of this is putting pressure on sales.
According to GfK, frozen food sales in the food retail sector are growing strongly, with an increase of 12.8%, which is well above the overall average for food of 8.3%. By contrast, the sales volumes of frozen food manufacturers and distributors specializing in the out-of-home market developed more dynamically due to the continued increase in demand from the foodservice industry. Catch-up effects from the pandemic period can still be observed here. Following the drastic declines in sales and turnover in the coronavirus years, the out-of-home market for frozen products could therefore continue to recover in 2023.
The dti forecast for the development of frozen food in the catering sales channels of the AHM for 2023 assumes growth of 7%. However, it is also evident in the foodservice industry that while sales are rising significantly due to inflation, in real terms sales are falling by double digits. This is not good news for the foodservice industry in Germany, which has also had to contend with the expiry of the reduced VAT rate on food in restaurants from the start of 2024. A clear picture of the development of the overall frozen food market in 2023 will not be available until April 2024. The dti will then publish the data from the dti sales statistics 2023, which are based on its own industry survey of companies.
FFE: Can you provide insights into the key trends that influenced the market in 2023?
Dr. Sabine Eichner: The food market is developing dynamically: changing social values are reflected in our eating culture and determine how we deal with food. Greater awareness of sustainability is influencing purchasing and eating behavior and offers the food industry many opportunities for innovation. Young consumers are trendsetters and are driving developments towards more sustainable nutrition.
In our fast-moving times, nothing works without convenience: frozen food can fulfill this need very well in a wide variety of forms – and in combination with freshness and naturalness. Many consumers are looking for healthy food options that are quick and easy to prepare to cope with the hectic pace of everyday life and meet the demands of work and family life. In 2023, convenience was the most important trend for food. In the long term, sustainability will become a decisive future factor and defining trend, but this trend weakened in 2023, not least due to the sharp rise in food prices. Vegetarian and vegan diets are particularly popular among younger, female consumers.
The frozen food ranges offer a wide variety of options: Traditional vegan recipes or alternative products for meat and fish to reduce the consumption of animal products form new product areas. When it comes to meat, animal welfare is becoming a more important selection criterion, although high inflation is currently preventing many people from reaching for the higher-priced products.
Following the end of the coronavirus pandemic, the foodservice industry is also experiencing a resurgence: the diverse demands of guests, the difficult economic conditions and the simultaneous shortage of staff and skilled workers require new gastronomic concepts and smart nutritional solutions. Here too, the mega trends of sustainability and convenience are unmistakable. Healthy, sustainable convenience, economically viable and emotionally convincing concepts are a must for the foodservice industry today. Frozen food offers many excellent product ranges for this and supports the sector on its way to a successful, more sustainable future!
FFE: What were some notable challenges faced by the frozen food industry in Germany in the previous year, and how were they addressed?
Dr. Sabine Eichner: The increasing and worsening global political crises and challenging national and European political framework conditions pose challenges for the frozen food industry in Germany. As the representative body for the frozen food industry in Germany, we therefore take a very critical view of the German government’s current economic and food policy and call for a change of course.
The raw materials situation remains tense, electricity prices in Germany are among the most expensive in Europe, bureaucracy and regulatory frenzy at national and European level are tying up valuable capacities, while at the same time there is an increasing shortage of skilled workers. Inflation and consumer restraint are weakening business. The foodservice industry is also under enormous pressure. The dti has therefore publicly called on the German government on several occasions to create better political framework conditions that promote competitiveness and growth of the business location, rather than slowing it down.
Above all, this means a secure energy supply, permanently affordable and competitive energy prices, further tax relief and a rapid reduction in unnecessary bureaucracy. The great innovative strength, motivation and creativity of our member companies gives us hope. The frozen food industry is not waiting for cumbersome politics, but is boldly moving forward with a pioneering spirit, especially in many sustainability projects. After all, the frozen food industry has a lot to offer as a future-oriented category: We are helping to prevent food loss and are working towards the major goal of climate neutrality with innovative ideas and a great deal of commitment.
Increasing energy efficiency, conserving resources, and optimizing processes along the entire frozen food value chain are ultimately in the interests of all market participants. Our member companies benefit from the high level of expertise in our association network, the outstanding cohesion in the “frozen food family” and the very lively internal exchange in our committees and working groups. We are very proud to be able to offer our members such an exclusive, valuable, and value-added network as a knowledge and communication platform and are constantly working on expanding our services and tailoring them to the needs of the companies.
FFE: In terms of consumer preferences, how did the demand for specific types of frozen foods change in 2023?
Dr. Sabine Eichner: In view of the mid-term review of frozen food presented by the dti in mid-September 2023, we assume that the trend towards more convenience in private households will continue to grow. In view of the high demands of work, family and everyday life, consumers benefit from food products that allow them to conjure up healthy meals that are quick and easy to prepare. Frozen products can fulfill this need very well in a wide variety of forms – and also in combination with freshness and naturalness.
The same applies to professional users in the catering industry: the diverse demands of guests, the difficult economic conditions and the simultaneous shortage of staff and skilled workers require new gastronomic concepts and smart nutritional solutions. Here too, the mega trends of sustainability and convenience are unmistakable. Again, frozen food is the perfect problem solver: reliable costing, low food waste, high individual refinement potential, guaranteed success and taste, long shelf life, perfect portioning – and all this with uncomplicated use.
FFE: Were there any significant regulatory changes or industry developments that impacted the frozen food sector in Germany last year?
Dr. Sabine Eichner: The industry is currently busy implementing the requirements of the German Supply Chain Due Diligence Act. To this end, risk analyses and risk management systems must be set up to ensure compliance with human rights in supply chains. The dti actively supports its members with its expertise. The switch to renewable energies to achieve climate protection targets remains a major challenge for the industry. The use of non-fossil energy sources in mobility is also a focal point in the further development of the frozen food industry. Even if there is still a long way to go, there are many innovative approaches, which makes us optimistic that we will achieve our goals.
FFE: Looking ahead to 2024, what are the expectations for market growth, and what factors are anticipated to drive or hinder this growth? Are there any industry dynamics that stakeholders in the German frozen food market should be particularly attentive to in the coming year?
Dr. Sabine Eichner: The trends mentioned can be seen in the long term and will continue. This will result in many opportunities for the frozen food industry, as frozen food offers numerous unbeatable advantages such as freshness, naturalness, convenience, and sustainability all in one. The incredibly wide range of products in the frozen food department shows that frozen food companies have their ear very close to the consumer and know how to respond to changing eating habits and requirements.
This applies to the megatrend of plant-based nutrition, which is being driven primarily by the younger generation and is already very clearly reflected in the menus of many universities. These are the consumers of tomorrow, who will also shape the offerings in company canteens and restaurants in the future. It is important to help shape this development with creativity and innovation.
There is great potential here for our future frozen food category if we can work together to communicate the benefits of frozen food even more effectively and present them at the POS – particularly in terms of sustainability, naturalness, and freshness. As an interest group and communication network, the German Frozen Food Institute offers the ideal platform for all players in the frozen food industry who want to leverage these great opportunities for the future. If you are not yet a member, you are cordially invited to join our strong community!