Frozen food makers seek ways to stay cool with consumers

Meatballs, hamburger steaks, Chinese-style meat dumplings, fried rice, gratin, tempura and fish boiled with soy sauce — these are just some of the hundreds of frozen food items stocked by the nation's supermarkets.

Kaori Tsugawa, expecting to give birth within days, picks a frozen-food item from the shelf at an Ito-Yokado supermarket in Ota Ward, Tokyo. She was stocking up on frozen meals because she would soon be too busy to shop. YOSHIAKI MIURA PHOTO

Frozen dishes have long been a favorite with busy people looking for ways to save time. They constitute a market that has grown steadily, with consumption more than doubling over the past 20 years.

According to the Japan Frozen Food Association, nationwide consumption of such food in 2006 rose 3 percent from the previous year to 2.69 million tons, or 21.1 kg per person.

But demand is leveling off because of demographic, safety and structural factors, and processors are looking for new approaches, including mail order delivery.

Two of the biggest hurdles facing the frozen food industry are the declining birthrate, and thus fewer consumers, and the China food-scare factor, which is hampering Japanese food processors that have established factories in China.

Shinichi Taneya of the Japan Frozen Food Association noted that, in Japan, sales are being affected by living arrangements, aging and consumer behavior.

Nichirei Foods Inc., a big player in the industry, is part of a trend in which offerings are being expanded to suit the older generation, especially in mail-order frozen food items.

But persuading consumers to overcome traditional notions of cuisine is proving easier said than done — especially with the elderly.

The older generation is an increasingly important demographic as today people over 50 account for half of the adult population, according to government data. But they are also set in their ways, often believing food should be made with fresh ingredients and cooked from scratch.

"People of that age have been the most unlikely to eat frozen meals," said Toshihiro Haga, a manager at industry leader Ajinomoto Frozen Foods Co.'s marketing division.

So to woo finicky consumers, Ajinomoto is expanding its lineup of high-end frozen Chinese-style dishes made with quality ingredients. Examples include "gyoza" (dumplings) containing brand-name pork from Kagoshima Prefecture, extra plump steamed-shrimp dumplings and "happosai" stir fry featuring a premium selection of vegetables.

These and other items in the series retail for about ¥450 each, as much as 40 percent more than Ajinomoto's regular frozen fare.

In late August, Ajinomoto will add four frozen items to its My Pack series of reduced-size servings of such delectables as fried lotus root and steamed dumplings.

Each pack contains one serving and goes for ¥130 to ¥150. Individual packaging is intended to cater to the needs of older people and singles who desire a wide variety of small dishes for each meal, as is typical in Japanese cuisine.

This strategy may have a downside, however. Splitting up dishes in this fashion means more production lines at factories, individualized packaging and other logistic considerations that cost the manufacturer money.

But Ajinomoto spokeswoman Michiko Wada said the firm believes the benefits outweigh the risks, with the wager being that allowing consumers to tailor their own meals will increase market penetration.

"For our company, adapting to change is a higher priority than cost," she said.

Nichirei's strategy is to sell, via mail-order, frozen food items in sets that include a main item such as hamburger steak or ginger-fried pork and several side dishes. Yet total calorie content is less than 320 kcal, with low sodium content. Rice is not included.

Since launching the mail-order frozen food delivery service in December 2004, the number of meal sets has risen to 28 from seven. Each is priced between ¥700 and ¥1,300.

"Our main customers are couples in their 50s whose children have grown up and moved away," Nichirei spokesman Yoshinori Okada said.

These middle-aged couples, Okada said, eat less than they used to and therefore often have leftovers when they cook for themselves. In addition, freezers have gotten bigger in recent years, allowing consumers to store much more frozen items, Okada added.

"People of that age are more health-conscious and our (healthy recipe) delivery service can meet their demands," he said.

Kyoko Sato, a 60-year-old housewife who was shopping at an Ito-Yokado supermarket in Ota Ward, Tokyo, fits the consumer profile that frozen food makers are trying hard to please.

Sato said she buys frozen food products once a week for herself and her retiree husband, and uses them for lunch on a daily basis.

"I don't want to spend my time cooking three meals a day for the rest of my life. I think housewives of our generation feel the same way," she said. "I'd rather devote my energy and time to playing golf."

Like other frozen food makers, Japan Tobacco Inc. — which wants to turn its food business into a core venture — has high-end items for baby boomers like Sato. But its "anago no tempura" (fried conger eel), introduced earlier this year, and other select frozen goods have yet to gain ground because, unlike Sato, many older Japanese still insist on cooking from scratch.

So JT is pinning its hopes on the rising number of single-member households that the government expects to represent more than a third of the total by 2015. JT is marketing its "butano kakuni" (soy-simmered pork belly) burger for young independent consumers. These retail for ¥200.

"Young people are more open to the idea of using frozen food items," said Koji Iwashita of JT's food-business division.

Taneya of the Japan Frozen Food Association meanwhile said: "Single household people, regardless of age, are less hesitant about using frozen meals. They prefer items that are preservable and convenient because they can't go shopping every day."

But then there's the China problem, which is affecting food processors in general, not just the frozen food industry. There have been mounting safety concerns amid widespread reports of food items and ingredients from China containing contaminants, causing alarm in the U.S. as well as in Japan.

Many frozen-food makers shifted production to China, and the industry now fears public distrust could lead to reluctance in buying products made in or containing ingredients from China, Taneya said.

Nichirei, which has two factories in China, said there should be industrywide efforts to boost transparency in how quality control is being managed at its plants there.

"We will have to work harder in disclosing the information regarding the suppliers of ingredients in China to confirm that they are safe," Yoshihiko Soma, president of affiliate Nichirei Foods, told a news conference in July.

Another obstacle that frozen food makers have to surmount is the long-established practice of keeping prices artificially low at both the wholesale and retail level to stimulate demand.

Frozen food products, regardless of makers and brands, are sold at a 40 percent to 50 percent discount almost once a week, encouraging consumers to wait for prices to drop before they buy.

Hidenori Tanaka, a senior researcher overseeing the food industry at marketing research firm Fuji Keizai Co., believes this practice is the reason behind the dim prospects for the industry.

"The problem is that no one buys frozen food items at regular prices," he said, adding that consumers' insistence on low price makes it difficult for manufacturers to shift to high-quality, pricier goods.

However, without singling Nichirei out for praise, Tanaka said selling high-end frozen products exclusively through home-delivery service is an effective way to prevent consumers from being lured away by rival discount items at retail outlets.

Ajinomoto's Haga agrees that customers demand added value, so to lure them away from the competition, frozen food makers will have to put their technology to tactical advantage.

One successful example is the specially frozen blocks of food developed and first marketed in 1999 by Nippon Suisan Kaisha, commonly known as Nissui. These handy items, now available from other manufacturers as well, can be plunked into an empty lunch box straight out of the freezer, and later eaten at room temperature.