Frozen food market: growing trend but technological gap in the supply chain

According to recent studies, the world's frozen food market is constantly growing: urbanization and economic development in the Northern hemisphere and increased agricultural production are contributing to this trend.

In Italy the sector registered a record growth in 2019, bringing the average consumption per capita of frozen products up to 14.1 kg per year (+1.3% on the previous year) for a value of 4.7 billion Euros. From the cold chain we mainly buy fish (16.5% of total frozen products), snacks, pizzas (11%) and potatoes.

The pandemic and its consequences have pushed frozen food sales even in markets that, under ordinary conditions, are not very interested in the product, and Southern Italy - rich in quality fresh raw materials - is a clear example, as are Spain and Greece. Despite the catering crisis induced by the first lockdown, the increase in frozen food in the retail sector (sales in supermarkets) in Italy increased by 13.5% in the first four months of 2020, while the door-to-door frozen food sector grew by as much as 40% in the same period.

In parallel with the growth in demand, the supply and propensity to enter the market of new "ready to freeze" food also increased. But if demand and offer increase, it is not certain that there are the optimal conditions to manage them: the market, in fact, has a clear limit in logistics.Cold chain requires a dedicated technological supply chain. Even though Italy is a leading producer of refrigeration equipment - the main manufacturer of refrigeration systems is the Italian LU-VE – it is not as advanced in terms of technology in the supply chain, where margins for development are still considerable. The limits of the sector - analysts point out - concern, for example, the still marginal use of IOT sensors for the complete control and tracking of the cold chain, a technological but also environmental challenge: cooling, in fact, also means consuming electricity and thus increasing the pollution risks.

Technological updating of refrigerated warehouses, containers and trucks then becomes strategic for the supply chain, in terms of efficiency, but also containing energy costs and therefore respecting the environment.

Finally, the organizational challenge, in a context where the last mile to the restaurant or door-to-door deliveries require a high level of planning, represent the chance for logistics players to get a leading position in the market thanks to the quality of service, even if that would implicate  increased investments.