In 2022, frozen food sales in the U.S.
reached over $72 billion.
Demand has been rapidly growing.
Throughout Covid, we had among the highest sales in
all of the food space.
Behind this seemingly simple idea, there's a
sophisticated supply chain keeping perishables
frozen.
Each step is very critical.
The products have to maintain proper
temperature throughout a complex network of
refrigerated trucks and cold storage facilities.
Should the temperature vary, it can become
unsafe.
But it's not just about keeping ice cream from
melting.
The percentages are remarkable in terms of
what's tossed and frozen items because of
inadequate cold storage temperature.
And the refrigeration tech is often outdated.
We're still relying on centuries old technology.
The weak link in cold chain logistics, planes,
trains, automobiles is how to deliver any
perishable good at the appropriate temperature.
Major players in the global frozen food market
include privately-held Cargill, Conagra, Nestlé,
General Mills and Unilever.
So the consumers are buying more frozen
product, it's going to require more storage
capability and a more efficient supply chain.
The perishables are poised to profit, and so are
those investing in really cold properties.
Supply chain issues and labor challenges haven't
really gone away in the food industry.
Where's the stuff?
Without resilient supply chain infrastructure, the
growth and safety of the massive $265 billion
global frozen food market is at risk.
Can cold storage supply chains keep up with frozen
food demand? Virtually all American households
purchase frozen food at least once a year.
Since 2019, sales have grown by 23%, according to
the American Frozen Food Institute.
When Covid happened, when supply chain, everything
got shut down, you saw a huge spike in frozen food,
sometimes 30%, 40%, 50% year over year basis.
Frozen foods demand was supercharged during the
pandemic in the U.S., bringing in over $65
billion in 2020.
The pandemic taught consumers to invest in
bulk buying. Frozen foods were some of the best
selling items during the pandemic, since they can
be really stored for long periods of time.
We're seeing that growth continue.
We saw about a 20% growth during Covid, which was
really very rapid and fast.
Most frozen food products reported double digit
increases.
We did a recent survey and found that over 80% of
consumers looked to frozen to reduce in-home
food waste and also save money.
The main driver is cost.
What can consumers afford?
A great study by Cornell that looked into how much
waste the average consumer has between both
fresh and frozen. And what they found was with
frozen food, you're five times more likely not to
encounter food waste.
Every year, roughly $1,300 is spent by the average
American on food that ends up as waste.
You know, Cargill produces enough protein to feed 170
million people around the world.
So that's enough to feed the entire country of
Bangladesh every single day.
The frozen category, really seeing things like
variety meats more likely to be purchased frozen.
At the end of the day. It's about that 4 p.m.
dinner tonight decision, right?
A great variety of dinners is promised.
The dinner is packed and ready for subzero storage.
The industry has come a long way since the 1930s,
when Clarence Birdseye pioneered a flash freezing
technique that better preserved foods.
Before then, the market was known for a tasteless
and textureless products.
Quick freezing is one of the newer ways of keeping
foods, meat, fruit, vegetables.
He won consumers over.
I'm sorry, but I already have a frozen food man.
In the 1950s and '60s became the golden age of
food freezing.
Birdseye Hawaiian style international vegetables.
That flash freezing technique is still how a
lot of frozen products are made today,
particularly with mechanical freezing.
Think frozen plates and conveyor belts for contact
freezing or the air blast method, which is one of
the oldest and commonly used.
That's when cold air fills a room of food to
freeze it.
Freezing technology really hasn't gained leaps and
bounds.
Flash freezing.
And what that means is, let's say strawberries are
coming out of a field in California, we'll take
those warm strawberries out of the field as soon
as they're cleaned, and then we'll blast them down
to -20 degrees and then store them so then later
they can be consumed.
The air blasting technique also utilizes individual
quick freezing, aka IKF.
IKF, what it does is it freeze individual pieces
of food, and that does two things.
One, the speed of the freezing helps reduce the
size of the ice crystal.
So it helps preserve the integrity of the food when
it's thawed or cooked.
You want to freeze at that peak of freshness.
And that's really an aspect that whether you
look at meat or vegetables, a lot of
industries have really focused on communicating
that message as well.
The other way food can be frozen is cryogenic
freezing. It uses liquid nitrogen or carbon
dioxide to get to extremely low temperatures
quickly, but it can be more expensive for
companies to invest and switch to the cryogenic
techniques, plus the cost of nitrogen added to that.
However, cryogenic freezing is much faster
since that liquid nitrogen is so cold.
One estimate puts mechanical freezing at
nearly an hour to freeze fruits and veggies, while
cryogenic freezing could take 11 minutes.
It's all about speed.
The faster food can freeze, the smaller ice
crystals that form, which ultimately creates a
higher quality product.
Our data scientists heard that we were not blasting
strawberries fast enough in California.
The algorithm, based on computational fluid
dynamics that were able to reduce the freeze cycle
from three days down to one to two days.
So not only are you reducing the lead time of
freezing the berries, but we're using less energy to
do that.
How to freeze food is just the first half of the
equation. Frozen foods need a robust and
sustainable cold storage supply chain to reach
consumers. Even Birdseye recognized this in the
late 1920s when convincing Americans to
try Frosted Foods, He created his own
refrigerated boxcars for trains and leased freezers
out to retailers.
The U.S. still transports a lot of food by truck.
In the U.S., we're very fortunate, but in other
developing countries we're seeing an investment
in the cold chain to try and keep the agricultural
products preserved for year-round consumption.
It's really a way of preventing food waste
globally.
Approximately 13% of all food produced globally is
lost due to poor cold storage every year.
That wasted food could have fed an estimated 950
million people.
Tenth annual Disruptor 50 list, our fastest growing
private companies challenging public
incumbents.
Number three, Lineage Logistics, improving the
food supply chain to prevent waste with a
proprietary freezing process.
Lineage serves big name customers, including
Walmart and McDonald's.
Lineage Logistics focuses on the frozen food market,
and part of its mission is decreasing global food
waste.
And so we provide frozen and chilled warehousing,
450 warehouses across 20 countries.
Let's use salmon as an example.
Salmon will be harvested up in the Pacific
Northwest. Salmon will immediately be packaged,
put into one of our freezers that packaged
salmon across the country, may go to a
retail store and then finally to the consumers
at home. It may end up moving to a restaurant
where the final consumer then purchases.
But we're helping to move that food through the
entire cold chain and ensuring that it keeps a
safe temperature the entire way.
The supply chain weaknesses garnered
international attention when the coronavirus
pandemic struck.
Covid really showed how fragile the supply chain
system is. That really exposed huge gaps in being
able to transport in frozen food and even
refrigerated food in the U.S..
At the same time, it's expensive to generate
power to keep the entire supply chain frozen.
Being able to minimize costs in different ways,
whether you're using different software, AI,
robotics, freezing technology, driverless
technology to transport the product from point A
to point B, like that is the biggest pinpoint.
Our data scientists have looked at the space that's
used in our freezers because they consume a lot
of energy and we want to make sure that we're using
every square inch of that facility with frozen food.
They've created algorithms to be able to
see where are we not using some of that cubic
space and how can we optimize that usage?
We have been able to create over 300,000
additional pallet positions of frozen food
that is equivalent to a 3,000,000 square foot
freezer.
Food waste also contributes to unnecessary
emissions, and that's a ticking time bomb that
Phononic aims to defuze.
Number 17 on the list is Photonics, a semiconductor
company that is reinventing the
refrigerator.
Through the power of semiconductor innovation,
we are sustainably transforming global
cooling, so core to our platform is a
semiconductor chip that when powered, generates
coldness.
Phononic embraces solid state cooling with
semiconductor devices that cool and freeze
products in the cold chain fulfillment process.
So Phononic really developed the ecosystem,
and now we're delivering solutions poised to
disrupt an almost $50 billion global market.
Cold is super hot if you're in the cold storage
warehouse business.
Why? It's because of your Amazon Fresh, your Peapod
by Giant. The new food delivery service is
driving it literally from the warehouse to your
home.
Online grocery sales soared over the pandemic.
Feeling frozen food sales with a 75% increase in
2020.
It's expensive right now to ship by e-commerce
frozen products because it needs to stay cold.
How do we get product either from retail to the
consumer using e-commerce and or from other
distribution points straight to the consumer?
While that may be convenient for a consumer,
it makes warehouse management a nightmare.
So much so that now in almost every case,
retailers lose almost $13 in an online grocery
delivery. Phononic developed an end-to-end
cold chain solution, not just hardware that
includes actively refrigerated and frozen
totes, but also the IoT connectivity that allows
the consumer to know exactly where their order
is from the minute it was placed to the time that
they pick it up.
Phononic is releasing these reusable totes to
grocery stores and retailers.
And that gives the grocer the warehouse and the last
mile delivery solutions provider tremendous
flexibility, saving labor, saving on energy
costs, but more importantly, increasing
order throughput to meet those online demands.
We're seeing the e-commerce side of the
cold chain growing and we've acquired two
companies to really be able to give us some
infrastructure there because it does require a
different layout of the facility and different
technology.
And while the number of households buying online
leveled out in 2022, what continued to grow was the
frequency of orders and the money spent per order.
The pandemic surge in frozen food consumption
has shown staying power from purchases in stores
to online orders.
I don't see that changing at all.
To be able to not only feed yourself, but feed
your family something that it doesn't take two
hours to cook.
That is a huge factor as well.
That's driving frozen food sales.
I like to call it the convenience continuum.
So when you think from a consumer standpoint, it's
the "let me do it, do it with me or do it for me."
And frozen foods can really play in all three
of those spaces.
Between the demand growth, retailer engagement and
industry innovations, the frozen food market is
looking strong, according to the American Frozen
Food Institute.
They want cold and frozen items in particular,
almost instantaneously.
So we view ourselves as not just a facilitator of
coldness, but a facilitator of e-commerce
itself.
Once consumers get used to the convenience, it's
really tough to go back.