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Inflation is driving a surge in frozen food purchases

Yahoo Finance’s Allie Canal joins the Live show to discuss the dramatic shift towards frozen food among consumers as food prices continue to rise amid inflation.

Video Transcript

JULIE HYMAN: Rising inflation is having a big effect on grocery store prices, of course, and it's leading consumers right down the frozen food aisle. Yahoo Finance's Allie Canal joins us now with the details on this. Allie, obviously, we've seen inflation everywhere in the grocery store. Can people save money by going to frozen food?

ALEXANDRA CANAL: Yeah, so it's really interesting what's happening in the space right now. As you said, frozen food items have risen, along with fresh food items. If you take a look at the latest CPI print, you'll see that grocery store prices have risen at least 1% month over month so far in 2022. That is not slowing down. So I was curious to see how that's impacting the frozen food category.

I had the chance to speak with the CEO at Saffron Road, which manufactures clean label frozen food products, better for you meals. And he told me that over the past six months, they've seen record growth consistently with their products. And he told me that there's been this dramatic shift from fresh to frozen. And there's a few reasons why, number one being the longer shelf life. Frozen food items, they can last in the freezer above a year, whereas fresh items, they typically only last about five days. And that's leading to frozen food products being more of an ESG-friendly play.

I've written a ton about food waste and how that has really influenced the consumer. According to a recent report, 40% of food in the United States gets thrown out. A lot of that is your produce, your fruits and vegetables, your bread items. So because of that, that's leading to a higher price perception for frozen food items. A lot of people think canned items, frozen products, they have more value over time. And then if you think about the inflationary environment, gas prices are incredibly high right now. People don't want to go to the grocery store--

JARED BLIKRE: I don't.

ALEXANDRA CANAL: --every second of the day, so they're stockpiling a little bit. And that's something that we saw during COVID-19 throughout the pandemic, and actually, during COVID, hurt a lot of industries. But the frozen food category saw a rise in sales compared to 2019. You're seeing there on your screen that those 2020 sales were up 21%. So, interesting to see what's happening in the grocery aisle at grocery stores right now. But clearly, consumers are taking a hard look at their wallet, a hard look inside their fridge and their freezer, and they're trying to make educated decisions based on what's happening in the economy.

JARED BLIKRE: And Allie, the Nobel-winning-- Nobel Prize-winning economist Milton Friedman famously said, inflation is everywhere and always a monetary phenomenon. I think he said that. I'm not asking you about economics or inflation. I just wanted to see if you would flinch here. But any other food trends that you're noticing? Because I think a lot of these retailers have been hit and producers have been hit by the double whammy of inflation, of pandemic plus inflation, so lots of reorientation there. What trends have you seen as well?

ALEXANDRA CANAL: I think a big trend right now is plant-based is better for you. I think consumers are willing to spend a little more on those types of products, considering the surge that we're seeing right now. Obviously, we have Beyond Meat, but there's a lot of newer entrants in this space, too. You know, I just reported on a company that's growing fungi-based meat. So there's a lot of new and exciting things that are happening in this space right now. And I think that's something that is continuing to grow. And people, there's more-- people are willing to spend a little bit more to have those healthier options.

JULIE HYMAN: It's not necessarily healthier.

ALEXANDRA CANAL: True.

JULIE HYMAN: Sorry, I would just push back just a little bit

ALEXANDRA CANAL: And that's why the Beyond Meat stock has sort of struggled a bit because investors are pushing back on that. Like, is this actually a healthier option? How is the taste?

JULIE HYMAN: There are other reasons in terms of, like, climate impact, you know, footprint, et cetera, et cetera. But I think, like, the line that it's always healthy-- it might be. Sometimes, it is. But I don't know. It's more complicated.

ALEXANDRA CANAL: I agree, and I've sort of tried to look at those different products, too. And even the company that I was looking at, Meaty, which is a new startup, they only have four to six ingredients in their products. And then if you look at something like a Beyond Meat burger, that is 18 ingredients. And I don't think a lot of people think about that. So I agree with you, Julie. You always have to hedge it a little bit. Not necessarily healthier, and that's ultimately why I think the stock has been struggling a little bit, too.

JARED BLIKRE: I think about these things, too. And you did say fungi, right?

ALEXANDRA CANAL: Yes.

JARED BLIKRE: OK, the plural, is that fungus, fungi, or fungi?

ALEXANDRA CANAL: Yes.

JARED BLIKRE: All right.

JULIE HYMAN: Fungi.

ALEXANDRA CANAL: Fungi. I know. That's also a big debate, but fungi.

JARED BLIKRE: Got it. I'd like to think I'm one, but who knows? All right, Thanks for that. Yahoo Finance's--