Ajinomoto: aiming to make gains in the downturn with frozen rice
Published:30-April-2009
By Datamonitor staff writer
Japanese food company Ajinomoto is aiming to capitalize on the economic downturn by increasing its frozen rice business in the US. This strategy has a good chance of panning out well for the company, given that the downturn has meant that Americans are increasingly eating at home and looking to frozen products as cost-saving alternatives to fresh foods.
Ajinomoto has announced plans to increase US frozen rice sales by 150%.
Japan-based Ajinomoto aims to increase sales of its frozen rice lines by 1.5 times their current level in the next year or two, noting that there is a great deal of potential for this type of food in the US market. This will reportedly increase the production capacity of the company's US subsidiary plant that makes these products by 20%. Ajinomoto supplies its frozen rice to major US supermarkets such as Wal-Mart, as well as the foodservice industry, and produces around 10 frozen rice products that generate sales of approximately $20m a year.
The frozen food market is big business in the US, with a value of around $25 billion in 2008. Although the category is somewhat mature, with a fairly insignificant annual growth of 2.7%, frozen food is expected to grow in value in the downturn due to its image as a value-for-money option. As well as being generally cheaper to buy than chilled food alternatives, consumers could gain a greater appreciation of the fact that frozen products can be stored for a long time and are therefore less wasteful than chilled lines.
Furthermore, US consumers are dining at home with increasing regularity due to the impact of the downturn, meaning food options that ease the cooking experience, such as frozen foods, are likely to increase in value. Japanese food in particular is gaining popularity with US home diners who desire to bring the restaurant experience into the home. Due to the factors discussed above, Ajinomoto has the potential to make gains at a time when other industry players are feeling the pinch, even given the likelihood that there will be an increased number of competitors in the market.
