U.S. Frozen Potato Demand Remains Strong, with Challenges and Opportunities for Future Growth

October 18, 2024

A Letter from the CEO

Potatoes have experienced exceptional growth in demand over the past decade, particularly frozen potatoes. While we might be entering a new normal, the demand trend is not reversing. Reported volumes for potatoes grown and sold in the United States are up 16% since 2014 and up 6% since 2019¹. This reflects an undeniable change in consumer behavior that has been positive toward potatoes and potato products resulting in remarkable opportunities for growers, processors, importers, and others.

Looking first at foodservice, a decade ago in 2014, 57.2% of U.S. restaurant menus featured fries. In 2024 that number rose to 59.6%. While that’s down slightly from a high point of 60.0% in 2021, we’re still right around that historic record for menu penetration. Of course, menu penetration does not measure volume, but it is a key indicator in foodservice for desirability of a category. Looking forward, the future projections are strong. Menu penetration for fries is expected to grow to a record 60.9% by 2028, which should support longer-term demand².  

While this is positive, we must also recognize consumers began to feel the impact of inflation in the foodservice world in 2023 and early 2024 when traffic slowed – largely related to reduced personal budgets and sharply higher prices set by restaurants³. According to Technomic, foodservice menu prices remained at historically high levels in 2023, rising more than 7% for the second straight year⁴. By the end of Q1 2024, 45% of restaurants had increased menu prices once again, and more than half of restaurants said they expected another future increase³.

These cost increases were limiting consumer traffic. When Technomic asked consumers why they were eating out less at restaurants, more than three-quarters said, “prices are too high.” Sixty percent reported “my budget for ordering foodservice has decreased.”³

General economic factors are still impacting short-term demand, but there are signs this could improve soon and may have already begun to improve in some situations. The foodservice industry started to answer consumers’ calls for relief earlier this year. McDonald’s³, Arby’s and Taco Bell⁵ have all introduced Value Menus to spark consumer traffic. McDonald’s $5 meal is slated to be available through December³. Some positive signs were reported this summer, and we are hopeful more will be reported this fall as the programs have time to yield results.

As experts look to 2025, Technomic estimates growth in both limited-service and full-service restaurants where the majority of frozen potato sales are found³. “Expect burgers to recover for sure, and the chicken players will continue to show strong growth,” said Technomic. “These are both good for fries.”⁶ 

In short, foodservice operators continue to value the versatility, relative cost, and consumer preference for potatoes⁷. While price shocks have had a negative impact in the short-term, menu penetration for fries is still near historic highs², and promotions are intended to drive traffic.

Turning to retail, dollar sales from July 2023-June 2024 increased for all potato types except fresh, and the most significant increase was in frozen (+14.6%). Volume sales for that period remained steady, with frozen potatoes sales remaining relatively flat compared to the prior year, a 0.02% decrease. Considering the sharp increases in prices for frozen products, this is an impressive accomplishment at retail. Overall retail sales since July 2023 are nearly 10% greater than fiscal year 2019 and only 4.5% less than fiscal year 2020’s pandemic pantry-loading high⁸.

This further shows us that the U.S. potato market is strong. It’s so strong, in fact, that international companies are in the early process of building new processing capacity in the United States⁹. This includes companies from Belgium, France, and India that we know of today. The increased processing capacity should rebalance imports over time, which have more than doubled over the past decade¹ while U.S. consumption outpaced supplies – especially for many frozen products. In the future, U.S. farmers should have more opportunities to use American-grown potatoes to help meet the demand these companies previously filled with potatoes from other parts of the world¹⁰.

It’s also worth looking at international markets, particularly Mexico. The opportunity to ship fresh potatoes to markets throughout Mexico has had a measurable impact on the U.S. potato industry and creates new opportunities for growers and shippers that simply weren’t available in the past. In the period July 2023–June 2024, Mexico was the United States’ largest potato export market for the second year in a row, and we believe consumer demand is expected to continue to expand, providing opportunities for both Mexican and American potato farmers¹¹.

While we see more competitors globally, we also believe global demand for potatoes and potato products is expected to expand over the coming decade¹⁰. The interest in China, India, and Turkey to produce more frozen products will very likely disrupt some regional markets in the coming years, but we are hopeful greater access to supplies will (over time) also create more demand in these markets where most potatoes are still marketed in a fresh format.

Potatoes are a fundamental food product – one most people would consider to be a “mature” produce category. Understanding this, the growth we’ve seen over the past decade is truly impressive. While the rate of growth may have slowed in some areas over the past year, the category is still growing and riding a historical peak with new demand records again in 2024. All things considered, the future for potatoes is bright. We do, of course, face several challenges, including new competitors and uncertain economic factors. How we react to these challenges will determine our success both individually and as an industry.  

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1 Potatoes USA Volume Assessments

2 Datassential, Fries the food SNAP^TM Food Profile

3 Technomic State of the Industry Midyear Report 2024

4 Technomic Top 500 Chain Foodservice Report 2024

5 Technomic Fries Menu Report 10.09.2024

6 Email – SRG x Technomic Help on explaining Fries in FS decline (and optimism looking forward)

7 Datassentials Potato Trends 2024 Annual Review

8 Circana Retail Sales Report_FY24 July 2023_June 2024

9 Point/Plover Metro Wire, March 25, 2024 https://spmetrowire.com/new-state-law-secures-citys-spot-as-finalist-eyed-by-belgium-potato-processor-150-jobs/

10 World Potato Markets – A Global Perspective of Potato Processing

11 Trade Data Monitor compiles the data from the United States Department of Commerce, Foreign Trade Division, using the Harmonized Coding System, Schedule B https://potatoesusa.com/news-events/us-potato-exports-july-2023-june-2024/

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