Cold foods have been a reliable mainstay in the retail sector for decades, with steady-selling staples like ice cream, milk, eggs, pizza, fruit and vegetables, microwavable meals, and more populating grocery store cold cases for shoppers to fill their refrigerators and freezers at home.
But it wasn’t until the pandemic in 2020 when refrigerated and frozen foods took a significant leap forward in sales. As people sheltered in place, made fewer trips to the store, and had groceries delivered to their doorsteps or deposited in their vehicles via contactless transactions, cold food sales in the U.S.—and frozen foods in particular—skyrocketed. According to 210 Analytics, frozen food sales jumped by $13 billion in the U.S. between 2018 and 2020, from $52.8 billion to $65.8 billion, and continued to climb after the pandemic to more than $72 billion in sales, remaining in that range today. Globally, the frozen food segment is expected to climb to $638 billion by 2034, according to Future Market Insights.
All those cold foods sales meant that manufacturers not only had to produce more products, but needed additional room, labor, and storage to manufacture and distribute their perishable goods. In response, the speculative cold storage construction market increased to keep up with demand for space while adding regional distribution options for more efficient deliveries. Today, 2.5 million sq ft are in the pipeline for 2024, up from 2 million sq ft in 2022 and 2023, according to real estate firm CBRE.
This Interstate Warehousing cold storage facility in Anderson, Ind., is representative of the cold foods boom since the pandemic. The facility opened in 2019, and has been expanded twice since then to keep up with ever-increasing cold storage demand.Tippmann Group
But before finished products are sent to a cold storage facility, they are, of course, manufactured in a plant designed for cold foods production. The differences in energy usage, construction materials, food safety guidelines, and logistics capabilities compared to non-perishable food plants can be significant. Here, we’ll look at several elements that encompass the cold foods manufacturing, storage, distribution, and facility construction segments, and detail trends that are impacting the industry today.
The journey of a frozen pizza
The supply chain needed to manufacture and transport a perishable consumer packaged goods (CPG) product is known as the “cold chain,” and every step along the way has the potential for failure if strict procedures aren’t followed. One crucial thread running through the cold chain is temperature control. If at any time temperatures rise above chilled or frozen for a period of time, the product can spoil or degrade, and the cold chain can be broken. Few, if any other CPG segments are this dependent on temperature from start to finish.
“I have to think about processing rooms being cold, I have to think about the equipment and labor working in a cold room, and I have to think about keeping the ingredients cold. Then, when the finished products are frozen and packaged, I have to be able to monitor and maintain temperature throughout the whole supply chain,” says Peter Cokinos, COO at Palermo’s Pizza. “My whole plant is designed with that in mind, for me to be able to keep very low temperatures throughout the whole process, all the way to the point where it leaves my freezer and it goes on a tractor-trailer. And then it’s delivered to the customer, who also has to maintain frozen temperatures.”
Milwaukee-based Palermo’s Pizza produces 300 million frozen pizzas annually, with retail distribution in all 50 states. Some of the company’s best-selling brands include Urban Pie and Screamin’ Sicilian.Palermo's Pizza
The frozen pizza category accounts for more than $6 billion in the U.S. annually and remains on an upward trajectory. Palermo’s is one of the powerhouse producers in the frozen pizza segment, with distribution into every major grocery outlet in all 50 states. The Milwaukee-based company makes 300 million frozen pizzas per year with brands like Screamin’ Sicilian and Urban Pie, as well as the Palermo’s flagship brand, under its umbrella.
A blur of packaged Screamin’ Sicilian pizzas fly off the line on their way to case packing and temperature-controlled distribution to customers.Palermo's Pizza
“We’re a USDA facility, so we have a USDA inspector that can be onsite all day long. But typically they’re here once a day and they’re inspecting the facility to make sure we maintain refrigerated temperatures,” Cokinos says, adding that, ironically, the first step to making a frozen pizza begins in a hot bakery to create the crust. Palermo’s has its own bakery onsite, so the crust can be flash frozen to lock in freshness, and then head to the toppings phase.
“My [automated] processing equipment to put cheese, pepperoni, and toppings on and to dispense sauce are all specialized machines that are designed to be in a cold room,” explains Cokinos, who notes that once the pizza is finished, it must be completely frozen before being packaged. “The packaging films I use are designed to withstand low temperatures and remain somewhat flexible in those cold temperatures or they become brittle and rip. The glue to hold the boxes together also has to be able to withstand freezing temperatures, or the glue becomes brittle and the boxes open up.”
Each step of the way, Cokinos has quality control teams that “make sure we’re maintaining the temperature of the raw materials, we’re applying them cold, we’re freezing the finished pizza completely, and that it’s packaged properly. It’s our responsibility to make sure the product is kept at a frozen temperature all the way to the dock of a retailer. And then that obligation transfers to the retailer to make sure that they accept it frozen and it’s maintained frozen until a consumer buys it and takes it home.”
Cokinos says Palermo’s had to expand its existing facility in Milwaukee to accommodate the pandemic surge in demand for frozen pizza. Because sales have stayed robust, the company opened a separate 30,000-sq-ft manufacturing facility in Jefferson, Wis., in 2023. Taken together, a total of 80,000 sq ft of manufacturing space has been added at Palermo’s.
Inventory and food safety
Meticulous observation of cold foods inventory is another area that requires more attention than most non-perishable CPGs, particularly from a food safety standpoint.
“Managing inventory for perishable foods requires careful monitoring of expiration dates and stock rotation,” says Josh Knott, owner and CEO at Knott’s Foods in Paris, Tenn., which makes a variety of refrigerated dips and spreads. “Not only does that refer to the raw materials used in production, but the finished goods in shipping. Non-perishable foods and their raw materials may still have expiration dates, but the risk of spoilage is generally lower, allowing for longer shelf life and potentially larger inventory quantities of raw materials and finished goods.”
Knott’s Foods in Paris, Tenn., has been making refrigerated dips, spreads, and salads since 1947. The company takes a modern approach to manufacturing today, incorporating automation and resource-saving strategies into their production facility.Knott's Foods
Knott advises other cold foods manufacturers to create a list of daily procedures to follow and adhere to daily. “Following our procedures at Knott’s is a must in our processing. Whether we’re talking about quality control, temperature control, or food safety, it all comes down to following our procedures. If we always follow them, the rest of the potential issues become minor. Making a system of policies and procedures is integral in making sure our facility runs safely and efficiently.”
Like Palermo’s, Knott’s knows its cold chain duties don’t stop after their products are picked up by a refrigerated truck for distribution. Knott’s uses “temperature monitors on each pallet, as well as trailer temperature monitoring software on our company trucks and those provided by third-party carriers," Knott says. "Trailer temperature and pallet temperature monitors are checked by all customers upon arrival at their distribution centers to ensure all refrigeration requirements have been met.”
Labor and automation
The workforce woes throughout the food processing industry are well documented, but for cold foods processors, it can sometimes be more difficult to find workers willing to remain in a cold environment throughout their shifts, even though cold weather gear like coats, hats, and gloves are provided to keep them warm.
“When people come to work for us, one of the things we ask them in advance is if they have a preference between cold and ambient temperatures, because we have an onsite bakery that is not cold, which is a nice option for us to offer,” Cokinos says. “Sometimes, it might be in the middle of the summer, and someone says, ‘Hey, I’m good with a cold environment.’ So, we put them in a cold environment and after a full day, they say, ‘This is not for me.’ But typically, when somebody settles into a cold environment here, they become accustomed to it.”
Much of the work in cold foods manufacturing has been automated in recent years, like Palermo’s automating all sauce dispensing, cheese distribution, and toppings placement, for example. At Knott’s, increasing automation “has not resulted in loss of labor as much as you would think,” says Knott. “Very few jobs were affected because we need skilled employees to run our machines. It actually adds value to the employee, which gives them higher wages. Also, maintenance personnel have to be higher skilled with a higher wage to maintain the machines.”
Constructing cold facilities
The difference between building a cold facility—whether it’s manufacturing, storage, or a combination of both under one roof—and one that doesn’t require refrigeration or freezing can be vast due to the construction strategies, budget, and materials needed to maintain chilled temperatures.
“When designing a cold facility, there are a lot of details that need to be thought out and planned prior to breaking ground,” explains John Tippmann III, executive vice president for Tippmann Group. “The two main differences are doing everything possible to prevent cold air from leaving the space, but also designing it with components able to withstand extreme temperatures for up to 40 years. We have facilities in our network that have been running at -5°F for 35 years without ever being shut off.”
Loading docks in a cold foods facility should be temperature-controlled and efficiently designed so products can be expedited onto trucks quickly, helping to maintain cold temperatures for distribution.Tippmann Group
Bobby Degregorio, vice president of business development at ESI Group USA, adds, “These facilities require robust insulation and precise temperature control to maintain specific conditions like refrigeration or freezing. Insulation materials, HVAC systems, and refrigeration systems must be carefully chosen,” he says. “Also, stringent hygiene protocols are essential to prevent contamination. Stainless steel surfaces, easy-to-clean equipment, and proper drainage systems are crucial. For non-perishable food facilities, hygiene matters, but it’s not as critical as cold food facilities.”
The geographic location of a cold foods facility can be contingent on several factors, including “the initial cost, operational cost, and potential impacts to surrounding businesses or residential areas that need to be considered,” says Forrest McNabb, president at Big-D Construction. “It’s also important to plan for logistics based on the interaction of tractor-trailers with automobiles and pedestrians due to increased traffic flow, and to create separation to support safe operations onsite.”
Cold foods facilities like this distribution center are strategically built near populated areas for faster expediting to customers, while saving resources like fuel due to shorter trips.NMPhotos (ESI Group USA)
Speculative cold storage facilities are strategically located in areas where distribution to customers can happen in the shortest time possible. With the demand for cold foods remaining elevated, these facilities are being built near large cities to serve dense populations, or in locations where distribution can happen throughout a region. A company like Palermo’s, for example, has distribution throughout the country, so cold storage facilities provide regional bases for the company to store and maintain its product flow to retail customers in places far outside of Wisconsin, like the West or Southwest.
“There continues to be a focus by large firms such as Amazon or Kroger on the last mile proximity to customer bases in large metropolitan areas,” McNabb notes. “These firms are doing all they can do introduce fleets of smaller vehicles, allowing sustainable operations by using electric and natural gas in their fleets with more timely and agile—not semi-truck and trailer—deliveries to retail facilities and direct-to-consumer customers.”
Sustainability
Resource usage is one of the primary differences between cold foods processing and their non-perishable counterparts. The cold chain as a whole uses a tremendous amount of energy to maintain cold temperatures throughout, whether it’s in production, storage, or refrigerated trucks to transport goods. In recent years, manufacturers and those who build cold facilities have looked for every available option to reduce energy usage. After all, resources cost money, so if a company can help its bottom line while helping the planet, it’s a win-win for everyone.
“We have added the use of thermal cameras to our facility to show where we may be losing refrigeration and energy or could insulate better to make our equipment more efficient,” Knott says. “We also made other changes such as switching all lights to LED and installing smart thermostats throughout [our plant].”
At Palermo’s, Cokinos says the company has also added LED lighting, and switched to an ammonia-based refrigeration/freezing system, which Cokinos says is the most efficient refrigerant using the least amount of energy.
“All of our new equipment is energy-efficient, and we’ve put automated controls and sensors in a lot of the equipment that more precisely monitors the temperature and the humidity of the equipment itself,” says Cokinos. “Then we do a lot of training with our employees, so they’re aware of energy consumption as well. We’re always thinking about how we can reduce our environmental impact as we’re making these improvements.”
From a construction standpoint, one area that may be overlooked in saving energy and helping to maintain temperatures is the loading dock, where perishable ingredients come in and finished products are sent out. “Loading docks should be temperature-controlled for seamless product transfer,” says Degregorio. “Efficient flow from receiving to processing, storage, and shipping is vital. Minimizing temperature fluctuations during product movement will increase facility efficiency and lower the cost to operate the facility.” Degregorio adds that all cold facilities should have an emergency preparedness plan in place that includes backup power for cooling in case of an outage or disaster.
Cold foods future
The future of cold foods storage after processing—like in this meat plant—will likely lie in the use of automated storage and retrieval systems (AS/RS) due to the lack of labor and the need for increased speed and efficiency in moving inventory on and off racks.Big-D Construction
“I believe what we will see over the next several years is all of those spec-built [cold] warehouses slightly modifying their layouts, racking, and forklift types to increase efficiency,” adds Tippmann. “Also, the cost for these facilities has gone up substantially, and there are still a lot of older food plants and cold storage facilities that could be nearing the end of their lifetime. With the cost of building so high, it will force companies to look very long term to see what they expect [financially] from these high-priced facilities.”
From a processor standpoint, as consumer standards continue to rise for food quality and transparent ingredient lists, so does the need for manufacturers to meet and exceed those expectations. Long gone are the days when refrigerated and frozen foods were perceived by the public as nutritional afterthoughts. Companies like Knott’s have responded by introducing several new clean-label dips and spreads, while Palermo’s has a clean-label line of pizzas called Urban Pie.
“Eating better means something different to everybody. We try to understand what our niche is, and how we’re going to fit into people eating better,” says Cokinos. “I’m seeing constant improvement in the supply chain and in the quality of the products from our suppliers. Consumers have been trained to expect very high-quality products. So, we’re always pushing our vendors to ensure that whatever they’re offering us is at least the same quality as a restaurant, because that restaurant-quality expectation from consumers isn’t going away.”
