The demand for frozen potatoes in the U.S. has been on an upward trajectory for over a decade. Since 2014, potato volumes grown and sold in the U.S. have surged by 16%, with a further 6% increase since 2019. This growth is reflected in the rising popularity of potato products in both foodservice and retail sectors. As the industry continues to adapt to economic pressures, such as inflation, there are significant opportunities for U.S. growers, processors, and suppliers to further capitalize on this trend.
Growth in Foodservice: Fries Leading the Way
In the foodservice sector, fries remain a staple on menus. In 2014, 57.2% of U.S. restaurant menus included fries, and this figure rose to 59.6% by 2024. While this is slightly below the 2021 peak of 60%, projections suggest menu penetration will reach a record 60.9% by 2028. The demand for fries has proven resilient despite challenges posed by economic pressures, making them a key growth driver for the frozen potato industry.
However, inflation has impacted consumer spending. By early 2024, over 45% of restaurants had raised menu prices due to increased operational costs. Technomic reported that these rising prices slowed foodservice traffic, with 76% of consumers citing high prices as a reason for eating out less frequently. In response, fast-food chains like McDonald’s, Arby’s, and Taco Bell introduced value menus to entice customers back. These efforts are expected to help maintain strong demand for frozen potato products in foodservice.
Retail Sector: Frozen Potatoes Maintain Momentum
The retail sector has also contributed to the growth of frozen potatoes. From July 2023 to June 2024, frozen potato sales saw a 14.6% increase in dollar sales, though volume sales remained flat due to price hikes. The ability to maintain steady volume sales despite higher prices is notable, given the inflationary pressures felt across the food industry.
Retail sales of frozen potatoes in fiscal year 2024 were nearly 10% higher than in 2019, signaling continued strong demand. This growth has attracted international attention, with companies from Belgium, France, and India planning to build new processing facilities in the U.S. to meet local demand. The expansion of domestic processing capacity is expected to reduce U.S. reliance on imports, which have more than doubled in the past decade.
International Opportunities: The Case of Mexico
Mexico has become the largest export market for U.S. potatoes for the second consecutive year. The ability to ship fresh potatoes throughout Mexico has created new opportunities for U.S. growers and processors. This expansion is expected to continue, providing a stable outlet for U.S. potato exports and benefiting farmers in both countries.
Globally, potato consumption continues to rise, with emerging markets like China, India, and Turkey investing in frozen potato production. Although these countries will likely increase competition in the international market, they also present new demand opportunities as they transition from fresh to processed potato consumption.
The U.S. frozen potato market remains robust, driven by consumer demand in both foodservice and retail sectors. Despite short-term challenges like inflation and rising competition from global producers, the long-term outlook for the industry is positive. With increased processing capacity in the U.S. and growing demand from export markets, particularly Mexico, U.S. potato farmers and processors are well-positioned to capitalize on future opportunities. The key to success will lie in navigating economic pressures, embracing technological advancements, and expanding market access to maintain growth in the coming years.
