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Frozen Food Age
Pizza Nation
Pizza, the staple of many diets in this country, is as popular and
profitable as ever. Frozen pizza sales have rebounded
By Gail Fleenor
"In the United States, we love our pizza and this love doesn't show signs of
fading. With frozen pizza sales in retail food stores over $2.6 billion in
2006, manufacturers continue to experiment, innovate and tempt consumers
with new flavors, crusts and healthier options.
While frozen pizza movement had been depressed in the last few years, sales
have rebounded in a big way with the most recent Information Resources Inc.
(IRI), Chicago, data showing an increase of 6.9% to $663.9 million for 12
weeks ended March 25, 2007, pushing sales for the 52-week period ending in
March up by 2.8%. This is a significant turnaround, considering sales
through all of 2006 were up just 0.4% and in 2005 they were down 1.2%.
Units were up 4.2% to 246 million for the 12 weeks ended March 25 and up
1.9% to 967.2 million for March-ending 52-week period.
This renewed vigor in frozen pizza sales seems to be coming from all
fronts-advertising, consumer interest, category promotion, and product
innovation from national and regional pizza makers.
Phil Lempert, the "Supermarket Guru" and "Today" show food trends
correspondent thinks television ads for chains like Pizza Hut and Papa John'
s have kept pizza 'top of the mind' and may have resulted in more frozen
pizzas sold. "The consumer in the supermarket thinks 'Do I really want to
wait for a half-hour or hour for somebody to deliver a pizza which is going
to be two or three times the price of frozen? Or, do I want to grab one for
the freezer and be able to just pop it in the oven when I want?"
The frozen pizza market is more competitive than ever. To help market its
rollout of DiGiorno Ultimate, Kraft recruited an actor from the "Desperate
Housewives" television series. Schwan's has done its own recruiting by
offering consumers the chance to win a private concert by a rising country
music star.
Supermarkets remain the top channel for purchasing frozen pizza, according
to IRI's Consumer Insights Builder for 2006. Figures show 62.8% of
supermarket shoppers purchase frozen pizza at an average price per unit of
$2.57 compared to 3.4% of club store shoppers where average price per unit
is $9.12, indicative of club packs.
Even though Kraft and Schwan's combine for $1.4 billion of total frozen
pizza sales or 57 percent, according to IRI figures for 52 weeks ending Dec.
31, 2006, there is still plenty of room for "niche" pizzas like organic
offerings and regional pies, which continue to grow in popularity and
variety.
Make That Slice Bigger
"Today, we're going after an even bigger slice of the pizza pie," says John
Boswell, senior vice president and general manager, pizza category, Kraft
Foods Inc., Northfield, Ill. "We're setting our sights on the $20 billion
dollar local pizzeria business. By expanding our frame of reference, we're
now playing in the entire $35 billion dollar pizza market. We have taken the
DiGiorno brand into the super-premium category with our new DiGiorno
Ultimate pizza."
Kraft already has the No. 1, 3, 8, and 10 top frozen pizza brands in the
country-DiGiorno, Tombstone, California Pizza Kitchen and Jack's-totaling
$866 million.
Kraft Foods recently shifted gears and is now focusing on four growing
segments: Health and Wellness, Premium, Snacking and Quick Meals. The
company's new DiGiorno Ultimate super-premium pizza, part of the new focus,
will be available nationwide in July. The new pizza targets adults who
frequent pizzerias and enjoy pizza with "premium" Italian-style ingredients.
Kraft brought the new DiGiorno concept to retailers' shelves, currently 12
Midwest markets, in under 100 days. Chicago, the center for great pizzerias,
was chosen for the "Ultimate" launch. Kraft went head to head with local
pizzerias by creating a "pop up" pizzeria where Chicagoans could try a free
slice, according to a Kraft spokesperson. The pop-up store featured a
neighborhood pizzeria façade and "Desperate Housewives" actor Doug Savant,
who portrays a pizza shop proprietor on the show. Over 25,000 slices of
DiGiorno Ultimate pizza were served during the three-day event.
Marketing of the super-premium pie will continue with mobile marketing
tours, "tongue-in-cheek" television spots, radio and print advertising and
in-store promotion. Kraft will also maintain marketing support for its
original DiGiorno pizza, which received extensive promotion through contests
during the NCAA basketball tournament's March Madness.
DiGiorno Ultimate is made with a pizzeria-style crust topped with
"vine-ripened tomato sauce, premium cheeses, specialty meats, and julienne
vegetables." Each 12-inch pizza will have an SRP of $6.99; four varieties
are available.
"DiGiorno is clearly the lead brand for our operation on a sales dollar
measurement, and all premium rising crust brands represent 40% of our total
dollar volume," says Rick Benner, frozen food category manager, Spartan
Stores, Grand Rapids, Mich. "Specialty pizza is beginning to draw interest
by our consumers. California Pizza Kitchen has grown to a 4% dollar share in
less than two years and is our lead specialty brand."
"Our biggest selling brands are Jack's and Tombstone, with pepperoni,
four-meat and pepperoni and sausage the top-selling flavors," says Erin
Zimmerman, director, marketing projects, Hy-Vee, West Des Moines, Iowa.
Restructuring = More Sales
"It's a fun time to be in the pizza category," says Mark Jansen, vice
president of product strategy, Schwan's Consumer Brands North America, Inc.,
Bloomington, Minn. Schwan's has Red Baron, Freschetta and Tony's, the No. 2,
5 and 7 brands in the country, totaling $562 million. Recent consumer
research and market observations prompted changes in packaging and product
sizes.
"We realized the way our business is organized caused our brands to compete
with each other so we restructured to grow the category as a whole," Jansen
says. As a result, Schwan's aligned its packaging to make it easier for
consumers to understand branding, which has been huge he says.
Schwan's 8-inch pizzas, too big for singles and too small for couples, were
eliminated. "In its place, we introduced two-pack pizza singles. We feel
this is the way people eat," Jansen says. Schwan's sauce stuffed crust was
replaced by an ultra-thin crust "to let flavors shine through," a successful
move because many consumers want less crust, he notes.
"Consumers believe that premium and super-premium pizzas are better than
delivery or take-out," Jansen says. "In our research, Freschetta was
preferred to national chain pizza. Empty nesters and young adults are
trading up, buying the pizzas they crave, and moving away from some
mainstream value brands. They're exploring the Wolfgang Puck brand and brick
oven thin crusts."
Jansen believes the all-natural segment is under-developed. "We believe the
introduction of Wolfgang Puck pizzas will be incremental. We have tried to
counsel our sales force and customers that they are missing opportunities if
they shelve Puck pizza next to Freschetta and California Pizza Kitchen
rather than in an organic/natural set."
The Puck pizza, first rolled out at Sam's Club, is now aggressively
expanding, with half of its national distribution in grocery. Zimmerman of
Hy-Vee says "Wolfgang Puck is still fairly new. Awareness of the brand is
building."
Other Schwan's pizza brands remain strong. Red Baron has grown the last two
to three years, says Jansen. "It is traditionally known for its larger size
so now the Red Baron singles have the opportunity to attract smaller
households.
Tony's Pizza is now offering a white whole wheat crust targeted to kids," he
adds.
"Our business has grown in double digits the past 24 weeks and the category
has been following. As long as manufacturers continue to innovate, the pizza
category has a bright future," Jansen says. Schwan's latest promotion is a
contest for a private concert by country singer Julie Roberts for Red Baron
singles.
It's A Natural
There's no question that consumers are moving more towards organic foods,
according to Phil Lempert. "Consumers recognize that organic is not a fad
when they see Wal-Mart and Target selling it. I believe there is a really
good growth opportunity in organic pizza. Even in pizzas that aren't
organic, you're seeing whole wheat crusts and a healthier profile."
Mention Kashi and many consumers think of all-natural cereal. Long a
promoter of wellness through healthy eating, Kashi is entering the pizza
race with a line of all-natural frozen pizzas featuring a stone-fired seven
whole grain and sesame blend crust. "Pizza is one of America's favorite
foods, so we wanted to create a more nutritious option that people can feel
good about eating-a natural fit for Kashi," says Dae Lee, associate director
of marketing, Kashi Co., La Jolla, Calif.
"People can enjoy a delicious meal that is also rich in whole grains,
protein, fiber, and Omega-3s," Lee says. The new line will be available at
natural food stores and supermarkets nationally in July.
While acknowledging that there are many frozen pizzas on the market, Lee
says Kashi delivers "something different-gourmet ingredients and delicious
flavors paired with positive nutrition for which Kashi is known."
"Natural/organic pizzas are a small part of our pizza sales base (1%) but
grew 25% last year," says Spartan Stores' Benner. "As our stores undergo
remodel activity and we expand the department, we are adding additional
footage to accommodate more organic offerings. Pizza is one of the
categories we will look to expand variety." Another Midwest supermarket
chain is having success with organic pizza. "Amy's Pizza is big for us,"
says Hy-Vee's Zimmerman.
Where Pizza is King
"The Midwest is known as the birthplace of frozen pizza," says Benner.
"Tombstone, Jack's, DiGiorno, and Totino's were all born in the Midwest."
Frozen pizzas represent a significant part of Michigan-based Spartan Stores'
total frozen department sales, Benner says, at over 11% of total sales.
"About 50% of our stores maintain a seven-door or larger pizza section,"
Benner says. Hy-Vee's frozen pizza section averages 18 doors, according to
Zimmerman.
The Midwest is home to several regional frozen pizza makers. "Frozen pizza
is a strong seller in this area because there are a number of ethnic groups
who enjoy pizza in the Midwest in general and in Chicago specifically," says
Kevin Costello, information technology director, Home Run Inn Group,
Woodridge, Ill. "There is a strong heritage for pizza in this area. Many
areas in the Midwest have long histories of producing high quality sausages
and high quality cheeses, so the people who live in these areas are well
accustomed to the most popular pizza toppings."
Home Run Inn, named Chicago's favorite pizza on the Rachael Ray show's "Big
City Pizza Throwdown," is celebrating its 60th anniversary in the pizza
business. First served in the original Home Run Inn restaurant in 1947,
Costello says the company's pizza has "risen to the top of the Chicago pizza
market" because of loyalty to a 60-year-old family recipe first served at
the restaurant.
"Using the same recipe and preparation methods for our all natural frozen
pizzas as we do in our restaurant pizzas give us a superior quality product
in the freezer case compared to our competition. Our seven pizza restaurants
lend credibility to our brand name, something other frozen pizza producers
cannot duplicate," Costello says.
Distributed in supermarkets and club stores in 20 states, Home Run Inn has
expanded its production facilities to triple capacity in order to meet
continued demand for its pizzas, Costello says. "We have recently come out
with a line of deep dish pizzas with a fantastic plum tomato topping and
look for this product to make a strong impact on the market as its
distribution channels increase."
Loving pizza may be a requirement to live in Milwaukee. "Grow-ing up in
Sicily, my parents developed a love for great food and for family," says
Giacomo Fallucca, president and CEO, Palermo Villa, Inc., Milwaukee. "They
taught us that everything should be the very best you can make it and those
are the values that guide everything we do."
The Fallucca family opened a bakery in Milwaukee which was later converted
to a restaurant/pizzeria. After opening a frozen pizza plant in 1978, the
Falluccas broke ground with "the first rising crust frozen pizza" in 1989
and "Primo Thin, the first frozen pizza with an ultra-thin crispy crust" in
2003.
Palermo's Primo Thin was the fastest growing frozen pizza among the Top 20
U.S. brands in 2006 at a 155% increase, according to ACNielsen. The brand
comes in 11 varieties. "We recently introduced a Roasted Vegetables and Goat
Cheese variety to our Primo Thin line," Fallucca says. Last year, Palermo's
opened a new manufacturing facility to bring all operations under one roof.
This year, the brand brought suit against Trader Joe's grocery chain for
selling frozen pizzas under the name "Trader Joe's Pizza Palermo."
"Our pizzas are sold in club stores across the country and our supermarket
distribution is growing rapidly," Fallucca says. "We are currently
distributed in 30 markets across the United States and in Canada. Our latest
product introduction is our Rustico authentic rising crust pizza which is
like pizza from our pizzeria with its light and airy crust." Palermo's will
soon introduce Hearth Italia, "the first domestic hearth-baked product on
the market," which uses baking technology exclusive to Palermo's.
Another Midwest regional pizza is marketed under the name of Des Moines,
Iowa, radio personality Van Harden. The no-dough, gluten-free crust is a
combination of cheeses. Harden's developed the idea after he avoided eating
bread and lost 70 pounds. The only thing he missed on his diet was pizza.
First sold as fresh, a frozen version was developed and is sold in 160
Hy-Vee stores. "Van has done a great job of promoting the pizza with all of
his connections in the business but sales are fair at best," says Dennis
Milne, Hy-Vee frozen food buyer.
What does the future hold for consumers' favorite food? "I think the next
iteration for frozen pizza will be further development of packaging and
size," says Supermarket Guru Lempert. "Take a look at the new packaging of
microwave vegetables. I wouldn't be surprised if, in the next year or so, we
see a whole new way of cooking frozen pizza that will be microwaveable in
smaller sizes to fit the microwave and in packages to make it 'bullet-proof'
for consumers. And I think if this happens, we will see double digit growth
in sales of microwaveable pizzas for a number of years."
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By the Numbers: Pizza Sales Strongest in Central Regions
While frozen pizza sales are strong and growing across the country, some
areas purchase more pies than others. It's worth noting that in some areas
of the country, pizza can fulfill consumers' needs as a cheap meal for the
family.
Here are some examples from national research group statistics and sales
numbers (an index of 100 is viewed as average):
The NPD Group, based in Port Washington, N.Y., is a provider of consumer and
retailer information and insights. The group created a regional profile of
frozen pizza consumption with some interesting results. In the accompanying
graph, an index of 80 to 120 is considered average. The West North Central
area of the country, including the states of Minnesota, Iowa, Missouri,
North Dakota, South Dakota, Nebraska, and Kansas indexed highest at 135. The
East South Central area (Kentucky, Tennessee, Mississippi, Alabama) was
second highest at 126. The East North Central area was third at 110 and
includes Wisconsin, Illinois, Michigan, Indiana and Ohio.
Rick Benner, frozen food category manager for Spartan Stores, quotes AC
Nielsen's Category Development Index rankings to show frozen pizza strength
in the Midwest. "The Central Region ranked at a 170 index, followed by the
Grand Rapids region (Spartan Stores' headquarters) at 124 and Detroit at 78.
Spartan's retail trading area is ranked at 106. The Eastern region of the
country ranks at 68, the West region at 74 and the South at 99."
According to sales numbers from Information Resources Inc. (IRI) for 2006,
out of over $2.6 billion in total frozen pizza sales (excluding Wal-Mart),
sales in the Great Lakes Region segment were over $596 million, the highest
of any region. The next closest was the Northeast at $391 million. The
lowest regional sales were $224 million in the South Central area. Sales for
other regions include: Mid-South $365 million; Plains $303 million;
California $223 million; Southeast $312 million; and West $257
million. -D.G.F.
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