The pies have it

By offering convenience and quality that rival restaurants, at a fraction of the price, frozen pizza delivers strong sales and profits.

By Richard Turcsik

Those “special deal” commercials from Pizza Hut, Domino’s and other chains may have temporarily cooled frozen pizza’s burn-the-roof-of-your-mouth-hot sales, but the category continues to heat up the freezer case with new products, improved ingredients and stepped-up promotions.

“It is really amazing how far this category has come in the last 10 years in terms of quality and offering,” says William Whalen, executive vice president for Dr. Oetker USA, the Mount Laurel, N.J.-based maker of frozen pizza. “Frozen pizza has come a very long way in the last few years in terms of premium and unique-type offerings, which consumers are really clamoring for. They want something different and that is what we are providing.”

According to the American Frozen Food Institute, based in McLean, Va., in 2010 frozen pizza reached $3.2 billion, accounting for nearly 10% of mass-market frozen food sales. In 2010, 66% of households consumed frozen pizza, up from 62% in 2006, with the number of households considered heavy users of frozen pizza-those consuming 10 or more in 30 days-steadily growing.

“We think this is clear evidence that frozen pizzas are benefiting from a continued tough economy, with consumers increasingly opting to spend food dollars on eat-in, convenient foods, as opposed to dining out or purchasing take-out,” says Corey Henry, AFFI’s vice president of communications.

However, with consumers continuing to pinch their purse strings sales are dipping slightly in 2011. According to SymphonyIRI Group, a Chicago-based market research firm, frozen pizza sales in supermarkets, drugstores and mass merchandisers, excluding Walmart, were $3.13 billion for the 52-week period ended June 12, a decline of 2.6%, while unit sales dipped 4% to 1.024 billion.

“There’s no doubt that the aggressive pricing and advertising by the large national pizza chains have been successful in bringing some consumers back to the food service segment of the pizza industry,” says Chris Dresselhuys, director of marketing for Milwaukee-based Palermo’s Pizza. To better compete, “frozen pizza retailers must look at new ways to create interest in their categories such as creating promotional bundles that pair complimentary products together to deliver high consumer value without undermining prices,” he says.

Palermo’s has been on a growth spurt of late; the company has added 115,000 square feet of space to its headquarters and manufacturing facility to step up production of its products, which are distributed east of the Rockies as well as in military commissaries and club stores throughout the U.S., Canada and Mexico.

“Palermo’s company and brand have been on an aggressive growth curve for the past seven years,” Dresselhuys says. “Our award-winning Primo Thin remains the gold standard for ultra-thin crust frozen pizza and our newest product line, Palermo’s Hand Tossed Style, brings family favorite flavors on a middle thickness crust similar to those served by foodservice competitors.”

Dresselhuys says to maximize sales retailers should have a nice mix of craft brands, like Palermo’s, in their cases. “Retailers should look at their assortment and add new brands that will bring excitement and new product news to their category,” he says.

Winning with retailers

Newman’s Own is also heating up the frozen pizza case. According to SymphonyIRI Group, the company’s unit sales increased 59% for the 52-weeks ended June 12. “Consumers want pizzas that taste outstanding, appeal to everyone at the table and that they feel good about eating,” says David Best, vice president of marketing for Westport, Conn.-based Newman’s Own, Inc. “Because we deliver those benefits, we are selling well. Retailers, like consumers, like our pizza and are seeing the growth. We win by winning with consumers and winning with retailers.”

Newman’s Own varieties include Four Cheese, Pepperoni, Supreme, Margherita, White, Roasted Vegetable, Roasted Garlic & Chicken and Italian Sausage. Because the company uses top-quality ingredients inflation has nibbled at its bottom line, Best says. “Rising input costs are hitting every category, and pizza is no exception,” he says. “We work diligently to manage these costs in a comprehensive, systemic way. We do not pass them through unless it’s absolutely required. And we never compromise quality.”

That mantra also holds true at Dr. Oetker, which is imported from Germany and is the No. 1 brand of frozen pizza in Italy. The line was introduced in the Northeast in 2009 and has since expanded into the Southeast through a partnership with Harris Teeter. “We position ourselves against an Italian restaurant-quality pizza,” says Whalen. “We believe our thin crust and very unique and fresh toppings are different and are what sets us apart from the rest of the market.”

Whalen says that the category continues to evolve. “If you compare the category of five years ago to now you can see the trend is moving towards more premium,” he says. “As a retailer you want to make sure that you have the right mix and the right offerings. You want to maintain value and have that value offering but you don’t see growth in the value segment like you do in the premium segment. You want to look at trends in the marketplace and make sure that your case reflects that.”

Dr. Oetker currently offers six varieties: Mozzarella, a mix of mozzarella and Edam cheeses with a pesto sauce; Spinaci, with spinach and a hearty garlic sauce; Vegetale, with tangy tomatoes, red and green peppers, chili peppers and onions; Quattro Formagi, four cheese with mozzarella, Edam, Emmental and Blue cheese; Speciale, a meat pizza with pepperoni and cooked ham; and Funghi. “Funghi is our mushroom pizza,” Whalen explains. “If you are a mushroom lover you will love this pizza because it is filled with mushrooms. With a lot of frozen pizzas the mushrooms come across as canned or processed. The consumer response that we typically get is ‘Wow! This is great to get such a fresh mushroom on my pizza.'”

Hip to be square

In some circles pizza has a reputation as an unhealthy food, but manufacturers say those believes are unfounded. They cite simple ingredient panel statements of flour, tomato sauce and cheese, with little or no preservatives.

“Because innovation is so important to the category, one of the things that we’ve recently undertaken is health and wellness,” says Greg Evans, senior director of retail marketing, for McCain Foods USA, the Lisle, Ill.-based manufacturer of the Ellio’s brand. “We’ve tried to bring to light the fact that pizza is at its core a fairly simple food. There really is this idea of wholesome goodness. We don’t have any artificial flavors, no artificial preservatives. We want consumers to know that they can flip over our box and be able to pronounce and understand what every ingredient in Ellio’s is-dough, sauce and cheese. It is a really short and really clean ingredient statement.”

Introduced in 1963, Ellio’s is one of the original frozen pizzas on the market. Its flagship 9-slice box contains three pies that break into three square slices. “It is really perfect for an individual wanting to make a quick snack or a family wanting to prepare pizza as the center plate for an entire meal,” Evans says. “Ellio’s really is tailor-fit to meet a lot of different needs.”

That includes a healthy after school snack. “We try to stagger our marketing around key seasonal windows that make sense, and back-to-school is a huge timeframe for frozen pizza and for Ellio’s in particular,” Evans says.

McCain has several programs in place to further build the brand. “We have quite an active in-store marketing program, leveraging a variety of different vehicles of shelf talkers, freezer clings and things of that nature, but what we’ve really started to understand, given our core target of young families, is that digital space is very relevant,” Evans says. “We are getting much more active in social initiatives.”

According to Dr. Oetker’s Whalen, sampling is key to driving sales. Dr. Oetker has a mobile cooking unit called the Trattoria that drives around to new store openings and weekend consumer events, like fairs. “We work with our retail partners to have the Trattoria show up on the day of the opening,” Whalen says. “We set it up out front and make a big showing around the pizza. We give out free slices along with contests and other promotions to generate excitement, plus coupons to generate a purchase.”

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