09Dec2010
YO! VINNIE! GIMME AN UPSCALE SLICE!
Innovative new products and upscale “restaurant-style” items continue to drive frozen pizza sales, which remain healthy despite a recent dip in sales (see chart).
Several factors have kept the category strong during the recession. First, cash-starved shoppers are eating at home more often, cutting into pizzeria sales. According to a recent study by Chicago-based Mintel International, incidence of household consumption of frozen pizza rose from 62% in 2006/2007 to 66% in 2008/2009. An improvement in product quality has helped this along.
Further, product innovation has been just shy of amazing. Mintel reports that more than 1,100 new frozen pizza products were introduced between 2005 and 2009, including a strong showing of premium, restaurant- style and better-for-you offerings (e.g., natural, organic, wholegrain and portion-control pizzas) in line with the healthy eating trend.
“Growth in the premium sector — along with rising input costs — is driving up retail prices. The average FDMx (food, drug and mass merchandisers excluding Walmart) retail price of frozen pizza increased 14% from 2005-09, from $2.84 per pound to $3.23 per pound,” Mintel reports.
A glance at data from SymphonyIRI Group, the Chicago-based market research firm, confirms both the price increase and the trend to more restaurant-style products. In the 12 weeks ended Oct. 3, category leader DiGiorno saw its sales rise in dollars, units and volume. But more important, the average price of a DiGirono pizza was $5.31, versus the category average of $2.98. Red Baron, up by 20.2% in the 12-week period, had an average ring of $3.76. The trends here are pretty clear.
PRIVATE LABEL DIPS Private label has picked up considerable share over the past few years, although that segment’s poor sales in the most recent 12 weeks were the primary reason behind the category’s 4.2% drop in sales. Of course, it depends on which private label you’re talking about. Within the segment, results have been all over the place, with most inroads seeming to come from upscale, healthy items as well. No question about it: store brands have also joined the upscale/betterfor- you bandwagon, and with considerable success. “Notably, several of the top innovators in the pizza category — Kroger, Target, Aldi, Safeway, Walmart, Supervalu and Whole Foods — are retailers launching private label products,” according to Mintel. “Nearly a quarter of new pizza products launched from January 2005 to Dec. 10, 2009 (274 out of 1,123 products) were private label, as monitored by Mintel’s GNPD.”
Despite the innovations and the growing popularity of frozen pizza, “delivery” is still the No.1 choice among consumers. “Three in five (59%) of respondents to Mintel’s consumer survey reported eating delivery pizza in the past three months, while 56% have eaten frozen pizza,” the report, from January 2010, says.
“The pizza market has seen a significant shift in purchase behavior amid the economic recession,” Mintel says. “Nearly a third of Mintel survey respondents (29%) report buying more takeout pizza instead of eating out at restaurants compared to a year ago, while 23% report buying more frozen or refrigerated pizza at the grocery store.”
The report adds that consumers aged 18-24 are much more likely than other groups to have traded down to takeout pizza rather than eating out at restaurants. These younger consumers also seem more price-sensitive than their older counterparts, according to Mintel.
