Upper Crust
Upper Crust
The premium tier represents the greatest growth opportunity for store brands. But retailers still need to cover the value basics.
►Do consider unique toppings, including healthful-looking vegetables of an identifiable size.
Few other foods are as widely loved as pizza. Over the past few decades, it has become the “entrée” of choice for kids' birthday bashes, the solution to the “I don't feel like cooking” dinner predicament, and even a tasty grab-and-go lunch (or breakfast!) option. And when it comes to variety, the list of potential toppings and crust styles is seemingly endless.
But despite Americans' love affair with pizza, the segment still managed to lose some ground at retail during the past year. Data from Nielsen, New York, show 5.2 percent and 4.2 percent declines in dollar and unit sales, respectively, for the total frozen pizza category — and even steeper declines — 16.6 and 13.1 — on the refrigerated side (food, drug and mass merchandiser stores, including Walmart, for the 52 weeks ending May 14, 2011). Dollar and unit sales on the store brand side also took a dive (see the table, p. 30).
At retail, both branded and private label frozen (and refrigerated deli) pizzas have endured an onslaught of promotions from the delivery/ carryout sector, notes Giacomo Fallucca, president and CEO of Milwaukee-based Palermo's Pizza. However, different price segments within the frozen pizza category realized different results.
“Premium” frozen pizza saw strong dollar and unit sales gains on the private label side, for example, while “mainstream” frozen pizza realized slight dollar and unit sales declines. “Value” renditions, however, saw steeper declines.
In its “October 2010-March 2011 Category Insight, Pizza & Pies,” global market research firm Mintel International says it expects premium private label pizzas to enjoy continued strong performance.
“Consumers are happy with upscale private label products,” Mintel says, “and will not feel the need to go back to brand names once the economy stabilizes.”
Variety a necessity
In addition to premium products, many consumers are clamoring for unique toppings. In its 2011 “The Pizza Consumer Trend Report,” Chicago-based Technomic reports that more than a third of respondents (36 percent) polled in 2010 said new or innovative toppings are important factors in creating a good pizza. Although the survey was aimed at away-from-home pizza consumption, it does suggest the existence of an eager audience to savor the unique.
Technomic notes that more women (41 percent) than men (29 percent) indicated an interest in unique toppings — which could open up a gender-specific marketing opportunity. Although the traditional pizza varieties — pepperoni, supreme and cheese — still command the lion's share of dollar sales, Fallucca says less-traditional options that appeal to a maturing adult population have seen the greatest sales increases in recent years.
►Don't ignore regional taste preferences in new product development.
Brad Sterl, president and founder of Pittsfield, N.H.-based Rustic Crust, points to Trader Joe's as one retailer that does justice to the less-traditional.
“I just think they're trying to appeal to more of a LOHAS [lifestyles of health and sustainability] buyer,” he says, “tending to be a little more creative and taking a few more risks on flavors.”
He adds that fresh topping options, particularly healthful-looking vegetables of a “realistic,” identifiable size, hold particular appeal to many of today's consumers.
For its part, Mintel sees growth opportunities in ethnic bread bases such as naan and pita and ethnic toppings such as Thai meat. Although indulgence remains a key purchase factor within the pizza segment, the company points to rising consumer interest in health-minded tweaks such as smaller portions, natural ingredient claims and gluten- and lactose-free varieties.
But regional preferences matter, too: What flies off the shelf in one region of the country might not be of interest in another, warns Peter Smith, marketing manager for Champion Foods a New Boston, Mich.-based supplier of store brand take-and-bake deli pizzas and more.
“We are always more than happy to work with a retailer on a new idea or product that may expand on those traditional flavors,” he adds.
But retailers will want to invest in more than just topping and crust variety — the premium side might be growing, but the value tier also has room to expand.
“Retailers need to carry both,” stresses Aaron Gold, vice president of sales for Frozen Specialties Inc., a Holland, Ohio-based supplier of frozen pizza and pizza snacks.
On the value side, quality still counts — and the flavors need not be boring. Gold says FSI's new 6.5-ounce value pizzas are a bit “edgier” and “bolder,” with ingredients such as chorizo and Buffalo chicken that can give a retailer a point of difference.
Gold believes retailers really should offer a 6.5-ounce or 10-ounce private label value pizza as an alternative to the Tony's or Totino's brand — and perhaps stock some regional value brands as well. They also should have premium private brand offerings that hold their own against the DiGiorno and other national or regional upscale pizza brands.
In reality, retailers must be “very flexible and very innovative” when it comes to new store brand pizzas, stresses Fabio Cavicchioli, president and CEO of Italy-based Eat Better Srl.
“A solid frozen pizza program can capture an assortment of consumer groups,” he says, “whether it's the highly price-sensitive shopper looking for basic pizza or the higher-end premium consumer wanting upscale ingredients, [including] organic ingredients.”
Look What's New
Gourmet Minute Restaurant-Style Crust Pizzafrom Stellarton, Nova Scotia-based Sobeys is said to marry generous toppings with a savory hand-stretched sourdough crust. The refrigerated multiple-serving premium pizza retails in a recyclable package consisting of a paperboard backing and clear plastic wrap. It is available in two varieties: All Dressed and Cheese and Pepperoni.
New from El Segundo, Calif.-based Fresh & Easy Neighborhood Market is Fresh & Easy Gourmet Margherita Pizza. Inspired by the art of Italian cooking and made with the finest ingredients, the chef-created frozen pizza boasts European mozzarella, garlic, basil and sweet cherry tomatoes. Its foundation is a secret-recipe artisan crust that is hand-finished and said to be baked to crisp perfection. This product contains no artificial colors, flavors or preservatives and retails in an 11.64-oz. box.
Marketside Colossal Combo Pepperoni & Ultimate Meat Pizza from Bentonville, Ark.-based Walmart is half pepperoni, half “ultimate meat” (pepperoni plus sliced beef, sausage and bacon bits) — piled on a rectangular traditional-style crust. The crowd-sized (3.5-lb.) refrigerated pizza contains 100 percent natural cheese and retails in a box boasting 100 percent recycled materials.
Whole Foods Market, Austin, Texas, puts a unique spin on the category with its refrigerated Stone Hearth Pizza Co. Hand Crafted Roasted Peppers Pizza. All-natural with a thin crust, the pizza boasts locally grown ingredients such as ramps, yellow beets and celery root, and is free of preservatives, colorants, artificial flavor enhancers and dough conditioners. The pizza retails in a 16-oz. see-through pack. Also available are Pepperoni and Cheese varieties.
New from Pittsburgh-based Giant Eagle is Giant Eagle Chicago Style Deep Dish Pepperoni Pizza. The frozen self-rising pizzeria-style pizza is said to have a buttery, flaky crust topped with melted mozzarella and “perfectly seasoned” pepperoni. On top is a chunky sauce made with fresh tomatoes and herbs. The product is retailed in a 25-oz. box.
Packaged to please
In addition to new products, new packaging has been stirring up excitement in the pizza segment. Minneapolis-based Supervalu, for example, added an easy-peel feature to the plastic inner wrap for its Culinary Circle pizzas, eliminating the need for consumers to use scissors or a knife to get at the pizza.
On the national brand side, the Schwan Food Co. really shook up the pizza packaging game when it put its new Freschetta Simply Inspired products in the easy-open Fresch - Taste Seal package — instead of in a box containing a separate inner shrink wrap. According to the Marshall, Minn.-based company, the package uses 30 percent less material than traditional boxed pizzas, and a front clear window allows shoppers to view the toppings.
►Do invest in high-quality photography that creates appetite appeal and communicates the true quality of the pizza.
Following the lead of key national brands, some retailers are beginning to introduce meal-minded multi-product packages into the pizza category, Smith notes.
“We are working on multi-product-type packages for retailers,” he adds. “That could be a combo pizza and breadsticks or pizza and cookie dough or pizza in wings in one box.”
And for its part, FSI just collaborated with one of its suppliers on developing a new susceptor technology that does a “significantly better job” in crisping the crust during microwaving, Gold says. The technology is being offered in the company's new Simply for You single-serve value-minded lineup.
No matter what the technology, retailers will want to ensure that store brands keep up — or get ahead of — their national brand and regional brand competitors.
“Frozen pizza is a highly competitive category, and store brands need to compete in this arena using the same set of tools,” Fallucca says. “Packaging needs to utilize high-quality photography that creates appetite appeal and communicates the true quality of the product.”
Maximize appeal
Once a retailer has invested in variety and great packaging, it's time to flex the old marketing muscle. Cavicchioli says Pleasanton, Calif.-based Safeway really has done well with its O Organics pizza, thanks to efforts that run the gamut from shelf-talkers and catalogs to promotions and special events.
Store brand pizzas also need to be given prominent placement with the freezercase, Fallucca notes, so consumers actually have a chance to see them.
Don't sacrifice quality for a couple of pennies.◀
“Pricing discipline needs to be maintained in order to protect the value proposition of the price gap between private label and other products,” he adds.
Pricing also matters greatly on the refrigerated take-and-bake side, Smith says. “We have found that too high of a price point is sometimes enough to give a consumer pause and [cause them to] wonder if it is easier/cheaper to just go get a pizza from their local pizzeria,” he says. “You have to find the sweet spot that is enough to get a good margin but also give the consumer the perceived value and convenience of not having to make another stop to get a pizza.”
No matter how great the price or how pretty the package, however, a repeat purchase always will be tied to product quality.
“Some retailers sacrifice quality for a couple pennies,” Sterl notes. “Literally for a few cents more, they could get a better product [that consumers] will buy more often.” PGSB
