Schwan's Consumer Brands focusing on revitalizing frozen foods
July 31, 2013
by Keith Nunes
KANSAS CITY — Bob Waldron, president of the Schwan Food Co.’s Consumer Brands business, is intent on bringing consumers back to the frozen food aisle. With a portfolio of leading frozen pizza, pies and Asian appetizer products sold under brands such as Freschetta, Red Baron, Tony’s, Edwards and Pagoda Express, Mr. Waldron seeks to reinvigorate a category that has struggled during the past few years.
“Getting the products right is one way to bring more people back to the frozen food aisle,” he said in an interview with Food Business News. “There have been a lot of new products in the category, but they tend to have been replacement innovations; they have not gained traction with consumers.
“There is a lot of flavor variety, a lot of crust variety, but it’s replacement innovation and has created a lot of churn on the shelf. It did not drive the category at the shelf and as a result some of our core products lost distribution.
“That’s why we are working on getting the right products to the shelf and getting our core products back to the shelf. You can look at the products on the shelf in 2010 – they were what families wanted; they were not esoteric flavors.”
Mr. Waldron took the helm of Schwan’s Consumer Brands business unit in late 2012. Prior to joining the company he had been chief marketing officer for the Sun Products Corp., a laundry detergent manufacturer based in Wilton, Conn. Before joining Sun Products, Mr. Waldron spent 19 years with General Mills, Inc., Minneapolis, where he had many roles of increasing responsibility, including as president of General Mills’ Yoplait business.
With Schwan’s Consumer Brands, Mr. Waldron said he sees an amazing amount of potential for growth.
“During the commodity run-up the company pulled back on the marketing levers,” he said. “When I came here we went out and talked to consumers about our brands. They said they love them, but they also wondered where they have been. We saw an opportunity to get back to the fundamentals.”
The “fundamentals” include a focus on three priorities for the Consumer Brands business – building a strong team, revitalizing the businesses portfolio of brands, and strengthening the division’s ability to be a great retail partner, said Mr. Waldron.
“We intend for our initiatives to be seen on the shelf pretty quickly in frozen pizza, across pies and in the Asian business,” he said. “With Red Baron and Freschetta we have been working on packaging, upgrading our shelf impacts, and we have returned to advertising.”
With Freschetta, the company returned to the brand’s traditional green packaging in January.
“It’s working very well,” Mr. Waldron said. “Freschetta velocities are our fastest growing category.
“It may not be that exciting, but it’s working. We are focusing on the fundamentals by giving ourselves a better presentation on the shelf and we will continue the momentum through advertising and promotion. We want to remind consumers why they love frozen pizza.”
New products also are playing a role. This past March, Freschetta rolled out three new varieties of “pizzeria-style” frozen pizzas, including a brick oven chicken club pizza, a naturally rising Marghertia pizza and a naturally rising sausage and pepperoni pizza.
Making the deal to feel transition
Two challenges facing Mr. Waldron and his team are the intense focus of consumers for value products, and the changing retail landscape where many consumers are choosing to shop at a variety of retail outlets.
“There has been an increase value orientation in the market,” he said. “Look at the products that are serving a great consumer proposition – they are getting a good price. Look at Greek yogurt. A lot of growth and people are willing to pay for it.
“We’ve got to get back to offering a great product that when you buy it you feel like you got a great product. If people are delighted with the product they get, there is no reason they will not pay a full price.”
Mr. Waldron added that the size of the frozen pizza category was one reason he was intrigued about the opportunity lead Schwan’s Consumer Brands business.
“I think the numbers show it is the fourth largest frozen food category, and it is probably in the top one-fifth of all items shopped in the grocery store,” he said. “There is a tremendous opportunity to take the category from being more deal driven and to make it feel driven.
“You have to remember that I was in the yogurt business. Yogurt remains a fast growing category, but frozen pizza is right there with it.”
Noting that “pizza is something no one argues with” and that families make up the core of Schwan’s frozen pizza business, Mr. Waldron said there are two fundamental shifts taking place in the market that are affecting the category.
“The first is moms,” he said. “I think moms who are now baby boomers took advice from their mothers. Today, we have millennial moms, and these moms are taking advice from their friends and their virtual friends. In order to reach these moms there is a lot of work we need to do to get our message on-line.”
The other fundamental market shift Mr. Waldron sees is multiculturalism.
“We think there is solid opportunity in the Hispanic market,” he said. “Currently they comprise 11% of total pizza volume, but Hispanic consumers make fewer trips to the market to purchase frozen products. So the question we have to answer is how do we create more pizza occasions relevant to the Hispanic lifestyle?”
One effort the company initiated this past May around Cinco de Mayo was to re-introduce the Red Baron classic crust Mexican-style pizza, which features ingredients such as salsa, cilantro, chilies and tortilla chips.
Retail market expansion
An additional challenge facing Mr. Waldron and his team is the expansion of the retail category with the growth of mass merchandisers, club stores, dollar stores and convenience stores.
“What is essentially happening, in my opinion, is the consideration set for shopping is growing,” he said. “Consumers are going to more places to fulfill their shopping list. We have data showing consumers that really satisfied 95% of their shopping needs visited four to seven formats. We need to make sure we have strong partnerships across the board.
“We need to help retailers respond to the diversification of the shopper. We need to understand the shopper base of retailers to offer them relevant products. We need to develop new products or make packaging changes to meet that retailer’s needs.
“For example, the club channel tends to be larger quantity in the sale while dollar stores tend to be smaller. We need to understand the trip mission for each retailer and meet the consumer needs when shopping in that store.
“We are in a good position, though. Frozen pizzas and pies are in something like 90% of the grocery channel and the mass channel. That is really big for us and our leadership team is highly tuned into the diversification of the retail segment, effectively targeting these growing channels without losing relationships with grocery and mass.”
Mr. Waldron added that another change facing manufacturers and retailers is that while consumers may be shopping in more formats, they also are shopping less frequently.
“Consumers are not stocking up as they used to,” he said. “Trips are down as people shift from stock-up trips to just-in-time shopping. I don’t know if we have the exact answer. It could be consumers are shopping week to week to stretch their food dollars, but pizza has fewer trips. When consumers go in to stores they are buying the same things. They are just making fewer trips during the year.”
Uncertainty and a focus on efficiency
While commodity inflation may have challenged the frozen food category initially, the uncertainty and volatility of the commodity markets have made a focus on operational efficiencies a priority. Schwan Consumer Brands is no different than other food manufacturers and it is challenging its employees to identify ways to save money.
“We are focused on simplifying our business and eliminating the costs consumers are not willing to pay for,” Mr. Waldron said.
He said the focus on improving costs has opened the company’s eyes to the fact some products may be “over designed.”
“In one of our product lines we had five different types of sausages,” Mr. Waldron said. “No one knows why. We have gone out and conducted tests with consumers, and found one of those sausages is more popular with consumers than the others. Why not use it on all of that line’s particular products? By simplifying manufacturing we are now able to buy that sausage in bulk quantities.
“We also had many different types of sauces on our pizzas. By narrowing it down to one best sauce per brand will lead to less complexity in our supply chain. What we are doing is cross functionally finding these areas that are non-value-added consumer benefits and eliminating them.”
While his division faces many challenges, Mr. Waldron calls the current market environment “exciting times.”
“I know this has been an unsettling time for a lot of companies,” he said. “But this is where great brands can step up. Refocusing back to the fundamentals will revitalize the frozen food category. So I am excited about the future of our company and the category.”