Don't pay for delivery, just open the freezer

by Allison Sebolt
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With Domino’s now set up to take orders through TiVo and Pizza Hut accepting orders via Facebook, food service operators in the pizza segment keep making it easier for consumers to order delivery. But according to Mintel International, Chicago, there has still been minimal growth in the pizza restaurant category, and makers of frozen pizza increasingly are comparing the value and quality of their products to those in food service.

"Consumers are turning to frozen pizza as they continue to feel the effects of the slower economy and look for value-priced at-home solutions for meals and snacks," said Dan Hammer, senior vice-president of marketing for Schwan’s Consumer Brands North America. "As a result, research shows the weak economy is taking a bite out of consumers’ wallets and has significantly decreased traffic to quick-serve restaurants with the most impacted category being take-out pizza … However, this creates an opportunity for us because pizza is still America’s favorite food."

Tim Cofer, president of Kraft Pizza Co., sees the frozen market similarly and echoed Mr. Hammer’s observations.

"The economy and the ongoing unsettled financial atmosphere this year have pervaded almost every aspect of consumers’ lives," Mr. Cofer said. "As consumers are eating at home more these days, food retailers and frozen foods are benefitting from that change."

Mintel said in addition to current economic conditions, growth at pizza restaurants also has been slowed by changing tastes as 89% of respondents purchased pizza for the year ended August 2007 compared with only 76% of consumers for the year ended July 2008.

Mr. Hammer said current trends driving the market for frozen pizza are convenience, taste, health and wellness, portability, and price sensitivity.

"Consumers are more interested than ever before in the convenience and value of at-home solutions for meals and snacks," Mr. Hammer said. "We believe we need to give consumers the best value in the category while continuing to offer a variety of innovative pizza products that address all of these needs."

And it does seem important for flavor innovation not to be forgotten when emphasizing value.

"While consumers may be dining out less, they still look for bold, unique flavors and premium ingredients to enjoy, so we have the opportunity to bring these same offerings to the home with innovative frozen pizza varieties," Mr. Cofer said. "Our super-premium California Pizza Kitchen and premium DiGiorno pizzas help satisfy consumers’ interest in restaurant-quality options with a variety of premium ingredients and different crusts to satisfy everyone."

Not only is California Pizza Kitchen doing well in retail, but it and other chains catering to higher-income households also have been comparatively stronger in food service, Mintel said in its September report on pizza restaurants. Sales at California Pizza Kitchen increased 30% from 2005 to 2007, and Mintel noted its innovative and cross-cultural options set it apart. These options include Cajun pizza and Vegetarian with Japanese Eggplant pizza. In addition, California Pizza Kitchen has only about 209 units compared with Pizza Hut’s over 7,500, which suggest there is more room for growth.

In August, Kraft Foods Inc., Northfield, Ill., launched a new advertising campaign called "DiGiornonomics" with the goal being to demonstrate the value of frozen pizza compared with carry-out or delivery, asserting DiGiorno is about half the price. The company also added an on-line component to the campaign comparing the price of DiGiorno to carry-out or delivery.

"We aim to drive consumers into our retailers’ stores instead of to their nearby pizza chain," Mr. Cofer said.

Mintel quoted John Boswell, senior vice-president and general manager of the pizza category at Kraft, as saying, "Today we’re going after an even bigger slice of the pizza pie. We’re setting our sights on the $20 billion local pizzeria business. By expanding our frame of reference, we’re now playing in the entire $35 billion pizza market. We have taken the DiGiorno brand into the super-premium category with our new DiGiorno Ultimate pizza."

Innovations and flavors

Mr. Cofer said Kraft also is seeing consumer interest in single-serve products with a growing number of smaller, one and two person households. To this end, Kraft has the DiGiorno For One and California Pizza Kitchen For One pizzas.

Schwan’s, Marshall, Minn., also has a variety of smaller portion options with Red Baron Thin and Crispy Singles pizzas, which are all less than 300 calories per pizza, and Tony’s Pizza for One.

Mr. Cofer said Kraft sees strong interest in thin crust pizza through varieties such as California Pizza Kitchen Crispy Thin Crust and Signature Pepperoni offerings.

For Schwan’s, one of the newest innovations in the category has been Freschetta PizzAmore pizza. Mr. Hammer said the goal of the pizza is to give consumers the taste and convenience of take-out quality pizza without the hassle or expense. The pizza has performed so well to date the company plans to introduce Freschetta PizzAmore Fire Baked Thin Crust pizza. Other new products the company will be bringing to market in the near future include Wolfgang Puck

11-inch Thin Crust pizza; Red Baron Buffalo Chicken Classic Crust pizza; and Red Baron pizzas with flavored crusts, which include Butter Crust 4 Cheese pizza and Parmesan Crust Supreme pizza.

In terms of flavors and toppings for pizza, pepperoni still dominates.

"Pepperoni remains the No. 1 pizza topping, but today’s consumers are always interested in new flavors, textures, or even packaging enhancements that make the eating experience more fun and interesting," Mr. Hammer said. "Therefore, we believe we need to continue to offer a variety of crust and topping combinations to maintain the ‘excitement’ in the category while also delivering new applications of traditional favorites."

As an example of interesting toppings, the Freschetta PizzAmore products offer various toppings to choose from, including Pepperoni duo (spicy and mild), six-cheese (mozzarella, smoked provolone, white cheddar, fontinella, Parmesan and Romano), 10-topping supreme (mozzarella; Parmesan; pepperoni; spicy sausage; green, red and yellow peppers; red onions; garlic; and oregano) and meat medley (tangy pepperoni, spicy sausage, mild ham and bacon).

Overall, some of Schwan’s most successful pizzas include Red Baron Singles French Bread Panini’s, Red Baron Stone Hearth Pizza and Tony’s Pizza for One.

The natural and organic market for frozen pizzas also is expanding. Newman’s Own, East Westport, Conn., recently introduced all-natural frozen pizzas with thin crust. The crust is even made with flaxseed.

"For 25 years, our consumers have loved our all-natural products that help make delicious meals," said Mike Havard, vice-president of marketing at Newman’s Own. "So, we figured, why not make it easier and provide the whole meal. Our new pizzas deliver what consumers want — delicious, convenient meal solutions the whole family will love."

Amy’s Kitchen, Santa Rosa, Calif., also has frozen pizza products made with organic ingredients in flavors such as rice crust cheese pizza, and cheese and pesto pizza with whole wheat crust.

Kashi, La Jolla, Calif., offers all-natural original pizza crusts and varieties of frozen pizza in five cheese tomato,

Mediterranean and roasted garlic chicken.

While companies are trying to offer healthier options, Mintel said the idea of health-food pizza does not resonate with consumers, as 84% of respondents said they don’t care if the pizza they eat is healthy or not, although females are more likely than males to like the idea of low-fat pizzas.

"Part of the historical allure of pizza is indulgence — an image the industry must guard," Mintel said. "While the current product introduction trend is not in vain, as it reflects general consumer and governmental health concerns, it should be tempered with an understanding of why most consumers probably eat pizza in the first place — taste and indulgence."

Market numbers

According to Mintel, there were 212 new frozen pizza products introduced in 2007, up from 168 in 2006. In 2008 through Nov. 14 there have been 168 new pizza products introduced.

The total frozen pizza market for the year ended Nov. 2 in channels excluding Wal-Mart Stores, Inc. was $2,965,936,000, up 3% from the previous year with top brands being DiGiorno, Red Baron, private label, Tombstone and California Pizza Kitchen, according to Information Resources, Inc., Chicago.

"Overall, the category is healthy and we expect it to grow," Mr. Hammer said. "The frozen pizza category actually benefits from the economic downturn as consumers look for more value-priced, at-home solutions for meals and snacks. We will continue to drive category growth through strong innovation and delivering the best consumer value in the category."

This article can also be found in the digital edition of Food Business News, November 25, 2008, starting on Page 1. Click here to search that archive.

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