Moving pizza to the perimeter

by Allison Gibeson
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With many consumers exploring fresher and less processed foods, a number of shoppers are spending less time shopping the interior aisles of the grocery store. What does this mean for the pizza market? For companies producing refrigerated pizza, such as Mama Rosa’s, which is owned by Plaza Belmont, it presents an opportunity.

Approximately 32% of the refrigerated pizza market is held by store brands, and consumers increasingly are turning to supermarket’s prepared foods departments for convenient and inexpensive meals. A Mintel International survey found that customizable pizza from the grocery deli counter was the top-rated new pizza concept.

“(Refrigerated pizza) seems to indicate to the consumer fresh, fast and easy,” said Bill Mackin, president of Mama Rosa’s, Sidney, Ohio. “Refrigerated pizza has been known as the first of the home meal replacement items.”

In Mintel International’s “Pizza at Retail” report, the research firm said refrigerated pizza and pizza kits make up about 41% of the “other pizza products” segment sales. While still a small part of the retail pizza category, the market for refrigerated pizza is growing. From November 2008 to November 2009, sales of refrigerated pizza and pizza kits increased 16%, according to Chicago-based Mintel.

Part of the segment’s growth may be attributed to price. Mintel said refrigerated pizza costs less than frozen pizza, with the average retail price for refrigerated pizza and pizza kits being $2.76 a lb compared with $3.23 a lb for frozen pizza.

Mama Rosa’s product line includes a large family-style two-pack pizza designed to feed a family of four, as well as a small 7-inch pizza designed with teenagers in mind. In addition, there are four-pack mini pizzas. Forty per cent of Mama Rosa’s revenue comes from the 12-inch large pizza, 40% comes from the four-pack minis with the rest of sales coming from the 7-inch single pizzas. Refrigerated pizza also is consumed more quickly than frozen pizza with the first pizza in a two-pack generally being consumed within 24 hours and the second being consumed within three days. The company targets its pizzas to families of four or five who make less than $40,000 a year and are value orientated and shop at least once a week.

In order to overcome shelf life issues, the company works with its cheese, pepperoni and sauce manufacturers on proprietary blends. They use a substitute cheese that is 10% mozzarella and 90% casein, giving the product a shelf life of 21 to 28 days.

Mr. Mackin said one technology the company is investigating is modified atmosphere packaging for possible use with pizzas sold in convenience stores. While the technology has been used in other segments of the food industry for many years, he said it hasn’t been used often for pizza because most of the retail pizza sold is frozen.

The company also is venturing into specially shaped pizzas, such as pies in the shape of a football helmet. The helmet-shaped pizza, which is being launched in coming months, is designed to take Mama Rosa’s into the deli as opposed to just the refrigerated meat section.

“The supermarkets are becoming a little more disciplined in their approaches to home meal replacements,” Mr. Mackin said. “They were kind of scattered throughout most of the retail stores, not really in defined spaces or categories. We are starting to see much more structure, and I think that’s why you are seeing our success as you get around to some of these major retailers.”

According to SymphonyIRI Group, Chicago, sales of refrigerated pizza and pizza kits in supermarkets, mass market retailers and drugstores excluding Wal-Mart Stores, Inc. were at $147,366,800 for the year ended Sept. 5, up 14% from the previous year. Mama Rosa’s had sales of $43,932,280 during the same period, down 3% from the previous year. Additionally, the company’s mini pizzas had sales of $555,111 during the year, down 8% from the previous year.

Mintel also said Mama Rosa’s has 21% share of sales in the refrigerated pizza/pizza kit market. In addition, Spartan Foods, which makes Mama Mary’s pizza crusts and dough, has 12% of the market. Mama Mary’s sales climbed from $12.7 million in 2005 to $26.7 million in 2008, but sales fell 4% from November 2008-09. The Pillsbury brand, which is owned by General Mills, Inc., Minneapolis, is considered the second-largest brand in the segment with products such as Pillsbury Pizza Crust, which had sales of $37 million for the year ended Nov. 1, 2009.

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