Category Review: Pizza Products - Rollin' in the Dough

June 6, 2008
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Pizza is an extremely flexible meal option - what other food item can be served hot or cold for dinner, lunch and breakfast? And the category performance numbers are a telling sign of pizza's popularity.   

Pizza fits so well into the fabric of our lives - bachelors survive on it; kids celebrate their birthdays with it; first dates are centered on it; and tired parents often indulge in it … once the kids are asleep. 

Pizza is an extremely flexible meal option - what other food item can be served hot or cold for dinner, lunch and breakfast? Therefore, it’s not surprising that certain segments of the overall pizza category continue to experience substantial sales growth. It’s the recent activity on the store brand side of things, however, that’s causing some new excitement.  

According to Chicago-based Information Resources Inc. (IRI), frozen and refrigerated pizza crust/dough and pizza sauce experienced double-digit increases in dollar sales throughout the 52 weeks ending Feb. 24, 2008. Even more impressive is private label’s overall performance in these segments - store brands experienced double-digit increases in both dollar and unit sales. In fact, private label dollar sales increased by a whopping 43.7 percent in the refrigerated pizza crust/dough segment, while the total subcategory saw a 22.1 percent rise. And in unit sales, private label increased 29.2 percent, while the total category realized a 17.1 percent increase.

The strong sales performance is extremely telling of what’s happening in the overall pizza category. IRI data show that ready-made pizzas (frozen and refrigerated) are doing well, but the real growth is in the “make-it-yourself” segments (e.g., dough, sauce and other pizza-making products). Consumers have less disposable income these days, and making pizza at home enables them to create and enjoy their favorite pies without having to sacrifice a significant portion of their grocery budget. It’s no wonder private label is experiencing substantial growth in this area of the pizza category.

Growth in the overall pizza category, however, is being attributed to an evolution of sorts in pizza products. The quality of items is improving, making them more attractive to an even wider variety of consumers. What’s more, old standbys in the category have been altered to appeal to a changing pizza consumer, while product innovation has encouraged new private label pizza purchases.

My Pie

Much of the pizza category’s success can be attributed to its ability to be flexible. Pizza is extremely customizable, and as consumer preferences evolve, it has the ability to keep up.

One of the most revolutionary trends to hit the grocery store in recent years is the movement toward healthful products. Health concerns are top-of-mind for consumers right now. As a result, consumers are demanding foods that are good for them and their families. And as these consumers seek more healthful food choices, the pizza category is transitioning to answer these new demands.

The focus on products in the pizza category has gone from the familiar (and beloved) greasy cheese and pepperoni-type offering to more healthful versions with whole-wheat crusts, organic veggies and/or low-fat cheese.

“The trend toward more healthful eating has been a significant catalyst in the growth of the pizza [category],” explains Giacomo Fallucca, president and CEO of Palermo’s Pizza, Milwaukee. “More and more pizzas feature cleaner ingredient decks with fewer artificial components, and many include all-natural and/or organic ingredients.”

Organic items also are extremely popular in the grocery store these days. And in the pizza aisle, the trend is really making its mark with consumers.

“The biggest gainer in healthy eating has been in organic pizza,” notes Vincent V. Fantegrossi, president and CEO of Richelieu Foods Inc., Randolph, Mass. “We started offering organic pizzas about three years ago, and since that time, we’ve had very good growth in terms of sales and the number of organic varieties we are able to offer.”

One reason organic pizzas have become so popular is that consumers perceive anything with the word “organic” attached to it as being more healthful, explains Doug Cooprider, vice president of sales and marketing for Burke Corp., Nevada, Iowa.

But for today’s health-conscious consumer, it’s not just what’s on top of the pizza that counts. The actual crust is responsible for, well, bringing in the dough when it comes to health appeal in the pizza category.

“The biggest change [in the overall category] has been the wide variety of new crusts on which pizzas are being offered,” observes Fantegrossi. “The trend is toward thicker crusts, thin crusts, extra thin crusts, whole-wheat crusts, etc.” 

As consumers cook up organic pizzas complete with fancy new crusts and premium ingredients sprinkled on top, what’s to come of the old-faithful greasy cheese and pepperoni pizza? Is there room on the shelf for both new and old (read healthful and not)?

As Fallucca explains, because of the extreme push in the category toward more healthful products, it’s not looking so good for grease and pepperoni, especially if they’re part of the value-tier offering.
“The frozen pizza category will continue to see an increasing percentage of its sales coming from higher-quality premium products, while the value-priced offerings will contribute less and less to total sales and overall profitability,” he says. “Healthier products, including ultra-thin crust products with cleaner ingredients statements and organic offerings, also will continue to grow in popularity as the U.S. population matures and is no longer satisfied with the frozen pizza offerings of the past.”

The Pie in the Sky

Segments within the overall pizza category have demonstrated substantial growth throughout the past year, and show no signs of slowing down. In fact, a number of segments in the aisle still are ripe with potential, especially for private label.

With regard to product innovation, Fallucca makes note that the pizza category lacks a “truly great microwavable product offering.” He also suggests that too much of the category is focused on the traditional flavor varieties that “have been around since the birth of frozen pizza.”

He predicts that richer flavor profiles using distinctive toppings (beyond the traditional five or six choices) will continue to grow in popularity, and also will help to retain aging consumers.

The trend toward more healthful products in the pizza category also presents retailers and manufacturers with opportunities to experiment with the pizza size in addition to flavor profiles.

“We’re seeing more pizzas for one,” says Ron Frump, president and CEO of Frozen Specialties Inc., Holland, Ohio. “These kinds of single-serve type products are very popular for their perceived health benefits, and their popularity is expected to grow.”

The Pizza Loyalist

Pizza is a very personal indulgence - everyone has his or her favorite kind of pie, and consumer loyalties typically run deep. Therefore, as the pizza category continues to evolve in various directions, retailers will have to work hard at convincing customers to explore what’s new. And although category data from IRI reveal that private label pizzas and pizza products are familiar territory for consumers, retailers must make a special effort to highlight their evolving store brand offerings.

“In order to keep pace with the national brands, as well as improve customer acceptance and loyalty, store brands would be well-served to bring their offerings up to a premium product,” Fallucca suggests. “Sample [private label] aggressively in order to get consumers to try it, and place the products appropriately in a case that’s segmented by product quality levels.”

Frump agrees, adding: “Quality and innovation are areas of opportunity for private label pizza products. It’s important for retailers to get out there with their store brand pizza programs and offer customers more variety and value. If this happens, private label pizza products are looking at a pretty good future.”  PLB

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