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Sales in the category grew by about 25 percent from 2004 to 09, according to a January 2010 report from Mintel International, Chicago.
Frozen pizza sales rose 26 percent-and by 8 percent from 2008 to 2009 alone-while refrigerated ready-made pizza and pizza kits, which account for 8 percent of the category, grew 24 percent.
“Refrigerated pizza sales have thrived amid the recession as consumers seek out convenient, inexpensive and fresh meal solutions,” Mintel’s report notes. “Private label pizzas represent a significant portion of refrigerated pizza sales.”
Indeed, market leaders in the category, which include General Mills and Nestle, saw brand share fall more than 2 percentage points from November 2008 to 2009, while private label saw 26 percent growth-an $81 million gain-as store brands performed well across the frozen, refrigerated and pizza products sub-categories.
“While the recession has clearly helped drive private growth, product innovation is also a factor,” Mintel reports.
More than 1,100 new frozen pizza products came onto the market from 2005 through 2009, with the average price rising 14 percent; 274 of those new products, nearly a quarter, were private label.
In addition to better-for-you offerings that provide organic, natural, reduced-fat or portion control, consumers opted for convenience such as microwaveable or on-the-go options.
More recent data from Symphony IRI Group, for the 52 weeks ending April 17 at supermarkets, drugstores and mass merchandise outlets (excluding Walmart), show that private label comprised about half the sales for refrigerated pizza and pizza kits, about $78 million, and has seen dollar sales rise 28.6 percent in the past year compared with 9.32 percent for the sub-category as a whole. Unit sales rose 44.8 percent for private label, compared with 16.4 percent in total.
Other subcategories showed less dramatic differences, if any.
Private label pizza has struck out in new directions in the past few years, looking to “compete with the national brands in terms of flavor profile and crusts,” says Giacomo Fallucca, president and CEO of Palermo’s Pizza, Milwaukee.
“With the economy still sluggish in its recovery, people are looking for ways to maximize their dollars without completely sacrificing their eating experience,” he says. “You’re seeing a lot of expansion on different crust profiles, a lot more artisan-type of products, stone-baked or fire-baked products, that deliver more of the type of pizza crust that you would experience out of a wood [fired] oven.”
While pepperoni and supreme cheese are still driving the bulk of sales, new and different toppings hold great appeal, Fallucca notes.
Private label pizza that tries a me-too approach will be drowned out by national brands’ marketing power, Fallucca says.
Private label pizza brands succeed “by truly being a different product and standing for something that is ‘differentiable’ and ‘ownable,’ he says.
Take-and-bake pizza has been a trend on the radar screen of Jason Farrell, executive vice president of product sales and development, Land Mark Products, Milford, Iowa. “Everybody thinks they need a piece of that,” he says. “It’s a packaged product but typically made on site. In most of the grocery stores, you would see that in the deli department.”
For private label pizza to succeed, creative flavors and more eye-catching packaging should be combined with traditional convenience and value, says Ricardo Alvarez, president and CEO of Frozen Specialties, Inc., Holland, Ohio.
“We’ve seen the new combination pizzas, with chicken wings and other stuff,” he says. Packaging with three cardboard sides and a plastic film window on top showcases the pizza itself as the hero, Alvarez says.
Mintel surveys show pizza restaurants have taken a significant hit during the past few years, with 29 percent of survey respondents saying they’re buying more take-out pizza instead of eating out at restaurants from 2008 to 2009, 23 percent saying they’re buying more frozen or refrigerated pizza at the grocery store, about one-quarter saying their purchase decisions are driven more by price, and 6 percent saying they’ve switched from name brands to store brands.
To boost the shelf appeal that can contribute to those kinds of switches, Fallucca recommends that private label brands position themselves with complementary products, such as bagged salads or store-brand soda, to create a meal solution for the customer. It’s also important to make sure “that the packaging offers the type of appetite appeal and is of a quality that communicates to the consumer the type of experience they’re going to have,” he says.
And then there’s the value equation: Walmart retails a 16-inch take-and-bake pizza for $7.99, competitive even with lower-priced chains that offer $10 delivery, Farrell says.
Pizza delivery still slightly outpaces frozen pizza in terms of customer popularity, however, with 59 percent of respondents saying they have had pizza delivered in the previous three months, while 56 percent have eaten frozen pizza, Mintel says.
Fallucca says that national delivery and carry-out chains have been aggressively promoting to gain back some of the market share they lost during the depths of the recession. He cites a $5 individual-sized pizza at Pizza Hut as one example.
To compete with such offerings, Frozen Specialties introduced in June a single-serve product called Simply for You that will retail for between $2.50 and $2.99, Alvarez says. Later this summer, the company will introduce a chorizo sausage pizza aimed at Hispanics and Hispanic-taste fans.
Among the other challenges faced by private label, are higher commodity prices, particularly for wheat and cheese, which are at all-time highs, Farrell says. “They’re not coming down,” Alvarez agrees. “The forecasts don’t look very good, either.”
New crusts and flavor profiles aside, private label still needs to make sure it prices far enough below brand names to create differentiation, Fallucca says. “The store brand, at the end of the day, is a value play,” he says. “If the price-value gap gets too close, you could see a negative impact on volume, and, ultimately, margin.”
Alvarez agrees that a price gap of between 20 percent and 25 percent with the brands is critical to retailers’ success in private label. “When they do that on the value pizza side, we get some significant volume,” he says.