Milling & Baking News - June 29, 2010 - 32

Frozen Pizza Update 

Pizza positioning
Acquisitions, value offerings and emerging trends
have pizza makers posturing for shelf space

he past year has been one of
significant change in the pizza
segment. What is potentially the
biggest game-changing move has yet
to fully play out, as Vevey, Switzerlandbased Nestle S.A. is in the initial stages
of integrating Kraft's frozen pizza business, which it acquired in March. In
any event, it would seem Nestle has a
winner on its hands.
In the most recent 52 weeks ended
May 16, Kraft Foods' frozen pizza business was the runaway leader in dollar
sales, ringing up $1,283,062,000 of the
total $3,221,828,000 in the segment,
according to SymphonyIRI Group, a
Chicago-based market research firm.
Equally impressive was the 9% yearover-year gain in dollar sales and 8.5%
gain in unit sales scored by the Northfield, Ill.-based company's frozen pizza business during the period.
By comparison, Nestle USA Inc. experienced an 11% decline in dollar sales,
to $205,901,000, and a 9% drop in unit
sales, to 78,441,170, during the 52 weeks
ended May 16, making it the fourthlargest frozen pizza maker prior to its
acquisition of Kraft Foods' business.
Brad Alford, chairman and chief executive officer of Nestle USA, noted
in a Jan. 7 conference call to discuss
the transaction that Nestle expected
to realize distribution synergies as a
result of the acquisition. He also said
the company expects to incorporate
some "brand stretching opportunities," specifically mentioning DiGiorno, which under Kraft's direction has
soared to a commanding No.
1 brand position in frozen
pizza with $663,393,900 in
dollar sales in the 52 weeks
ended May 16, up 24% from
the same period a year ago.
The brand recently received a
boost from its Pizza & Breadsticks combo product.
"Can you take the DiGiorno
brand into sandwiches?" Mr.
Alford asked. "There is a lot of
opportunity to play our brands
across one another."
Schwan, General Mills push value
Growth in frozen pizza has not been
limited to Nestle/Kraft, though.
Schwan Food Co., Marshall, Minn.,
32 / June 29, 2010 Milling & Baking News

posted a 20% gain in unit sales and
5% increase in dollar sales in the period ended May 16, according to SymphonyIRI. With $736,956,800 in sales,
Schwan's frozen pizza business is firmly entrenched as the No. 2 player, and
much of the company's recent success
may be attributed to the Tony's brand.
With the tagline "More varieties,
more value, more fun!," Tony's pizza
is the seventh largest brand in terms
of dollar sales, but its 25% dollar sales

The recent launch of DiGiorno Pizza &
Breadsticks helped drive a 24% increase in
dollar sales for the brand.

growth and 70% unit sales growth
made it the most successful brand
(among the top 15 tracked by SymphonyIRI) in terms of percentage change
over the past 52 weeks ended May 16.
A key driving factor was the "value"
initiative, as Schwan slashed the average price of its Tony's pizza by 70c,
giving it an average unit price of $1.94
in a market where most similar-sized
pizzas cost more than $3. According to
SymphonyIRI, while no leading brands
raised the average price of their pizza
since May 2009, no one came close to
Tony's price cuts. Of the top 10 brands,
only Kraft's California Pizza Kitchen
and Schwan's Freschetta reduced unit
pricing by more than 10c, with cuts of
22c and 15c, respectively.
Besides Tony's, Schwan's also has
seen strong demand for its Red Baron
(dollar sales up 5%, unit sales up 7%)
and Freschetta (dollar sales up 4%, unit
sales up 7%) brands over the past year.
The third major player in the category, General Mills, Inc., Minneapolis,

also has used value to its advantage in
building up sales. At a price point of
$1.31 per unit, Totino's are one of the
most inexpensive options in the market, a trait that has served it well in
a difficult economic environment. In
the 52 weeks ended May 16 the brand
accounted for more than 75% of General Mills' total frozen pizza sales of
$215,530,500, according to SymphonyIRI. Totino's dollar and unit sales both
rose 8% during the period.
Niche products gather momentum
While the "big boys" are having their
day in the category, some emerging
trends have opened the door for niche
players to make their mark as well.
An increased awareness of food allergies and demand for better tasting
gluten-free food spurred Gluten Free
& Fabulous, L.L.C. to launch a line of
frozen pizzas in 2009. The Westlake
Village, Calif.-based company was
founded in 2005, and recently announced that Ralphs grocery chain
has joined Kroger and Sprouts in carrying the company's frozen pizza.
"The driving factor for the demand
of G.F.&F. products is that the glutenfree industry is one of the fastest growing sectors of the food manufacturing
industry," said Shari Cole, founder
and c.e.o. "Grocers want to capitalize
on the growth trend."
G.F.&F. offers 8-inch, 10-oz pizzas at
a suggested retail price of $7.99. They
are available in five varieties: pepperoni, cheese, vegetable margherita,
pesto margherita, and spinach feta.
The company said pepperoni is the
top seller, followed by cheese.
Tofutti Brands, Inc., Cranford, N.J., is
another company looking to carve out
freezer space. David Mintz, c.e.o. and
chairman of Tofutti, said during the company's June 10 annual meeting that a
re-formulated frozen pizza with a dairyfree, trans fat-free cheese topping is in the
pipeline. The product, Pan Crust Pizza
Pizzaz, is expected to hit store shelves
within the next six months, he said. MBN
- Eric Schroeder
bakingbusiness.com / world-grain.com

http://www.bakingbusiness.com http://www.world-grain.com

Milling & Baking News - June 29, 2010

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