PIZZA'S PIZZAZZ

SARAH MULHOLLAND

Frozen pizza has become an indispensable household commodity, evident in the category's longstanding steady growth. However, while less expensive entries exhibit an impermeable stability, some retailers are having a problem moving the super premium brands, despite consumer demand for rising crusts and quality ingredients.

According to Information Resources Inc., Chicago, the frozen pizza segment -- including everything from DiGiorno to Totino's -- witnessed a 5.8% increase in unit sales for the 52-week period ended Aug. 12, 2001. Total dollar sales for the food channel were $2.6 billion for the period, a 5.6% increase in sales.

The numbers correspond to industry reports of solid growth, particularly in the cheaper segment of the market, generally distributed through the warehouse.

Scott Incardone, a frozen-food buyer for Unified Western Grocers, the Los Angeles-based distributor, said frozen pizza is an "entirely huge" category for his company. And, basically, it comes down to low prices.

"The manufacturers have been extremely generous in offering discounts on products and programs," he said. "We carry the entire line of Gino's and the entire line of [Mama] Celeste. These are solid value-added items. Low cost and good value."

According to Incardone, there is little brand loyalty when it comes to cheap pizza, and whichever company is showing the best price that week will generally take the sale. Yet, even with this price-conscious consumer, Unified's Springfield label is not a particularly strong entry. Consumers may be a bit skeptical of the plain, white package, and with Gino's at 69 cents a box, private label is a tough sell, he said.

With so many manufacturers, Incardone tries to keep the selection manageable by concentrating on a select few. Incardone doesn't see the higher-end pizzas, which are usually direct-store delivery, although some of the more upscale members will occasionally make special requests. These higher case-cost items are usually small mom-and-pop operations catering to a wealthier clientele, he said.

Oftentimes, the pricier pizzas will claim some nutritional benefits. However, Incardone doesn't predict much of a future for healthy frozen pizzas, consigning the segment to a small, niche position.

"Nothing will give you the taste -- especially in frozen -- that a juicy, meaty pizza will give you," he said.

Scott Anderson, a store manager at a County Market in Worthington, Minn., paints a similar picture for his store. However, the numbers are not as strong as they might be due to a Wal-Mart that opened in the neighborhood six months ago, he said. While pizza still accounts for a large percentage of frozen sales, the mass marketer has had a notable impact. Anderson is currently working on regaining his frozen pizza market share.

"We are using EDLP [everyday low pricing]," he said. "The jury is still out on whether or not this is working."

Regardless of competitive forces, Anderson's No. 1 seller is generally the cheapest. That would be Totino's in his market, or what he calls the "babysitter special." The unit does carry Freschetta and DiGiorno, but they are relatively weak sellers.

In general, consumers don't care much about the brand name, Anderson said. However, there is a certain degree of loyalty to different types of pizzas, such as thick or thin crust. When it comes to toppings, traditional favorites continue to dominate.

"You've got your basic cheese, pepperoni, sausage and combo," said Unified's Incardone." You're just filling a category that grows year after year but doesn't demand much change."

Anderson, serving a largely rural community, agreed.

"Barbecue chicken and white pesto sauce pizzas are not going to go anywhere here," he said.

Freezer doors can be a challenge when it comes to promotional flair, but retailers do find ways to dress it up. Schwan's Consumer Brands North America, Bloomington, Minn., manufacturer of the Red Baron and Tony's frozen pizza lines, recently offered Anderson's store pizza boxes to be hung over the section.

In addition, Anderson cross merchandises when possible, using shelf-extenders for spices and restaurant-style seasonings. According to Incardone, many of Unified's customers will use the tops of coffin freezers to display parmesan cheese and the like.

While many retailers focus on the lower-end, economy-style pizzas, the higher-quality entries -- primarily Freschetta and DiGiorno -- represent considerable profits to some. According to an anonymous source from a Texas chain, this type of pizza is responsible for most of the fresh excitement in the category over the past several years.

"The dough didn't rise on the old pizzas. They were like cardboard," the source said. "These are more like bread, the crust actually rises and the quality is so much better."

While the higher price points may pose a problem, the source maintains that consumers are willing to pay.

"The house will buy the cheap ones for the kids, and the more expensive ones for the adults," he said.

Naturally, demographics play a significant role. Bob Roden, a category manager for upscale Lunds and Byerly's, Edina, Minn., says he does very well with the Freschetta brand, made by Schwan's, and DiGiorno Rising Crust Pizza, from Kraft Foods, Northfield, Ill.

"I'm convinced that these companies, Kraft and Schwan's, count on our retail format to drive sales in the specialty pizzas," he said.

Roden also does well with Wolfgang Puck's frozen pizzas, which the chain has been carrying for almost 10 years. Contrary to the trend in rural Minnesota, Wolfgang Puck's signature toppings -- such as spicy chicken and mushroom herb -- serve as the brand's main draw for the gourmet retailer.

Even given the high-rent retailers' demographic advantages, the specialty market is growing in more conventional outlets. Rick Benner, category manager for frozen foods at Supervalu's retail Cub Foods division, Minneapolis -- often billed as a regional, low-price leader -- would like to see a greater emphasis placed on the higher-end pizzas. While still growing the economy segment at his stores, it comes at a cost.

"We're running it at cost or below, so we're using it as a trip generator," he explained. "You're not looking to grow your dollar volume. But the category fills a need for the consumer, especially the preteens who are not so fussy."

Benner sees the true opportunity for growth and profit in the real premium brands -- Freschetta and DiGiorno -- as consumers show a willingness to pay more for quality.

"This area has a much stronger DSD penetration. Five dollars used to be a barrier on pizza. But now people are buying pizzas at $8.99 or $9.99."

Of course, consumers rarely pay the full price for a frozen pizza due to the frequency of promotion. In general, a premium pie is available at 2 for $8 or 2 for $10, Benner said. The premium segment is growing at Benner's stores, but not at the pace he would like. He attributes this largely to competition from other outlets, particularly take-and-bake operations.

"There is one chain [Papa Murphy] out here growing by leaps and bounds," he said. "They appear to be opening a new unit every two months. Take-out places like this have really stalled the growth in the frozen sector."

Benner works hard at trying to impress upon his suppliers the need for deeper and more frequent promotions. In his mind, the products have reached a plateau, and more demo activity and a scrupulous attention to price points are in order.

"A lot of presentations I get from the two big guys talk about the potential," he said. "But frozen accounts for only 10% of pizza consumed nationwide. These companies need to come up with marketing programs effective enough to move consumption up.

"Kraft owns about 50% of total frozen pizza volume. I'd like to see them do for pizza what they did for macaroni and cheese," he said.

Cub Foods is doing its part in the push for premium by coming out with competitive private-label lines.

"We had an excellent year in private label," Benner told SN. "We refocused our energies toward growing that side of the business."

Not only does the chain offer economy frozen pizzas, but the Cub Foods label also has an offering to run alongside higher rings like Red Baron and Tombstone, and a fresh rise alternative to Freschetta and DiGiorno.