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MAINSTREAM, VALUE SEGMENTS DELIVER GAINS

After several years of growth, premium and better-for- you brands are ceding market share to more affordable options. Does your assortment reflect the shift in demand?

During the 12 weeks ended Oct. 8, dollar sales of frozen pizza edged up 0.7% to nearly $1.51 billion across channels while units dropped 2.7% and volume 3.9%, according to Chicago-based market research firm Circana. Although the category outperformed the frozen department as a whole, sales are beginning to shift from premium and better-for-you offerings toward mainstream and economy options with lower price points.

CONSUMERS TIGHTEN THEIR BELTS

While the premium and better-for-you subcategories saw dollar sales post a 4% increase and a 1% decline, respectively, during the 52 weeks ended June 18, the mainstream and economy segments registered 19% and 15% gains year-over-year — and accounted for 71% of category growth — according to the “How to Win in Frozen” playbook developed by Alix Partners for the American Frozen Food Institute (AFFI). Among top sellers, premium brand DiGiorno suffered the biggest loss of dollar share (2.6 percentage points) during the period, while mainstream brand Red Baron gained the most (2.4 points). Mean- while, economy segment leader private label saw its share grow almost one percentage point. Does your assortment reflect recent shifts in consumer buying habits?

 

Industry observers say most retailers continue to dedicate cate too much space to better-for-you brands, which lost ground in the past year. However, a handful of diet-compliant, alternate crust pizzas have carved out a niche for themselves, according to “How to Win at Frozen,” which cites Milton’s cauliflower crust pizza and Banza chickpea-based pizza as prime examples. Regional specialty pizzas (think Detroit-style or tavern-style) and breakfast pizzas are also trending up — and experts say to keep an eye on pickle-topped pizza SKUs. But plenty of other specialty offerings have failed to catch on. So make sure you offer the right niche brands, not all of the niche brands.
While some retailers have gone over- board on better-for-you items, manufacturers say many aren’t offering enough single-serve options. Among frozen pizza buyers, 17% only purchase pizza-for-one, so it’s important to give the segment proper space and offer sufficient variety

To help determine the proper mix, keep in mind that toppings are the most important purchase decision-driver, followed by crust type, portion size, quality tier, brand and, finally, dietary requirements. So retailers should prioritize those attributes when considering new innovation, says AFFI.

CROSS-MERCHANDISING DRIVES GROWTH

Heavy frozen pizza buyers are usually white, age 25 to 54, have a high school education, and live in larger rural households; they also over-index in shelf-stable skillet meals, frozen pizza bites/rolls, frozen sweet goods-break- fast, frozen corndogs and Mexican appetizers, ac- cording to AFFI’s playbook. Since retaining those shoppers is essential to the category’s continued success, cross-merchandising frozen pizza with those subcategories is always a good idea. But in order to actually grow frozen pizza sales, retailers should consider cross-merchandising with products popular among medium buyers as well: frozen pizza rolls/bites (again), shelf-stable pasta dishes, other frozen appetizers, multi-serve meals and prepared break- fast entrees.

Make sure you offer the right niche brands, not all of the niche brands.

Meals deals that bundle frozen pizza with bagged salad, soda and a dessert or game day party packs that combine it with pizza rolls and beer are another proven winner — and a cost-effective alternative to takeout or delivery (because that’s your biggest competition, not other retailers). In fact, why not call out the savings offered by your meal deal over takeout from Domino’s or Pizza Hut in a simple sign? If you can, merchandise the products together in a single endcap or display to make it more convenient than takeout, too.

Industry observers are also bullish on demos and sampling. One manufacturer reports a huge increase in frozen sales when its pizza truck visits and offers free samples in store parking lots. But in-store demos are just as effective. Because let’s face it: In this economy, no one’s gonna shell out $8 or $9 for cauliflower crust pizza unless they know for sure that it tastes good.

FR Buyer

FR Buyer

Industry news straight from the Frozen & Refrigerated Buyer publication.

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