Milling & Baking News - June 10, 2014 - 41

Pizza Update



New players search for
traction in pizza market

ame faces, different places.
Sixteen years ago, DiGiorno, a
Kraft Foods Inc. brand, was the
top selling brand with dollar sales of
nearly $260 million, followed by another Kraft brand, Tombstone, with
sales of approximately $253 million.
Rounding out the top five back in
1998, according to data from Information Resources, Inc., were Red Baron
(Schwan Food Co.), Tony's (Schwan
Food Co.) and Totinos (Pillsbury Co.).
The past decade and a half has
seen ownership of some of the brands
change, but little in the way of movement in the rankings. DiGiorno, now
owned by Nestle USA, Inc., remains
the No. 1 frozen pizza brand, with
dollar sales of $1,981,983,000 in the
52 weeks ended May 18, according
to I.R.I., a Chicago-based market research firm. Tombstone, also now
owned by Nestle, has fallen to No. 4,
as sales only have moved up marginally, to $308,442,200. Red Baron and
Totinos both remain in the top 5, at No.
2 and No. 3, respectively. Only Tony's
has taken a step back, falling to No. 11
on the I.R.I. list. Freschetta, a Schwan
brand introduced late in 2006, now
ranks No. 5 with sales of $185,516,300.
The lack of movement may be fitting for a category whose performance
was virtually flat over the past year.
In the 52 weeks ended May 18, dollar sales in the frozen pizza category
totaled $4,353,651,000, up 0.24% from
the same period a year ago, while unit
sales slipped 0.49% to 1,374,488,000. But
signs suggest that two companies on the
periphery of the category - Annie's,
Inc. and Dr. Oetker - may be poised to
shake the segment out of its slumber.
Annie's 'price/value issue'
Acknowledging
the
company
"didn't quite get (it) right," pizza
nonetheless remains a category that
natural foods company Annie's Inc. is
confident in long term, John Foraker,
chief executive officer of the Berkeley,

bakingbusiness.com / world-grain.com

Calif.-based company, told analysts at
the RBC Capital Markets Consumer
and Retail Conference held March 13
in Boston.
"In the natural channel, it's doing
well and continues to grow, and we're
seeing very strong repeat or we're
building a loyal audience there," Mr.
Foraker said. "The fundamental thing
we got wrong on pizza is, we have a
very high-quality product that consumers like. Once they've tried, their
repeat rates are north of 70%."
The problem, Mr. Foraker said, is an
issue of trial. Annie's pizza products are
packaged in a box that's only slightly
larger than most of its competitors, but
the actual pizzas are twice as big. At a
price point of $8.99 to $9.99, Annie's pizzas are attempting to compete in a category where less than 2% of total sales
are done at a price point over $7.99.
"So we have a little bit of a price/
value issue we have to get consumers
over," he said. "In the natural channels,
it's less of a hurdle to get them over, because they know the brand better, they
try it. In mainstream grocery, our distribution levels are right about where
they were pre-recall. We've been holding that back a little bit now, because
we're working on some changes in
some communication and some other
changes in that product."
He chose not to elaborate on the
changes, saying more details will be
coming shortly.
"We do think that we have a really
clear path forward there, and we're
excited about our ability to compete in
that category," he said. "I've been with
Annie's since 1998, and we've innovated really outside of mac and cheese
since 2002. And sometimes, you don't
quite get it right in the beginning, and
that's true on some of our past categories that are big businesses for us now.
So you have to learn, you have to do
some consumer issues, talk to your
consumers and tweak it, and so that's
what we're doing now. But I'm confident we're going to build a nice pizza
business, I really am."
Annie's rolled out its family-sized,
certified-organic frozen pizza in January 2012, but the company was forced
to recall a number of pizza products the
following year, in January 2013, after
its contract pizza crust manufacturer

identified small metal fragments in the
pizza dough during a manufacturing
run and in some finished pizza crust
made on that same day. The source of
the fragments was traced to
a third-party supplier that
Annie's used to source
whole wheat flour.
New player to U.S. market
Dr. Oetker Canada, a
maker of frozen pizza, dessert and dry baking products for both retail and food
service, has opened a new
frozen pizza production facility in London, Ont. The
plant, which has been in operation since mid-March, will
serve as a production hub for
the company's North American pizza
operations.
"Canada is an excellent market for
Dr. Oetker," said Christian von Twickel, executive vice-president at Dr. Oetker Canada. "Canadians are particularly receptive to our type of innovative and high-quality products, and
we are excited to have opened our first
North American frozen pizza plant in
London, Ont. We are confident in the
local workforce, the Ontario agri-food
sector and the North American market
and we are honored to be part of the
London community."
The London facility houses the company's pizza lines, which include such
brands as Ristorante, a thin-crust gourmet pizza; Casa di Mama, its Italian
homemade style pizza; and Panebello,
its bakery crust pizza. The company
said the facility will produce up to 50
million frozen pizzas every year for
both the Canadian and U.S. markets,
and will source millions of pounds of
raw ingredients from Ontario farmers
and food processors.
Founded in 1960, Dr. Oetker Canada
operates in over than 39 countries. The
company's Canadian operation includes manufacturing and R.&D. plants
located in Mississauga and now in London, Ont., that produce more than 190
products. In addition to pizza, the company makes desserts mixes and baking ingredients (Shirriff and Dr. Oetker
branded). In 2013, sales for Dr. Oetker
were over $3 billion worldwide. MBN
- Eric Schroeder
Milling & Baking News June 10, 2014 / 41

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