News

Cold and cocky

Frozen pizza makers and their take-and-bake grocery store counterparts are using aggressive marketing messages and tactics to chew away a larger share of the $30 billion ready-to-eat pizza market.

April 30, 2005

"Hey Delivery Guy, You're History."

That's the message — and the attitude — touted in a print ad run recently for DiGiorno Rising Crust Pizza.

"With all these varieties, fresh-baked taste, and juicy toppings," the piece continues, "who needs a delivery guy?"

That's a good question given the increased quality of some frozen, rising-crust brands, their easy-to-grab grocery store convenience and their $5 average price point. And how customers are answering it is a concern to some ready-to-eat pizza operators. In 2002, John Schnatter, founder and chairman of Louisville, Ky.-based Papa John's, said he believed high-quality frozen pies were nibbling at some of his 2,900-store chain's market share.

Sales statistics sustain his suspicion: According to Information Resources, Inc., a retail sales research firm in Chicago, an increasing number of customers may be dissing the delivery guy. Frozen pizza sales grew 2.1 percent in 2004 to $2.6 billion in supermarkets, drug stores and mass merchandisers (excluding Wal-Mart, which does not share detailed sales information). Granted, that's less than 10 percent of the $30 billion in pizza sold in the ready-to-eat segment, but it's that market's loss nonetheless.

Some pizza companies are taking the battle right back to the grocery store. Over the past few years, Donatos Pizzeria, Papa Murphy's Take 'N' Bake Pizza and Nick-N-Willy's World Famous Take-N-Bake Pizza have set up kiosks at which they sell take-and-bake pies to shoppers. Scott Adams, president of Nick-N-Willy's franchising arm, said being in the grocery store addresses frozen pizza directly at the point of its greatest value: convenience. Frozen pizzas are great for "when I'm in a pinch, that Wednesday night when I don't know what I will have for dinner. They're also great for when it's late at night and I have that urge to eat a pizza. ... So if they know our pizza is there for sale, they might think, 'If I'm going to get one, I might as well get a better one.'"

Clever tactics

Not only do ads like DiGiorno's demonstrate frozen pizza manufacturers' eagerness to grab a share of the ready-to-eat market, the tactics employed read like many pizza operators' playbook. A story in a recent issue of Refrigerated & Frozen Foods Retailer supplied these suggestions for selling more pizzas

* Promote! Pizza should be in your weekly ad, and using creative point-of-purchase materials can drive awareness and build sales.

* Cross-promote! Help your shoppers see frozen pizza as a part of a complete meal, by combining offers with bagged salads, salad dressings, beverages, desserts and other meal items.

* Sell two-fors, four-fors — even 10-fors.

* Consider specialty items that draw a whole new set of shoppers to the aisle — people who don't normally buy frozen pizza.

Those methods are working, said Jerry Doty, national director of marketing for Figaro's Italian Pizza in Salem, Ore. One grocer in his area even runs weekly "$5 Friday" promos to drive take-and-bake sales.

"I would say high-end frozen pizzas are having an impact for sure," said Doty. "But having just as much impact are the folks in the deli end of the store. Out here on the West Coast, stores like Safeway have take-and-bake pizzas in their delis, and they're really price competitive with DiGiorno. What's better for them, though, is that they don't have the stigma of frozen."

Pizza quality and size is clearly a selling point for both the ready-to-eat and the take-and-bake segments, said Adams and Doty. To make them profitable, frozen pies typically have fewer toppings and less cheese, "and about the largest frozen pizza you see is 12 inches," said Adams, who doubted whether grocery operators are even making money on frozen pizzas. "They're priced so low that you wonder if they're losing money to sell them so they can get you in the door to buy everything else."

Both men said low-end pizzas like those sold for $1 to $3 by Red Baron and Tombstone aren't impacting their sales. Customers for those products likely aren't buyers of their pizzas, but even if they are, they're probably buying cheaper pies for their kids who, well, don't really care what they taste like.

Competition not all bad

At the very least, Doty said, the mega-money spent on advertising frozen pizzas is impressive and reflects strong demand for pizza overall. While some might view so many messages aimed at consumers as potentially confusing, he believes it ultimately can benefit ready-to-eat pizza companies.

"There's a school of thought that says a rising tide floats all ships," he said. "And when you look at what's going on in the deli section of a grocery store, it really can benefit the take-and-bake market." It educates consumers how take and bake works, he said, which ultimately leads them to buy it again, but from better providers.

Adams agreed that the exposure to supermarket take-and-bake pizzas can be good if the store does a good job of it. "All of it helps to put people in the mindset of baking pizza. But it's got to be a good experience or we're all in trouble."

So with brands like Freschetta spewing marketing messages like, "Always Hot. Never Late. No Tipping." and "Take the Pizza Less Traveled," do operators have an opportunity to point out frozen pizza's drawbacks? Doty said it would be easy to do so, but probably not beneficial.

"We don't ever want to remind a customer of the possibility of getting (pizza) somewhere else," he said. "We don't want to give the competition any attention in any space we're paying for."