THE BACKGROUND
From thin and crispy to deep pan, family feast to microwaveable snack, the sheer variety of pizzas on sale means there is one for every mealtime occasion, making it a perfect convenience food.
The pizza's simplicity has seen it transfer easily from the restaurant sector to the freezers and chiller cabinets of supermarkets, and has allowed manufacturers to innovate with formats and ingredients to meet consumer needs, including a push into 'authentic' Italian-style offerings. Yet more innovation is needed if brands are to convince shoppers that pizzas need not be an unhealthy option.
The British have taken pizza to their hearts, spending £728m on them in 2004. They have become one of our favourite convenience foods, although many of the pizza types and flavours now on sale bear little relation to their Italian roots.
With a wide choice of toppings and bases, pizzas have broad appeal to both adults and children. They straddle several sectors, as they can be a meal option or a snack; they are a convenience product, so compete with ready meals, but are also part of the takeaway sector.
Pizzas sold in stores are greatly influenced by the restaurant sector.
The market consists of frozen and chilled pizzas, as well as the tiny pizza base category, and total sales grew by 26% between 1999 and 2004, according to Mintel. Frozen pizzas accounted for £350m (48%) of last year's sales, with chilled at £370m (51%).
The chilled pizza category is dominated by own-label products, which account for about 80% of sales. In contrast, brands make up most of the frozen sector, with own-label taking a share of just 35%.
In recent years there has been a shift in consumer preference from deep-pan to thin bases. This is partly because the latter is perceived as the healthier option, although Paula Wyatt, senior brand manager for Chicago Town Pizza, adds that the faster growth in the thin-crust category can be attributed to innovation in this section of the market.
The pizza sector, as with most groceries, has been hit by extensive price promotion - the 26% sales growth between 1999 and 2004 was slower than the 37% rise in volume. While discounting has been prevalent in the frozen sector for many years, Mintel believes it is now being seen in the chilled sector.
Quality boost
The chilled category overtook frozen in 2001 and has strengthened its lead. But recently there has been much product development to enliven frozen pizza. In particular there have been efforts to improve perceptions of quality and to boost sales of the bigger, 12-inch pizzas.
The two leading players in the frozen sector are Schwan's, with its Chicago Town and Freschetta brands, and Green Isle (part of Northern Foods), which owns Goodfella's.
Goodfella's is the leading brand, encompassing the deep-pan Deeply Delicious range and the thinner Delicia line. In August 2003 it introduced the 12-inch Max Deep Pan range to provide a credible alternative to a home-delivered pizza to the young male market.
Despite the drift toward thin-crust pizza, Goodfella's marketing manager Adrian Mooney says deep-pan offerings are still an important part of the brand's offering. 'Our products cater for all need states and the Deeply Delicious range is particularly popular with families and young men looking for a more filling meal. Deep pan remains a very important sector.'
Yet Mooney admits that the company is trying to appeal to 'discerning foodies' with the launch of the premium Goodfella's La Bottega range in September last year. These are based on recipes from a Michelin-starred chef from Tuscany and use a stone-baked ciabatta base.
Authentic style
Chicago Town is the second-biggest frozen brand, and Deep Dish is its main sub-brand. Other products in its range include the Deep Pan variant, the Stuffed Pizza Slice microwave snack option, the Takeaway line and Pizza Minis.
Like Goodfella's, it is targeting consumers looking for a more authentic style of pizza, and this month launched its Brick Oven range. Wyatt says these thinner Italian-style pizzas are seen as lighter to eat and more in tune with the benefits of the Mediterranean diet.
Schwan's Freschetta is another brand aiming at a premium market, and uses a bake-and-rise system to produce a pizza that is closer to restaurant quality.
German-owned Dr Oetker, meanwhile, launched in the UK in 2002 and has rapidly built a market share of nearly 9% by heavily promoting a limited range of thin-crust products.
Chilled pizzas have a superior positioning in the minds of many consumers because they are seen as fresher and healthier than frozen. Topping choices are consistent with much of the frozen sector - cheese and tomato, pepperoni and ham and pineapple - although chicken is growing in popularity. Chilled consists primarily of pre-packed products, but the delicatessen category is now worth £70m.
Despite the dominance of own-label, brands are making some inroads into the chilled sector, with Stateside the brand leader and Pizza Express and Weight Watchers also featuring.
The Pizza Express range, which uses the same branding as the restaurant chain, is produced by Geest. While successful at launch, however, it has not sustained momentum.
Most of the product development in chilled has been by retailers' premium labels. For example, Sainsbury's has introduced pizza toppings such as Pancetta with Caramelised Pumpkin and Chorizo with CherryBell Pepper under its Taste the Difference label.
Health concerns
Manufacturers will have to step up their efforts if they are to address consumers' concerns about the sector. Although pizzas remain popular, many see them as unhealthy, fattening junk food, according to Mintel.
It is therefore likely that the trend toward thin-crust pizzas will continue.
The quality of the ingredients used is also a stumbling block for many shoppers.
Despite these health concerns, pizza sales are expected to rise, with real-term growth of 25% during the next five years, according to Mintel.
This will make it a £990m market by 2009. There will be an expansion of the snacking sector, bringing with it a trend toward smaller portion sizing, and chilled pizzas are expected to continue gaining ground at the expense of frozen.
MANUFACTURER/BRAND SHARES OF UK FROZEN PIZZA MARKET
2004 2000 00-04
pounds m % pounds m % change
(est) %
1 Schwan's total 85 24.3 76 24.4 11.8
Chicago Town 64 18.3 62 19.9 3.2
Freschetta 21 6.0 14 4.5 50.0
2 Green Isle total 84 24.0 42 13.5 100.0
Goodfella's 76 21.7 42 13.5 81.0
Others 8 2.3 n/a n/a n/a
3 Dr Oetker Ristorante 30 8.6 n/a n/a n/a
4 McCain 18 5.1 17 5.4 5.9
5 Heinz total 5 1.4 21 6.7 -76.2
San Marco* n/a n/a 17 5.4 n/a
Others 5 1.4 4 1.3 25.0
6 Other manufacturers 6 1.8 18 5.8 -66.7
7 Own-label 123 35.1 138 44.2 -10.9
Total 350 100 312 100 12.2
Source: Mintel
*Heinz sold San Marco to Green Isle in 2003
Data may not equal totals due to rounding
UK RETAIL SALES BY PIZZA TYPE
2004 2000 00-04
pounds m % pounds m % chng %
1 Chilled pizza 370 51 291 48 27.1
2 Frozen pizza 350 48 312 51 12.2
3 Pizza bases 8 1 9 1 -11.1
Chilled 3 n/a 4 1 -25.0
Ambient* 5 1 5 1 0.0
Total 728 100 612 100 19.0
Source: Mintel
*Including ambient pizza topping
Data may not equal totals due to rounding
UK RETAIL SALES OF FROZEN PIZZA BY SIZE
Size 2004 2002 2000 00-04
pounds m % pounds m % pounds m % chng %
1 Large (12 inches) 27 8 20 6 22 7 22.7
2 Medium
(8-10 inches) 231 66 227 69 212 68 8.9
3 Small
(up to 5 inches) 87 25 76 23 66 21 31.8
4 Topped breads 4 1 6 2 12 4 -66.7
Total 350 100 329 100 312 100 12.2
Source: Mintel
Data may not equal totals due to rounding
ANALYST COMMENT - KERYN MCKENZIE, ACCOUNT DIRECTOR, TNS SUPERPANEL
Pizza fulfils two of the three main drivers of consumption: enjoyment and convenience (the other being health). The need for convenience drove at-home consumption of pizza to more than 1bn occasions in the past year.
Taking advantage of this trend is the take-out/delivery sector, which is outperforming both chilled and frozen pizza, driven by innovation and store openings.
Growth in the chilled pizza sector has slowed as the market reaches saturation point, and the focus has shifted to encouraging existing consumers to spend more. The category successfully achieved this in the past year through product development and promotions to encourage trading up and multiple purchases in a single shop.
With retailers controlling the majority of the sector via private label, the focus has been to drive sales across the category. This, coupled with good product development and promotional strategy, will drive long-term growth as long as price deflation does not negatively affect the market.
In contrast, frozen pizza sales have remained static, partly because of the poor performance of the overall frozen foods market.
Frozen pizza also struggles to focus on long-term strategic growth above short-term tactical gain. Chicago Town and Dr Oetker, two of the biggest brands in the market, are driving share growth by using promotions to steal share from rivals. But this has not resulted in overall growth for the category.
Pizza is well positioned to take advantage of the trend toward convenience.
But while take-out and chilled pizza are capitalising on this opportunity, frozen pizza still needs to deliver real innovation.
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