With the economy on the rebound after eight grueling years of economic readjustment consumers are ready to indulge a bit. That is the leading reason that frozen food sales (Pizza) have been lagging the past couple of years according to Foodservice Solutions®, Grocerant Guru™.
In a new report from Mintel, three quarters (74 percent) of Canadian adults ate frozen pizza in the six months preceding 2015 and 81 percent ate restaurant or take-out pizza during the same time period. Pizza while still very popular as a sector has had declining sales overall the past five years.
“Aggressive pricing strategies, increased health concerns, competition from foodservice, where Millennials perceive pizza to be of better quality, as well as disinterest from the ageing population have all led to declining sales,” said Joel Gregoire, Senior Food and Drink Analyst at Mintel.
The Mintel report forecasts a return to positive volume growth within the Pizza sector with one very important codicil that being; competitive pricing pressures will force a continued drop in dollar sales.” There are many variables pizza consumers take into account when making a purchase decision. However, 34 percent rank price ahead of brand as a deciding factor.”
Are you too old for Pizza? Mintel found that as age increases, frozen pizza purchases decline. Only 56 percent of aged 65+ report eating frozen pizza, well below the average of 74 percent. Furthermore, this demographic is expecting growth of 19 percent by 2019, which places further financial risk on the faltering frozen pizza market.
Children do play a key role as pizza consumption starts to fall amongst those age 45-54 and continues to decline thereafter,” “When children are not present in the home, the share of consumers who do not eat frozen pizza nearly doubles to 31 percent.” Don’t tell any of this to the ‘hot new niche of fast casual pizza growth companies.
Millennials’ love with pizza is driving volume sales of frozen pizza, they contribute to the pricing pressures that are decreasing revenue. Mintel found for consumers aged 18-24, price is even more likely to be a factor when purchasing frozen pizza (45 percent vs 34 percent overall).
The report went on “Younger consumers, particularly Millennials, are the driving force behind the pizza category while simultaneously acting as the source of current market pricing pressures. Millennials show the highest penetration of pizza consumption and are the most fervent foodservice customers with 40 percent eating takeout at least twice a month. However, the fact that under a third of consumers aged 18-24 are eating frozen pizza (32 percent) is indicative of the current sales trend in the store-bought pizza market.”
Within Foodservice Solutions® FIVE P’s of Food Marketing both price and portability play key roles. In the pizza sector they have particular significance. Pricing, portability will trump branding for the next three years according to our Grocerant Guru™. Holding down pricing will be key to retaining customers.
Are you interested in learning how Foodservice Solutions 5P’s of Food Marketing can edify your retail food brand while creating a platform for consumer convenient meal participation, differentiation and individualization? Email us at: Steve@FoodserviceSolutions.us or visit: www.FoodserviceSolutions.us for more information.