Frozen pizza is a convenient meal with family appeal that offers good value for money. In the current economic environment, one could be forgiven for making the assumption that the pizza business would be booming. However, branded pizza manufacturers have, for the most part, witnessed declining sales over the past year. Katy Humphries reports.

Last week, French fry giant McCain Foods announced it plans to quit in-house pizza production in the UK. The company said a decline in demand for its branded McCain Pizza Fingers Cheese & Tomato pizzas meant in-house production was no longer “financially viable” for the company.

“Despite our best endeavours to grow our pizza business over recent years, we continue to experience declining volumes and demand in an increasingly competitive market place,” McCain manufacturing director Alan Bridges told just-food.

And McCain is not alone.

According to data produced for just-food by SymphonyIRI, the total frozen pizza market grew by 2.3% in the 52 weeks to 12 May, climbing to a total value of GBP385.87m (US$599m) in the year. However, the majority of brands saw their sales fall.

In value terms, sales of the McCain brand were down a hefty 23.6%.The market’s largest brand, Dr Oetker’s Chicago Town, saw sales decline 4.5%. The second largest frozen pizza brand in the UK, Goodfella’s – which is produced by 2 Sisters Food Group – witnessed a 7.9% drop in sales by value.

And if you look at sales volumes, the picture is even more grim.

Branded pizza manufacturers have pushed price increases on to consumers in a bid to offset rising input costs. The result being that price hikes have inflated sales value figures, partially offsetting even steeper volume declines.

Volume sales of Chicago Town were down 11.1% on the year, Goodfella’s volumes dropped 17.8% and McCain volumes were down 38.9%.

In fact, only one brand bucked the trend during the year: Dr Oetker’s namesake brand saw value sales up 18.3% on volumes that rose 20.5%. However, with a market share of 13.8%, the strong growth of the Dr Oetker brand is not enough to explain the overall growth that the frozen pizza market witnessed.

So where did the value growth in the frozen pizza aisle come from?

Private label. Retailer brand frozen pizza sales also saw strong growth during the period, with sales value up 8.4% and volumes up 7.2%.

Own-label frozen pizzas are already bigger sellers than any single branded product and growth ahead of the market means that they are increasing their share.

SymohonyIRI found own-label sales represent 40.1% of value sales and 49.2% of volume sales, meaning own-label products are sold at a discount to branded frozen pizzas.

However, price is only part of the equation. Retailers have developed a strong offering of frozen pizza products that span the “good, better, best” own-label spectrum and meet the needs of consumers, be it basic cheese and tomato for kids to more sophisticated and exotic pizza varieties.

Frozen pizza sales also face competition from chilled pizzas sold at retail – a category that is almost exclusively dominated by own label – as well as foodservice providers such as Dominos, which has engaged in heavy promotional activity through deals such as its “two for Tuesday” and BOGOFs on collected pizzas.

Branded frozen pizza manufacturers are therefore being squeezed from both sides: private-label frozen pizzas are, by-and-large, offered at a cheaper price point, meaning branded manufacturers cannot singularly rely on a value message. At the same time, they face competition on quality from fresh and foodservice manufacturers.

The pressure is therefore on for branded manufacturers to drive sales through innovation. This can often come in the form of new, more exciting, toppings. But often as not, consumers want the basics and innovation in this sense is presenting familiar flavours in new ways.

In a bid to compete with take-away pizza manufacturers, 2 Sisters Food Group has launched a limited-edition range offering Goodfella’s pizzas and potato wedges in a single box.

The new line, aptly named Goodfellas Take Away, sticks to the well-worn roads in pizza toppings: margherita and potato wedges, meat feast with potato wedges and and pepperoni with potato wedges. The firm aims to promote the product for “sharing” occasions, targeting gatherings of “friends and family” getting together to watch sports such as the Euros or Olympics.

Likewise, 2 Sisters has recently added to the Goodfella’s range with the launch of a line of “light” pizzas. In a bid to appeal to the health conscious and tick another ever-important box in the list of hot consumer trends, Goodfella’s Delizia range are seven inch pizzas containing 500 calories.

Another important plank in the branded manufacturers’ arsenal is consumer marketing. Pizza brands invest a pretty penny in convincing consumers of their superiority but in this crowded space it is difficult to ensure that your marketing dollars are not simply lost in the muddle.

While branded manufacturers are investing heavily in innovation and marketing as they slog it out for a slice of the pizza pie, the fact remains that their sales are still dwindling. Perhaps then, the news that McCain is quitting in-house pizza production should not come as such a surprise. And it does not seem beyond the pale to suggest that other manufacturers, particularly of smaller brands, could possibly look to pull back from this activity.