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Frozen pizza is hot. Helped by the nation's ever-growing appetite for convenience and for food that is filling -- and cheap -- sales of the freezer-aisle staple are growing faster than the overall food market. Americans bought $4.4 billion worth of frozen pizza last year, up from $3.1 billion in 2000, according to market research firm Datamonitor Inc.
"Pizza is a gold mine. It's been one of the few consistently growing categories" in the grocery store, said Burt Flickinger III, managing director of Strategic Resource Group, a New York consulting firm. "You've got a generation that either doesn't like to cook or can't. They like to heat and eat."
Harry Balzer, a food analyst at consumer market research firm NPD Group in Port Washington, N.Y., agreed.
"Pizza, frozen or ordered out, is the seventh most popular item eaten at dinner in the U.S. today," Balzer said. "Since the quality of frozen pizza improved in the mid-1990s, it has fueled the growth of pizza consumption. Restaurant pizza has never recovered from that."
Schwan Food Co., the Marshall, Minn., company that makes Freschetta, Red Baron and Tony's pizzas, for years has been No. 2 in the market, behind Kraft Foods Inc., maker of DiGiorno, Tombstone and Jack's. Schwan has about a quarter of the U.S. frozen pizza market, while Kraft has about a third, analysts said.
That market share could shift with Kraft's surprise announcement Tuesday that it would sell its North American frozen pizza business to Nestlé SA for $3.7 billion. Kraft said it will use the proceeds to finance its bid to buy British candymaker Cadbury.
"This removes a major competitor to Schwan from the marketplace," said Neil Hendry, vice president of consulting at Datamonitor, which is based in London with an office in Chicago. And that could buy Schwan at least six months before Nestlé gets its pizza act together.
"Nestlé will need to come up with a brand management strategy after the acquisition, and obviously that will be an opportunity for Schwan's to gain shelf space in leading retailers," Hendry said. "The key for Schwan's will be how well they manage their relationships with key retailers during this period of change."
Schwan could use the boost. In the past year, its slice of the frozen pizza market has gotten smaller, in part because of inroads by store-brand pizzas.
In the 52 weeks ended Nov. 29, Schwan's dollar sales of frozen pizza grew only 1.7 percent, while Kraft's sales grew 7.3 percent and store-brand pizza sales jumped 23.1 percent, said Information Resources, a Chicago market research firm.
Dan Hammer, a senior vice president of marketing for Schwan, declined to comment.
In addition to Kraft exiting the market, another factor working in Schwan's favor is that pizza market continues to grow, and grow -- which at least theoretically helps everybody selling frozen pizza.
"Since 2000, sales of frozen pizza in the U.S. have grown an average of 3.8 percent every year," Hendry said. "That's faster than the overall food market, which during the same period grew 2.7 percent a year" from $286 billion to $362 billion.
The reason: convenience.
"People are pressured for time, and if they can throw a pizza in the oven when they get home, it saves them time," Hendry said.
In fact, pizza is one of the biggest changes in the American diet in the past quarter-century. "Sales of two types of food have grown the most over the last 25 years," Balzer said. "Pizza is No. 1, making it the biggest single change in our diet. Coming in second is yogurt. This is all about us making life easier for ourselves, and pizza has done a wonderful job of satisfying that need."
Steve Alexander • 612-673-4553
• Kraft: DiGiorno, Tombstone, Jack's, California Pizza Kitchen
• Schwan: Freschetta, Red Baron, Tony's, Wolfgang Puck
• General Mills: Totino's, Jeno's
• Nestlé: Stouffer's