A new pizza concept and a new pizza acquisition demanded a bold new strategy at Bernatello’s Foods. But jettison the very brand name — Bernatello — that made the company’s frozen pizzas a hit in the Twin Cities?
“It was a huge deal, a decision not made lightly,” said Dave Ramsay, an owner and vice president at Maple Lake-based Bernatello’s. “I worked for about three-quarters of my career pushing the Bernatello’s brand. But you can’t make the decision with your heart.”
So within the past year, the company has been phasing out the Bernatello’s pizza brand in favor of a new premium offering — cheese-and-meat-packed Brew Pub — and a brand picked up with the acquisition last year of Wisconsin-based Five Star Foods.
The strategy has worked, with the new brands more than compensating for market share lost by the Bernatello brand, Ramsay said. And Bernatello’s continues bucking the pizza industry trend of flat or declining sales in recent years.
“We have had very sustainable and manageable growth for the last 10 years,” Ramsay said, with sales rising 10 percent annually on average. The company now has more than $80 million in yearly revenue.
Bernatello’s has its roots in Bud’s Pizza, a business created in the 1970s at an Annandale tavern. In 1982, Bill Ramsay, erstwhile CEO of the big ice cream maker Marigold Foods, bought a 50 percent share in Bud’s and changed its name to Bernatello’s. (Bernie Garthe had been Bud’s founder — add Italian flavoring to his first name and a brand was born).
Bill Ramsay is still CEO, and his children Dave and J.J. Halverson are both owners and top executives. The company’s corporate name remains Bernatello’s Foods.
In 1985, Bernatello’s established its main plant in Maple Lake, a Wright County town close to Annandale, and later added production facilities in Wisconsin. Today, it employs about 400, including 150 in Maple Lake. Bernatello’s primary market is the Upper Midwest.
Dave Ramsay described Bernatello’s market position as a “David and Goliath’’ situation — nationally, multibillion-dollar companies rule. Still, in the Twin Cities and Milwaukee, Bernatello’s was a solid No. 2, with more than 20 percent market share in both metro areas during the 12 weeks ended July 6, according to market researcher Nielsen.
Ahead of Schwan’s here
Nestlé, the Swiss food colossus and owner of the DiGiorno, Tombstone and Jack’s brands, ranked first and is the No. 1 U.S. frozen pizza maker. Marshall, Minn.-based Schwan’s is No. 2 nationally, but it was a distant third to Bernatello’s in the Twin Cities and fourth in Milwaukee. Schwan’s makes Red Baron, Freschetta and Tony’s pizza.
Bernatello’s also aces out — in the Twin Cities — the No. 3 U.S. pizza powerhouse, Golden Valley-based General Mills, owner of the Totino’s and Jeno’s brands.
Bernatello’s extended its reach in Wisconsin in 2012 with the purchase of Kaukauna-based Five Star Frozen Foods, maker of Orv’s, a popular brand, particularly in the eastern parts of the Dairy State. “Orv’s and Bernatello’s [branded pizza] would have cannibalized each other in Wisconsin,” Halverson said.
So the company opted to drop Bernatello’s and bring Orv’s to Minnesota, where it was added to a lineup that also includes Roma, a value brand, and Bellatoria, a premium brand. Then, at the end of last year, Bernatello’s added another premium brand, Brew Pub.
Bellatoria sports such diverse offerings as mushroom and spinach, margherita and garlic chicken Alfredo. Brew Pub takes a more traditional tack, piling on twice as much cheese and heavier helpings of classic pizza meats — there’s a bacon cheeseburger variation to boot.
Key to fending off delivery
Such higher-quality offerings are essential to fending off the growing competition from takeout and delivery pizza chains, said John Frank, manager of the food and drink team at Mintel, a market researcher. Mintel’s outlook for the frozen pizza market is anemic at best, and in a recent report the researcher notes fierce competition from pizza outlets.
The pizzerias took a beating during the recession, which conversely was — as bad economic times often are — a good time for frozen pizza makers. Now, the pizza cutter is in the other hand as the economy improves, and the chains have unleashed a barrage of marketing.
“In the last few years, people have gone back to restaurants,” Frank said. But “going premium is a strategy a lot of frozen pizza makers have used” to fight back. “Going premium is a good strategy, and what that means in pizza is more toppings and exotic toppings.”