Is Frozen Pizza Going the Way of the Typewriter?
Category Review and Recommendations for Frozen Pizza
March 2013
Global Customer Insights & Analytics2
Is Frozen Pizza Going the Way of the Typewriter?
•Health concerns work against pizza– Health: Pizza is #2 source of saturated fat due to cheese, no credit as
protein source, sodium, fat, processed food– Healthy means fresh, smaller portions, large pizzas do not work for small
households •Multicultural America – ethnic foods sales are up, new flavors desired, shoppers want customization
•Consumer redefining value to mean more than price – It will take quality and value to compete with Takeout
•More people snacking, but pizza is not portable nor easy to prepare as are microwavable or toaster snacks
Global Customer Insights & Analytics3
Purpose: To Activate Shopper Insights to Drive Frozen Pizza Category Results
A standard approach to answer the following questions
Key Questions Answered Supportive Analyses
1. What is the Category? Consumer Decision Tree or Hierarchy
2. How am I doing with the Category?
Dollar and Unit Sales Trends All Shopper ScorecardWalmart Shopper Cross-Purchase ScorecardVolume Decomposition
3. What is the size of my opportunity?Shopper & Dollar DistributionTrip & Conversion Opportunity Assessment
4. Who is the shopper and who is winning with my shopper? What is my shopper looking for?
Shopper ShiftingShopper TrendsWalmart Shopper Cross-Purchase Scorecard
5. On what trip types do shoppers buy my category?
Trip Distribution
6. Is my price competitive?Key Item ReportLowest Price in Market Report
7. Do I have the right assortment?Competitor-specific AssortmentKey Item Reports New Item Trends
Global Customer Insights & Analytics4
Frozen Pizza Product Hierarchy
Frozen Pizza
TTL US: $4.1 B (4.5%)*
TTL WMT: $1.0 B (5.3%)*
Single Serve Pizza
TTL US: $640.4MM (6.5%)* 15.7%**
TTL WMT: $111.8 MM (11.1%)* 11.0%**
SS Value
TTL US: $159.7MM (5.6%)* 3.9%**
TTL WMT: $6.8MM 23.8%* 0.7%**
SS Mainstream
TTL US: $296.9MM (3.9%)* 7.3%**
TTL WMT: $68.3MM (8.3%)* 6.7%**
SS Premium
TTL US: $124.7MM (3.9%)* 3.1%**
TTL WMT: $29.9MM (7.3%)* 2.9%**
SS Unconventional
TTL US: $59.1 (23.3%)* 1.4%**
TTL WMT: $6.8MM (50.0%)* 0.7%**
Multi Serve Pizza
TTL US: $3.4B (4.2%)* 84.1%**
TTL WMT: $902.1 MM (4.5%)* 89.0%**
MS Value
TTL US: $362.2 (2.6%)* 8.9%**
TTL WMT: $157.8MM (4.2%)* 15.6%**
MS Mainstream
TTL US: $1.2B (4.8%)* 28.7%**
TTL WMT: $304.0MM (4.3%)* 30.0%**
MS Premium
TTL US: $1.4B (3.9%)* 34.6%**
TTL WMT: $333.7 MM (2.8%)* 32.9%**
MS Unconventional
TTL US: $338.5MM (1.6%)* 8.3%**
TTL WMT: $59.0MM (1.3%)* 5.8%**
MS Combo
TTL US: $145.6MM (12.1%)* 3.6%**
TTL WMT: $47.6MM (20.0%)* 4.7%**
Pizza Crust
TTL US: $11.0MM 23.9%* .3%**
TTL WMT: $29.5K 1442.9%* 0.0%**
Pizza Crust
TTL US: $11.0MM 23.9%* .3%**
TTL WMT: $29.5K 1442.9%* 0.0%**
Source: Nielsen Scan Data – 52 weeks ending 12/08/12 vs.YAG
* $ % chg. vs. YAG** $ Contribution to Frozen Pizza
Segment size and hierarchy
• Frozen Pizza is declining everywhere but it is more severe at Walmart
• Walmart underperforms vs. the market in Multi-serve Value and Combo segments and all Single Serve segments
Global Customer Insights & Analytics5
Retail pizza sales did well moving into the recession; they, are losing to foodservice pizza as the economy recovers
Retail Pizza including:•Frozen pizza•Refrigerated pizza Crust/dough, kits
•Shelf-stable pizza crust mixes, kits, sauce
•Take-and-bake-pizza
Restaurant Pizza
Sales Projections
Price competitively with brands or segments that compete most directly
with take-out?
Dominos $4.99!
Global Customer Insights & Analytics6
Frozen Pizza Sales Have Declined in Walmart and the Remaining Market Over the Last Two Years
01-02-11 03-06-11 10-02-11 12-04-11 02-05-12 07-01-12 09-02-12 11-04-120
10000000
20000000
30000000
40000000
50000000
60000000
70000000
80000000
90000000
100000000
FROZEN PIZZA Dollar Sales WM TTL US Linear (FROZEN PIZZA Dollar Sales WM TTL US)
FROZEN PIZZA Dollar Sales WM TTL US-ROM Linear (FROZEN PIZZA Dollar Sales WM TTL US-ROM)
FROZEN PIZZA Unit Sales WM TTL US FROZEN PIZZA Unit Sales WM TTL US-ROM
Do
llar
/Un
it S
ales
Frozen Pizza Sales Trends
Week ending dates
Global Customer Insights & Analytics7
Total Walmart by $ per Buyer
Purchase Frequency & Annual Spend of Frozen Categories
Total US by $ per Buyer
• Pizza is purchased about as frequently as snacks and less often than Meals
• This may imply that shoppers think of Pizza less as a meal alternative and more as a snack or it could be due to Pizzas and Snacks being on a separate aisle
Trips X Annual Spend
Know the shopperWho buys the category?
On what trip missions do my shoppers purchase the category?
What consumer trends affect the category
Global Customer Insights & Analytics9
Older People Eat Less Pizza than Younger Consumers, But Shoppers age 55 + Represents a Large Proportion of Sales
• 53% of respondents 65+ and 62% of those age 55 to 64 indicate that their household Frozen Pizza compared to about 70% of younger households
• Mintel• BASE: TOTAL SAMPLE 2,000; AGE 18-24 – 260; 25-34 – 358; 35-44 – 370; 45-54 – 386; 55-64 – 292; 65+ – 334
Pizza type by
age
Global Customer Insights & Analytics10
Walmart Frozen Pizza Declines are Driven by Market Contraction, Retained Buyers Buying Less, Shifting is Minimal
• Publix, Kroger, Dollar Channel, Sam’s and Save A Lot are gaining sales from Walmart
Source: Nielsen Homescan - Total US 52 weeks ending 11/24/2012
Walmart Banner – Total U.S. – Frozen Pizza Dollar Shifting
Walmart Banner Dollar trends are due to: Dollar Gains & Losses (000
-13.2
-10.5
-1.8-0.9
Publix
Dollar
Save A Lot
Hy Vee
Safeway
Winn-Dixie
Giant Eagle
Fred Meyer
Conv/Gas
BJ'S
Meijer
Albertsons/Supervalu
Giant Carlisle
Harris Teeter
Ralphs
Military
All other
2,8816,204
9924,918
1,4653,023
8871,1211,7871,1102,235
15686401974973742075852,0461,1731,9292,2091,752
4176045666924599011,271900
32,145
-6,249-9,331
-2,427-6,148
-2,561-3,897
-1,757-1,802-2,430-1,639-2,473
-241-904-255-315-591-447-235-566
-2,004-1,074-1,828-2,106-1,640
-231-396-349-470-140-325-661-219
-27,179
Net Dollars
Interact Index
-3,368 138-3,128 104-1,436 219-1,230 191-1,096 216
-874 137-870 88-681 155-643 83-529 109-239 154-227 106-218 81-215 33-119 43
-95 32-73 237-28 3918 5142 10199 62
101 66103 120112 162186 40208 75218 55222 66320 38577 43610 153682 69
4,966 93
Shopper Shifting
Global Customer Insights & Analytics11
Walmart is Losing Pizza Stock Up Trips Which Account For 82.5% Of All Frozen Pizza Trips ; Kroger is gaining all trip types
NOTE: Competitors have been ordered in terms of Trip share Trip share is computed for Walmart Supercenters
Stock Up Trips
Immediate Needs Trips
Kroger
Publix
WMTSupercenters
Change in Walmart’s Trip Share in the US 2012 Vs. 2011 – Frozen Pizza
+0.4%
-0.4%
+1.2%
+0.3%
+1.8%
Source: Walmart POS Data, IRI Trip Data : Period : Last Year (Nov 2010 - Nov 2011) This Year (Nov 2011 - Nov 2012)
Top 2 Banners by Trip Share gain apart from Walmart
Department Destination Trips
+1.1%
Confidential: Internal to Walmart only
-0.3% WM Total US
Kroger +1.8%
Kroger
Publix
+0.6%
+0.6%
Trip Type Distribution
Global Customer Insights & Analytics12
Walmart Is Losing Frozen Pizza Trips Across All Trip Types
• Walmart’s share of Pizza trips exceeds 19% but it is declining (.3%)
• Walmart’s total box trips are increasing at 0.4% suggesting an issue with Pizza, not the box
• 83.6% of Pizza is purchased on stock-up trips; both sales and visits declined 7.5%
• Immediate Needs (What’s for Dinner Tonight) are10.8% of sales but they are declining.
• Walmart’s share of Seasonal/Party trips is 28.7%; only 1.7% of Pizza is sold on these trips
Trip Type Distribution
Global Customer Insights & Analytics13
22.1
21.9
21.7
21.1
20.6
20.1
19.6
19.6
19.5
19.5
Fz Pizza $/Trip
% of All Trips w/ Fz Pizza
Top 10 Affinity Products in Fz Pizza basket in Walmart Total ranked by Total Opportunity Dollars* Trip Index
In Walmart Total, FZ Handheld Entrees and Fz/Rfg Processed Chicken are the top 2 of the top 10 affinity products in Fz Pizza baskets; representing over a 4 million dollar opportunity each if Fz Pizza increased by 1% in each of their baskets.
4.3
4.3
4.3
4.3
4.3
4.3
4.3
4.3
4.3
4.3
515
511
508
493
481
469
458
458
455
455
$7.74
$6.90
$6.85
$7.17
$6.08
$8.61
$6.63
$6.01
$6.88
$7.36
*Dollar Opportunity if get Fz Pizza into an additional 1% of Row Product baskets
% of Row Product Trips w/ Fz Pizza
SIG Syndicated Reviews ILD ConsumerNetwork Household data; Current 52 Weeks Ending 12-30-2012; 52wk static; Walmart Total
Global Customer Insights & Analytics14
Finding Fz Pizza Walmart trips are more likely than average to include
Fz Handheld Entrees (Non-Breakfast) Processed Fz/Rfg Chicken/Chicken
Sub Fz Appetizers/Snack Rolls Dry Dinner Mixes With Meat Fz Ravioli Fz Onion Rings Fz Pretzels Fz Breaded Vegetables Fz Tortellini/Tortelloni Fz Cookie Dough
Co-Promotion Ideation
Recommendations
Offerings in the above categories to this consumer group should address the need gap/need state around quick meal solutions and stock-up needs; offering options that deliver on convenience needs for a busy household.
Focus on convenient, yet satisfying or flavorful attributes of the offerings and various ways the products can be used to satisfy meal and snack cravings. Appeal to the desire for quick, easy meals. Focus on convenience as ways to meet their needs. Convey the promotions as a quick, easy way to incorporate convenient products into their hectic schedule.
Summary of Recommendations – Fz Pizza in Walmart TotalConvenient Meal Solutions/Snacks & Stock up Items
Global Customer Insights & Analytics15
Income: Frozen Pizza Buyer & Dollar Distribution by Retailer/Channel
Pizza Buyers are Distributed Across Demo Groups: Walmart Wins with Lower Income Pizza Buyers as do Dollar and Save A Lot Stores
15.3 17.5 14.4 11.4 16.1 11.618.9
11.3
29.9
7.7 6.5 7.018.9
29.513.2 15.7
14.212.4
13.212.9
15.313.2
23.1
8.6 11.4 6.2
18.9
19.711.7
13.212.6
11.813.3
11.6
13.4
12.9
12.5
11.0 8.55.7
12.7
13.2
10.511.5
11.711.0
13.19.9
8.9
10.0
11.0
10.0 10.9
7.8
10.2
10.116.7
16.817.6
18.918.2
21.117.0
20.1
13.4
19.8 16.7
15.9
16.3
13.115.4
14.114.4
16.714.3
16.013.3
16.5
7.3
18.7 21.1
19.8
10.99.317.2 11.2 15.2 17.8 11.8 16.9 13.2 16.0
0.0
24.1 24.937.6
12.1 5.2% of HHs
Income $100000 +
Income $70000 - $99999
Income $50000 - $69999
Income $40000 - $49999
Income $30000 - $39999
Income $20000 - $29999
Income Under $20000
TOTAL
U.S.
WALM
ART
KROG
ER
PUBLIX
ALDI
MEIJ
ER
FOO
D LIO
N
H-E-B
SAVE A L
OT
TARGET T
OTAL
SAM'S
COSTCO
DRUG S
TORES
DOLL
AR STO
RES
14.2 17.9 12.2 12.1 15.8 9.8 14.6 9.927.9
8.3 6.1 7.519.2
31.012.9
16.815.7 11.6 11.7
12.913.1
11.7
29.6
6.6 12.9 7.4
19.219.6
11.612.7
13.210.0
17.911.8
15.712.4
11.6
12.1 7.35.5
9.8
11.510.9
11.712.4
9.2
12.111.9
9.210.0
10.3
8.1 10.36.2
12.87.1
17.416.9
17.316.9
17.819.3
17.823.8
9.8
17.5 16.314.1
16.412.116.0
13.8 15.120.5
15.219.3 16.3 15.8
9.3
21.5 21.6
21.1
10.1 11.017.0 10.2 14.2 19.79.4 15.0 13.2 16.5
0.0
25.9 25.438.2
12.4 7.7
% of Dollars
Buyer & Dollar
Distribution
Breaks with fewer than 50 raw buyers
in the Channel/Retailer are
excluded
Source: Nielsen Homescan - Total US 52 weeks ending 11/24/2012
Global Customer Insights & Analytics16
Age: Frozen Pizza Buyer & Dollar Distribution by Retailer/Channel
26% of US Pizza Consumers are Over Age 55, They Account for only 20% of Pizza Dollars
19.7 21.4 23.2 23.5 22.0 21.6 17.827.1
15.632.8
20.3 18.4 23.916.4
14.5 16.3 16.5 14.8 17.3 14.6 16.5
17.7
14.7
20.0
14.9 16.0 10.413.0
21.623.0 19.7 17.7
23.621.9 23.1
21.5
20.3
19.1
25.8 25.618.7 21.9
14.513.7 11.6 13.3
12.7 15.4 15.612.5
16.1
8.914.9 14.5
14.5 16.5
11.6 10.610.0 12.9
11.5 10.4 10.17.5
15.9
5.9 9.4 7.612.5 15.6
18.1 15.1 19.0 17.7 12.9 16.1 16.8 13.7 17.3 13.3 14.7 17.9 20.1 16.7
% of HHsNo Female Head Age
Age 65 and Over
Age 55 to 64
Age 45 to 54
Age 35 to 44
Age Under 35
TOTAL
U.S.
WALM
ART
KROG
ER
PUBLIX
ALDI
MEIJ
ER
FOO
D LIO
N
H-E-B
SAVE A L
OT
TARGET T
OTAL
SAM'S
COSTCO
DRUG S
TORES
DOLL
AR STO
RES
21.4 21.8 26.6 23.8 15.9 24.1 20.7 28.816.8
33.219.3 17.1 22.8 15.6
16.6 17.2 16.7 15.012.8
17.1 15.218.4
16.1
21.0
14.5 17.1 10.211.5
24.0 24.0 20.4 20.0 35.023.8
24.720.8
22.5
19.2
24.9 26.517.5 26.9
12.0 12.4 10.2 12.912.6 12.8 12.7
10.013.3
7.214.2 13.4
13.119.0
8.2 8.6 7.6 10.0 9.2 6.8 7.8 4.810.6
4.37.8 6.9
11.112.4
17.7 16.0 18.5 18.3 14.5 15.4 18.9 17.2 20.8 15.1 19.3 19.1 25.314.7
% of Dollars
Buyer & Dollar
Distribution
Breaks with fewer than 50 raw buyers in the Channel/Retailer
are excluded
Source: Nielsen Homescan - Total US 52 weeks ending 11/24/2012
Know the competition
Have shoppers shifted purchases to other retailers?
How do I compare (benchmark) against others?
Global Customer Insights & Analytics18
All Category Buyers: Volume Driver by Key Competitors
Most Retailers Convert More of their Pizza Shoppers than WalmartIncreasing shopper conversion by 10 points is a $165 MM opportunity 1 extra trip from our shoppers is a $159 MM opportunityOpportunity Calculations:
• Conversion = (25MM Walmart buyers / 36.9% conversion) * 10% * $24.39 = $165 million
• Trip = (1 trips / buyer) * $6.37 per trip * 25MM Walmart shoppers = $159 million
Shopper Scorecard
Source: Nielsen Homescan - Total US 52 weeks ending 11/24/2012
Frozen Pizza All OutletsWalmart Banner
Kroger Banner Publix Aldi Meijer
Food Lion Banner H-E-B Corp Save A Lot Target Total Sams Club Costco
Woodmans Food Market
Buying Households (000) 11/27/11 - 11/24/12 79,909 25,088 9,500 4,171 2,727 2,534 2,677 2,074 2,584 6,377 3,688 3,375 346% Chg. YAG -2.5 -5.5 2.2 5.2 -10.2 -16.9 -6.2 3.3 4.3 3.8 16.6 -17.2 2.5
% Household Penetration 11/27/11 - 11/24/12 67.1 21.1 8.0 3.5 2.3 2.1 2.2 1.7 2.2 5.4 3.1 2.8 0.3Chg. YAG -1.8 -1.2 0.2 0.2 -0.3 -0.4 -0.2 0.1 0.1 0.2 0.4 -0.6 0.0
% Household Conversion 11/27/11 - 11/24/12 100.0 36.9 62.7 53.1 17.7 43.2 42.3 60.6 31.3 13.0 17.9 22.1 47.6Chg. YAG 0.0 -1.4 2.8 3.2 -2.8 -6.0 -0.7 -0.8 0.0 1.0 3.1 -3.6 -3.7
Dollar Share 11/27/11 - 11/24/12 100.0 18.1 8.0 3.5 0.8 1.9 1.9 1.5 1.0 2.7 3.1 2.7 0.4Chg. YAG 0.0 -0.4 0.8 0.7 -0.5 -0.1 -0.1 0.1 0.1 0.5 0.5 -0.3 0.0
Dollars per Buyer 11/27/11 - 11/24/12 42.37 24.39 28.36 28.77 10.17 25.63 24.38 23.91 13.48 14.59 28.70 27.56 37.86% Chg. -3.15 -2.21 2.34 11.41 -36.08 5.61 -4.10 -3.20 4.49 10.34 -2.97 2.77 -12.87
Dollars per Occasion 11/27/11 - 11/24/12 6.96 6.37 6.55 7.33 4.61 7.01 6.49 5.33 4.99 6.70 12.50 11.82 9.45% Chg. 0.57 0.18 1.52 5.33 -4.50 7.77 -9.13 -6.43 5.84 6.61 -0.92 -0.11 0.86
Purchase Frequency 11/27/11 - 11/24/12 6.1 3.8 4.3 3.9 2.2 3.7 3.8 4.5 2.7 2.2 2.3 2.3 4.0% Chg. -3.7 -2.4 0.8 5.8 -33.1 -2.0 5.5 3.5 -1.3 3.5 -2.1 2.9 -13.6
Purchase Cycle (Days) 11/27/11 - 11/24/12 36.8 41.0 42.9 44.2 51.7 45.7 43.7 40.5 45.5 52.1 63.3 70.2 42.5% Chg. 2.4 -1.7 1.6 2.6 25.5 -0.4 0.2 -2.8 -4.8 -4.0 4.3 9.6 4.6
% Dollar Volume on Deal 11/27/11 - 11/24/12 39.1 12.2 47.8 56.5 5.8 58.2 47.7 21.3 9.2 42.0 6.3 37.5 30.6Chg. YAG 1.9 0.0 -0.5 10.3 4.8 6.1 2.5 4.6 -2.0 1.0 3.8 6.7 -3.1
Raw Buyers (N=) 11/27/11 - 11/24/12 38,815 11,354 4,645 2,234 1,490 1,567 1,286 881 1,149 2,605 1,924 1,774 218
Global Customer Insights & Analytics20
11/26/2010 03/26/2011 07/26/2011 11/26/2011 03/26/2012 07/26/20120%
25%
50%
75%
100%
35%45%
Percentage Unit Volume Sold on Deal ROM
% U
nit
Vo
l on
de
al R
OM
Source: Nielsen syndicated POS and Walmart POS data for 104 weeks ending 11/16/2012
11/26/2010 03/26/2011 07/26/2011 11/26/2011 03/26/2012 07/26/20120
25
50
75
100
7361
WMT Price Position
WM
T P
rice
Po
sitio
n
11/26/2010 03/26/2011 07/26/2011 11/26/2011 03/26/2012 07/26/2012$2.5
$3.0
$3.5
$4.0
$4.5
$5.0
$3.85 $3.82
$4.33 $4.24
Avg. Price for WMT and the ROM
Avg
. Pric
e
WMT ROM
2898bps
WMT-77bps
ROM-207bps
-1597bps
Price Position, Cause and
Effect
Increased Promotion Contributed to Lower Market Price Implying Vendor Negotiation Opportunity
Global Customer Insights & Analytics21
But Deal Does Not Drive Incremental Sales – Implies Need for Competitive EDLP Pricing and Vendor Negotiations
Total US- FROZEN P...
Base $
Incr. $
81.6%
18.4%
Source: Nielsen Scan Data – 52 weeks ending 12/08/12
Base & Incremental
Sales
Brands whose Price Position Worsened
• Totinos 56th percentile to 48th
• Totinos Party Pizza 55th percentile to 51st
• Red Barron 75th percentile to 48th
• Tony’s 90th percentile to 83rd
• California Pizza Kitchen 85th percentile to 77th
39% on deal
20.7% wasted
Global Customer Insights & Analytics22
Price PositionRest of MarketWalmart
BrandPrice (First
Week)
Price (Last Week)
PriceChg
(Bps)
Price (First
Week)
Price (Last Week)
PriceChg
(Bps)
Avg. Unit Vol on
Deal TY
Chg in Unit
Vol on Deal
Price Pos
(First Week)
Price Pos
(Last Week)
Chg in Price
Pos TY
All Brands $4.09 $3.82 -660 $4.61 $4.24 -803 56% 15% 64 61 -424
Totino’s Party Pizza
$1.32 $1.32 0 $1.40 $1.39 -71 43% 27% 55 51 -766
Di Giorno $4.53 $4.50 -66 $5.02 $5.16 279 48% 10% 77 77 -56
Red Baron $3.63 $3.65 55 $4.33 $3.75 -1339 67% 19% 75 48 -3649
Tombstone $4.09 $3.75 -831 $4.48 $4.35 -290 70% 13% 55 63 1520
Tony’s $2.50 $2.37 -520 $3.12 $2.65 -1506 62% 24% 90 83 -859
Celeste Pizza for One
$1.11 $0.98 -1171 $1.10 $1.08 -182 54% -4% 6 81 127755
Jack’s Original $2.98 $2.75 -772 $3.06 $3.02 -131 68% -1% 48 57 1838
Freschetta $5.55 $4.86 -1243 $6.32 $5.31 -1598 71% 21% 71 73 298
California Pizza Kitchen
$4.55 $4.58 66 $5.19 $5.21 39 48% 12% 85 77 -1017
Totinos $1.43 $1.33 -699 $1.56 $1.35 -1346 42% 35% 56 48 -1355
Great Value / Private Label
$4.26 $3.98 -657 $4.49 $4.65 356 47% 3% 53 93 7620
Source: Nielsen syndicated POS and Walmart POS data for 52 weeks ending 11/16/2012
Our Price Position Declined Overall and with Totino’s, Red Baron, Tony’s and California Kitchen; Some of our Highest Volume Brands
Price Position by Brand