It's not DiGiorno. It's delivery.
The sales boost frozen-pizza brands enjoyed at the expense of takeout is being flipped on its head during the recovery as delivery chains, which have deployed aggressive marketing and heavy discounting, emerge from their recession-induced slump. Grocery-store brands like rising-crust pioneer DiGiorno are fighting back with new campaigns and innovations like stuffing chicken wings and cookies into their pizza boxes in hopes of regaining the slice of their business lost to restaurant rivals.
"The gap between frozen pizza and restaurant pizza is narrowing," said Darren Tristano, exec VP at Technomic, a Chicago food-industry consultancy. The percentage of households consuming frozen brands jumped to 66% from 62% between 2007 and 2009, and dollar sales increased 8% in 2009 to $4.85 billion, according to Mintel. But in the year ending Feb. 20, dollar sales are down 2.9% according to SymphonyIRI, which excludes Walmart. Private labels, which are typically cheaper and surged in the recession, have fallen 7.4%.
By contrast, pizza chains ended 2010 up 4.5% to roughly $20 billion in sales, and big players Pizza Hut and Domino's Pizza were up by 7.8% and 9%, respectively, according to projections by Technomic, which tracks 190 chains. The gains came as Pizza Hut increased its measured media spending from $199 million in 2009 to $218 million last year, pouring more money into promoting $10 pizza deals and 50-cent wing Wednesday's, according to estimates from Kantar Media. Domino's spending actually declined a bit, from $172 million to $169 million, according to Kantar estimates. But the chain's ads were widely seen as more effective last year, as it amped up messaging about its reformulated pizza recipes.
Mr. Tristano credited "more advertising, but more importantly, a broadening of the menu to include sandwiches, desserts and chicken wings," he said. "The broad menu gives consumers more reason to buy from a pizza restaurant."
Enter DiGiorno which, nearly a year after being acquired by Nestle from Kraft, is boxing chicken wings and cookies with its pizza and adding two varieties to its "pizza & sides" pairings that started last year with pizza and breadsticks.
"Pizza is served around the big game, around having friends over, a party atmosphere." Breadsticks and pizza came out last year to mimic what Mr. Moe said is the top pizza-delivery combo. The wings and cookies pairings hit stores about a week ago. The line extensions are priced under $10.
The move will be pushed with advertising by Interpublic Group of Co.s' DraftFCB to debut in April. The campaign will build on the "It's not delivery. It's DiGiorno's" tagline the brand has used for 15 years.
There's a lot at stake, considering nearly one in four frozen pizzas sold at retail is DiGiorno's. The brand is the frozen-pizza leader with a market share of 22% and $680 million in sales in the year ending Feb. 20, up 5.87% from the year prior, according to SymphonyIRI, which excludes Walmart.
Worth noting: The wings are not actually wings -- they're white-meat chicken fritters, which is why DiGiorno's labels the product "Pizza and Boneless Wyngz." Federal regulators don't allow grocery brands to call wings "wings" if they don't have wing meat, Mr. Moe said. DiGiorno's went with breast meat because "it was more important for us to offer a high-quality product and then integrate a name in that the consumers would still understand," he said. The "Pizza and Cookies" boxes include enough Nestle Toll House cookie dough to make 12 cookies.
Nestle spent $61 million in measured media on DiGiorno's in 2010, down a bit from the $66.8 million that Kraft spent on the brand when it controlled it in 2009, according to Kantar.
Nestle also appears ready to pump more money into its other pizza brands. The company told Ad Age last week that it was shifting now-dormant marketing duties for Tombstone to DraftFCB and "looking for a really big idea" to rebuild the brand. Sales of the brand dropped 3.8% in the year ending Feb. 20 to $253 million, according to SymphonyIRI. Nestle acquired Tombstone from Kraft in early 2010 along with DiGiorno, California Pizza Kitchen and Jack's (all handled by DraftFCB).
Meantime, Nestle rival Schwan's Consumer Brands last week launched two products under its Freschetta pizza line: Microwave-ready single slices of pizza and "Freschetta Simply ... Inspired," featuring vegetables such as roasted red peppers and shiitake mushrooms. Taking a shot at his restaurant competitors, Schwan's senior VP-marketing, Dan Hammer, said in a statement: "Our pizzas give consumers great-tasting options that are always a better value when compared to the additional costs that delivery pizza chooses not to publicize with their so-called deals."