This means that "third 3" brands are growing at a much faster rate than the dominant brands in their category through this period, resulting in short-term share gains. But is this sustainable?
We decided to investigate for early signs of repeat purchase activity in categories where long-term pantry-stuffing is generally not an option. With consumers eating at home more often, the frozen pizza category was a logical place to start.
Between Feb. 17 and March 15, 30.8 percent of American households purchased frozen pizza, up 4.4 points from the year-ago period for a whopping year-over-year growth rate of 16.7 percent. When broken out by brand, we see increased penetration across nearly every leading brand in the category.
A pattern is emerging
DiGiorno might be gaining the most in terms of total penetration and dollar sales, but Freschetta, California Pizza Kitchen and Celeste (all "third 3" brands) are growing at a much faster rate, therefore gaining share. Can they hold on to it?
To see a sustained increase in share, "third 3" brands will need to see the increased rate of trial purchases convert into repeat purchases. Why? Because in a typical year, these brands see the vast majority of their dollar sales come from repeat buyers. And larger brands tend to see an ever-higher proportion of their sales come from repeat buyers, thanks in large part to the Double Jeopardy Law of Marketing: Brands with low market shares have fewer buyers and loyal customers.
While frozen pizza brands see repeat purchases occurring every two to three months on average, these averages can be deceiving. For example, 40 percent of all frozen pizza purchases occur within two weeks of the most recent frozen pizza purchase. And, given that consumers buy the same brand of frozen pizza from one occasion to the next 43 percent of the time, we should be able to see distinct trial sales leading to repeat sales.
We established a baseline of new trial-to-repeat purchase activity in 2019 to compare to COVID-19 shopping behaviors. We analyzed first-time brand purchases between Feb. 24 and March 10, 2019, to see if they led to repeat brand purchases between Feb. 24 and March 24. In 2020, we examined first-time brand purchases between Feb. 24 and March 9 to see if they led to repeat brand purchases between Feb. 24 and March 24.
None of the brands maintained or improved upon their 2019 repeat rate. The significant drop in repeat purchases among Freschetta and Celeste brand first-time buyers might actually indicate that the two brands are suffering greater levels of retail inventory shortages than DiGiorno and California Pizza Kitchen.
Regardless of what’s causing the drop, it seems highly unlikely that these brands will be able to ride the recent wave of new trial purchases to ongoing brand growth. In conclusion, don’t expect this short-term chaos to lead to long-term havoc among brand shares—at least not in the frozen pizza category.