Australian’s Frozen Pizza Market

Introduction –

This report will feature an in-depth analysis of the Australian frozen pizza industry, displaying the many current trends and future projections within the market. Current trends suggest that due to the rise of health consciousness in Australia, negative perceptions regarding the minimal health and nutrition factors of frozen pizza products have highly affected the revenue within the industry. As a result, many existing and emerging brands have shifted their production and manufacturing efforts to innovate around the shifting behaviours surrounding healthier approaches to groceries shopping. As a result, brands are showing their responses to these negative perceptions through innovations to product quality with the intent to elevate nutritional value. Innovation efforts include: the production of lower carbohydrate pizza bases in addition to pizza bases with gluten-free and vegan recipes. This allows consumers with dietary complications and specific dietary preferences to enjoy frozen products, supplying Australian consumers a greater variety of frozen pizza options to select from. Furthermore, innovations include the production of pizza sauces with reduced salt and sugar, a highly effective decision in conjunction with the increased premiumisation of traditional ingredients. With more brands using higher quality, low-in-fat meats, and organic vegetables, it is by these very decisions which contribute to efforts to mend negative consumer perceptions surrounding the product, shifting their buying motivations in favour of more nutritious frozen pizza options. This report will also feature the proposal of a prospective frozen pizza brand which will look to compete with existing products within the market, titled. Titled, ‘Pizza Organica,’ this product will seek to target the segment of Australia’s ‘health-conscious’ consumers, as a direct response to the relevant trends surrounding this complex realm of consumer motivation and behaviour.

Market Size: 

Following IBISWorld, Australia’s Frozen Pizza Market is within a mature life cycle stage with a medium barrier to entry. Currently, the industry has generated $161.5m annually, over the years 2017 and 2022. The industry has experienced a minor decrease in sales revenue, dropping 2.2% over this same 5-year period. However, future projections over a 5-year period suggest a minor annual growth in revenue. Between the years 2022 and 2027, the industry will see a revenue increase of 1.6% proving the success of current and prospective approaches to product innovations regarding ingredient quality and premiumisation. Industry profits, however, over a 5 year period reveal a major decline as a decrease of 5.8% has occurred between the years 2017 and 2022.  

The market is segmented into four different product types:

Family Pizzas: (35.5%) 

Thin-Crust: (20.4%) 

Snack Pizza: (15.9%) 

Gourmet Pizza: (28.2%) 

Market Share: 

The most competitive brand within the Australian Frozen Pizza Market is McCain Foods Pty Ltd and have maintained a market share of 60.7% over a 12-year period (2010 to 2022). McCain’s current revenue has seen an annualised growth of 2.6% between 2021 and 2022, allowing the company’s annual revenue to sit at $98.0 million.

McCain Foods shares the market space with three other major brands, including Dr Oetker’s Ristorante, Papa Giuseppe’s and Dela Rosa, brands which work for 39.3% of the industry’s market share. McCain Foods Pty Ltd provides its customers with a myriad of products, ranging from Pizza Snacks, Pizza Pockets, Family Pizzas, Pizza Bases, Rustico / Gourmet Pizzas, and Ultra-Thin Crust Pizzas. With McCain Foods’s ability to capture the top spot within the market, the brand’s frozen pizzas are not the only offering they provide. by adopting flexible catering capabilities such as: delivering products to school canteens, cafes and venues who require in-expensive catering options for guests or clients. Another contributing factor to the generation of McCain Food’s market share is its expansive frozen food options, as Frozen Pizza is not the only meal option the brand produces.

McCain Food’s also produces frozen potato meals, and frozen ready dinners available as well. As a result, McCain’ Food has allowed itself to capitalise on the industry’s number one position since its debut in 1975. Currently McCain Foods has led the frozen pizza industry within the realm of product innovation, offering consumers an elevated quality to their products using ‘premium ingredients’ such as Tandoori Chicken and Angus Beef. In effect, the company has been able to separate themselves from other brands who resume using processed, lower quality ingredients within production. McCain Foods have also pioneered new products to the market, such as a range of Pizzas with Ultra-Thin Crusts, a frozen pizza alternative for consumers in need of a ‘lighter’ option, with bases lower in carbohydrates and salt content. McCain’s Foods also developed a premium take away Pizza range. This range was designed to compete with existing major takeaway pizza brands such as Dominoes and Pizza Hut, as a means of providing consumers with quality products similar to those cooked within an industrial setting. However, McCain Foods have since dropped this range due to the preservation of its novelty. Furthermore, in 2017 the company launched a gourmet pizza range focusing on the production of Rustica wood-fired sourdough pizza bases, to provide consumers with high quality, luxury frozen dining experience.

Consumer Motivations & Behaviours:

Frozen Pizzas, to most Australians are perceived to be ‘relatively cheap.’ (Richardson, 2020, pg. 24) According to the Australian Bureau of Statistics (ABS) the average weekly earnings for a full-time working adult is $1,835.30 suggesting that most working adults are entitled to a disposable income below $2000 each week. Canstar Blue further illuminates that the average Australian household ‘spends $152 weekly on groceries equating to $608 a month or $7,296 a year.’ Finance Professor, Ljubica Georgievska brings attention to the fact that 63.77% of single parent households with children are more likely to opt for cheaper food alternatives, with 49.66% of childless couple households opting for similar inexpensive food options. Furthermore, Georgievska reveals that 60.92% of couples’ households with children are opting for more inexpensive food options during weekly groceries shopping. With specific relation to the Frozen Pizza industry, Canstar Blue also suggests that frozen items make up 46% of the average Australian’s groceries. It becomes clear that frozen pizza products may be appealing to low-income households due to their existence as a ‘a low-cost substitute’ for costly takeaway meals or restaurant dining experiences. (Richardson, 2022, pg. 10) In response, frozen pizza options can thus provide consumers a level of ‘convenience,’ due to its low effort preparation factor, providing time-poor consumers a highly beneficial food alternative to fit within their busy lifestyles. (Richardson, 2022, pg. 9) Consumers who enjoy a higher disposable income, however, are able to enjoy the freedom of ‘buy[ing] more premium frozen pizza offerings,’ regardless of their typically higher price point, permitting them to enjoy the luxury of gourmet products or products with higher quality ingredients. (Richardson, 2022, pg. 17) Consumers with a lower disposable income are, in effect, more likely to ‘readjust’ their spending habits regarding weekly groceries, opting for cheaper frozen pizza offerings to reduce tensions that may exist within food budgets. (Richardson, 2022, pg. 17) Overall, unlike high-income consumers, this factor disallows lower-income earning consumers to frequently enjoy higher quality, more healthier options that are available in supermarkets.

• Efficiency for Time-Poor Families: 

Philosopher Robert E. Goodin states that ‘people can be time poor as well as money poor,’ further suggesting that individuals who work upwards of ’40 hours per week in paid labour’ can be considered ‘time poor’. (Goodin, 2011, pg 10) As a result, full-time workers are limited in the time they have to purchase ingredients and prepare healthy meals from scratch. This factor becomes increasingly difficult for individuals who live with larger families which in turn results in more people to feed. The ABS Household and Families Census 2021 suggests that ‘couples with children make up 43.7% of all Australian families. As a result, frozen pizza exists as a highly time efficient, cost-effective food option with a myriad of flavours to choose from. This factor allows most individuals who desire such an option to enjoy the product without the frustration of minimal options for harder to please consumers, whether it be a dietary complication or dietary preference. It becomes clear that ‘frozen pizza is a convenient option for time-poor consumers’, more specifically families with many children due to its capability to satisfy a large number of people in one sitting. (Richardson, 2022, pg. 9) Frozen Pizza is also able to be preserved for a very long time due to its ability to be stored within a freezer. Extended shelf life allows time for poor consumers to purchase the product in bulk and store it over time to permit time for activities other than meal preparation and groceries shopping.

Key Industry Trends & Opportunities: 

• Premiumisation & Product Innovation: 

Currently the frozen pizza industry has experienced many brands elevating the quality of their products, a decision which in effect, ‘can draw higher prices.’ (Richardson, 2022, pg. 13) Premium frozen pizza products can be defined and differentiated from average products ‘depending on ingredients, crust style, sauce or flavouring.’ (Richardson, 2022, pg. 13) Part of premiumisation involves the development of ‘authentic pizza’ or ‘gourmet pizza’ offerings, such as McCain’s Rustica Sourdough pizzas and Coles’ ‘Premium’ home brand frozen pizza range, both innovative frozen pizza options focused in providing consumers with authentic Italian experiences regarding taste and quality. Similarly, Dr Oetker’s Ristorante has also attempted to elevate the premium nature of their products evidenced by their 2022 5 Star Canstar Blue rating, classifying the brand first in the market for ‘taste and quality of ingredients,’ (Canstar Blue, 2022). The premiumisation of Dr Oetker’s pizzas can be seen through introduction in the use of exotic ingredients such as ‘mushroom and Quattro Formaggi.’ (Canstar Blue, 2022) Furthermore, the brand’s decision to produce allergy friendly pizza options with ingredients such as gluten-free mozzarella cheese and gluten free bases. In addition, the brand has elevated their use of premium, organic ingredients, venturing into healthier avenues. Premium frozen pizzas products are more likely to include ‘gluten-free and plant based’ pizza bases, as well as smaller, portion-controlled options, such as Dr Oetker’s ‘Ultra-Thin Crust’ pizza. The development of pizzas with reduced sugar, carbohydrates and salt preservatives are gradually becoming more common, an example of this can be seen through the FroPro Protein Pizza, a frozen pizza option manufactured with a recipe inclusive of increased protein content and 50% less carbohydrates than average frozen pizzas. It is by these various innovations that allow health-conscious consumers with dietary complications to enjoy frozen pizza products without the fear of settling unhealthy or unsuitable options in stores.

Macro-Environmental Forces & Threats: 

• Health Consciousness: 

Elevated health consciousness in Australia exists as ‘a significant demand determinant for frozen pizza’ as negative perceptions have developed regarding the limited health benefits associated with frozen pizza products. (Richardson, 2022, pg. 17) As suggested by IBISWorld’s ‘Health Consciousness’ Report, Australia’s level of health consciousness has increased by 0.9% between 2021 and 2022. (IBISWorld, 2022, pg. 1) As a result of small increase, health consciousness in Australia is projected to rise again by 0.5% from 2022 to 2023. (IBISWorld, 2022, pg. 1) Future projections reveal that Australis forecasted health conversions will rise annually at a rate of 0.3% over 5 years (2027 to 2027). [IBISWorld, 2022, pg. 3] In relation to the frozen pizza industry, Australians deem the product as ‘unhealthy’ due to the amount of, low-quality, highly processed ingredients commonly used within their production. It is by this notion that has resulted in a 2.2% revenue contraction between 2017 and 2022. [IBISWorld, 2022, pg. 9].

• Product Importation:

Niche frozen pizzas with a ‘gourmet’ status ‘pose a significant threat’ on the industry as private, international brands such as Dr. Oetker Ristorante and Papa Giuseppi’s Pizza are gradually minimising the necessity for Australian labour, produce and ingredients. (Richardson, 2022, pg. 11) IBISWorld suggests that imported frozen pizzas are expected to account for 13.6% of domestic demands which, in effect, will generate a projected annual revenue of $24.3 million between 2021 and 2022. (Richardson, 2022, pg. 19) One major example is Dr Oetker’s increased reliance on Canadian, German and British manufacturing facilities as opposed to Australian facilities, minimising the necessity for domestic manufacturing efforts.

• Substitution:

With an increase in Australians seeking healthier dining options the overall ‘demand for frozen pizza has declined,’ posing product substitution as one of the industry’s biggest economic threats. (Richardson, 2022, pg. 9) Considering Australians perceive ‘pizza as [an] unhealthy food’ consumers are seeking other food alternatives to attain a greater health benefit within their daily life. (Richardson, 2022, pg. 9) Alternative ready-made meals are, in effect, perceived as healthier and ‘more balanced in nutrition and flavour’ while maintaining equal levels of convenience. (Richardson, 2022, pg. 9) The increasing range in ‘healthier ready-made frozen or chilled meals’, is resulting in less consumers opting for frozen pizza meals. (Richardson, 2022, pg. 9) Furthermore, in accordance with the 2022 IBISWorld Report ‘Real Household Disposable Income’ the average disposable income is projected to slightly increase 1.1% between 2023 and 2024, (IBISWorld, 2022, pg. 3) which in effect may allow more consumers to ‘dine out more often instead of purchasing frozen pizzas’ ultimately minimising the demand for the product once again. (IBISWorld, 2022, pg. 13)

Market Segmentation, Targeting & Positioning:

• Market Segmentation:

Pizza Organica’s Segment Selection: 

• Health-Conscious Consumers: 

Pizza Organica will exist within a concentrated (niche) market as it will target the specific segment of health-conscious consumers. As per current market trends, consumers are becoming increasingly dissatisfied with traditional frozen pizza options due to the unhealthy nature of their ingredients. As mentioned previously, IBISWorld projects health consciousness in Australia is to rise by 0.5% between 2022 to 2023. As a result, future product development and innovations within the frozen pizza industry must subscribe to shifting consumer values and demands in order to survive in the mature and rather volatile market this frozen pizza industry currently exists in. In 2022 alone the frozen pizza market experienced an increase of 1.6% regarding niche product offerings, further illuminating consumers’ growing dissatisfaction with traditional frozen pizza options. (Richardson, 2022, pg. 9) In order to successfully subscribe to shifts in health concerns, the prospective brand, Pizza Organica, must focus its production on the use of organic, higher quality, non-processed ingredients to differentiate itself from its traditional pizza counterparts. Higher quality ingredients may include feta cheese as a substitute for high fat mozzarella or tasty cheeses. Processed meats can be substituted for prosciutto or higher quality low-fat, pepperoni, bacon, chicken or beef. Pizza bases are also able to premiumize to include lower counts of carbohydrates, salts, sugars. Lastly, Pizza Organica will seek to focus on the inclusion of consumers with dietary complications and/or preferences, incorporating gluten and lactose free alternatives with a further focus on vegan alternatives to allow more consumers to enjoy the convenience of a ‘healthier’ frozen pizza option. However, despite existing attempts to innovate within the frozen pizza industry, such proposals and developments have not yet completely ‘rehabilitated the industry’s image’ as a healthier, nutritious food option, though evident movements toward a healthier image have significantly ’helped grow the consumer base’ due to efforts of inclusivity and the overall elevation of product quality. (Richardson, 2022, pg.12)

Positioning Statement: 

Pizza Organica is a healthy frozen pizza alternative encapsulating the tastes and aromas of quality authentic Italian pizza. Rated 5 stars for its nutritional properties, each pizza is jam-packed with ‘all the good stuff, without the nasty taste’ that traditional frozen pizzas usually inherit. Pizza Organica has a highly convenient preparation time, taking each pizza only 20 minutes to cook to perfection, in most household ovens. This makes Pizza Organica the perfect choice ‘for when you couldn’t be bothered’ to prepare and cook a healthy meal from scratch. Pizza Organica is highly nutritious with hearty potions combining low-carb, high-fibre pizza bases with reduced salt and sugar sauces, ideal for consumers seeking a leaner alternative at dinner time. All the ingredients include fresh vegetables and lean, non-processed meats that are all made here in Australia, so consumers know exactly where their food is coming from.

Positioning Map:

Product Development: 

• Product:

Considering Pizza Organica is a premium, ‘healthy’ pizza, all the packaging for the product will maintain a sleek, minimal design, a creative decision focused on representing the brand as an almost luxurious choice, differentiating it from the colourful nature of traditional frozen pizza packaging. In utilising a monochromatic design with formal fonts and national Italian colours, the visual nature of the product will attempt to further illustrate its premium nature, but also, its presentation as an ‘authentic’ Italian product as well. In photographing an image of the pizza atop the front of the packaging, consumers can gather an idea of what the pizza will look like once it has been prepared. Pizza Organica will utilise a tagline, emphasising the health factors of the product, in suggesting Pizza Organica provides ‘all the good stuff without the nasty taste,’ the brand is actively comparing itself to other, traditional frozen pizza products, suggesting itself as the best alternative. Similarly, the product will utilise a slogan, emphasising the convenience and time-effectiveness of the product, encapsulated by the simple phrase, ‘for when you just couldn’t be bothered’ [to cook].

Promotion:

• Internet Advertisements: 

The current social media market size is estimated to be worth $72.2bn (2022). [Marino, 2022] As a result, 14.9% of businesses allocate their marketing budgets towards social media, due to the extreme accessibility and simplicity of use it entails. (Marino, 2022) In 2022, 91% of businesses utilise social media as their main marketing platform, with 86% of businesses using Facebook and 40% of businesses using TikTok as their marketing platform of choice. (Marino, 2022) It becomes clear that due to the significance of social media in the modern realm of digital marketing, this space becomes a highly appropriate platform to promote and advertise Pizza Organica to the targeted segment of health-conscious consumers. Through the use of hashtags, posts are able to enter a public database which will push publicity further and gain traction to the 4.59 billion people who currently use social media in 2022. (Dixon, 2022)

• Potential Facebook Post Idea:

• Comparative Advertising: 

Comparative Advertising is used to ‘help to drive brand awareness by comparing their product or service to a competitor’ (Needle, 2022) Pizza Organica may adopt this promotional technique to demonstrate its proclaimed health benefits (such as salt, sugars, carbohydrate and fat totals,) in comparison to major competitors such as McCain’s Food. By ethically illustrating the many ways Pizza Organica’s positive nutritional benefits outweigh those of its competitors, health-conscious consumers are able to visually recognise and learn of the fact Pizza Organica is a better product in comparison to the most popular products from brands which currently hold the higher market shares.

Place:

In Australia, 37.4% of people use Woolworths as their supermarket of choice, whereas 28.4% of Australians use Coles. (Wallis, 2022) With both supermarkets holding the highest market share in the country, it is within these stores Pizza Organica will gather the most sales in. Considering both Woolworths and Coles provide consumers with a highly accessible variety of frozen pizza options, ranging from high to low quality, and high to low prices, Pizza Organica would benefit greatly from the ease of accessibility associated with these major, whether they be local or rural supermarkets. Regarding the benefits both Woolworths and Coles will gather by selling Pizza Organica to local consumers, is its existence as a rather niche product, centralised around the provision of organic nutritional value with a premium delivery of quality. In being targeted at Australia’s increasing health-conscious demographic, its retail within major supermarkets provides these stores a product vastly to the myriad of traditional, low to medium quality frozen pizza options that are already on supermarket shelves. In turn, Woolworths and Coles have gained an elevated status, providing a product that allows consumers to avoid settling for frozen pizza options which fail to satisfy their nutritional needs and desires. Regarding the relevant distribution channel, Pizza Organica will utilise an indirect marketing channel. With the use of various intermediaries that will seek to facilitate the smooth flow of producer to consumer. This specific marketing channel will further allow the brand to maximise its focus on the production of the highest quality frozen pizza product that will satisfy Australian consumers.

Price: 

In accordance with Woolworths.com (Australia’s highest market share supermarket), the following prices for competitor frozen pizza product also targeted at health-conscious consumers are:

 According to Woolworths.com (2022): 

FroPro Frozen Protein Pizza ($12.00) 

Veganz Verdura Pizza ($$8.50) 

Della Rosa Italian Supreme Pizza ($7:00) 

Dr. Oetker Ristorante Margherita Pizza ($6.00) 

As Pizza Organica is a premium product with high quality ingredients, prices for production, and manufacture will need to be higher to accommodate this efficiently. As a result, the retail price for Pizza Organica will need to reflect costs within this realm. Pizza Organica will adopt both a cost-focused market-skimming pricing method, a method defined by a brand’s decision to charge ‘the highest initial price that customers will pay and then lower it over time.’ (Hayes, 2022) When demand for the Pizza Organica begins to elevate, the price for the product will lower to ‘to attract… [the] more price-sensitive segment of the population.’ (Hayes, 2022). One financial benefit of making initial retail prices high for Pizza Organica, is to not only to justify its elevated costs of manufacture but also to establish itself as a higher quality product among its competitors in the eyes of prospective consumers. The retail price of Pizza Organica will be $14.95, which in comparison to its counterparts is slightly above the average frozen pizza retail price of $9.95 (Woolworths.com, 2022). It is for this reason; consumers will associate its value with the fact the product is produced in a manner focused on high quality and premium ingredients in addition to the premium manner by which the product is presented to them. For consumers interested in a health-conscious frozen pizza option, Pizza Organica’s higher price is designed to differentiate itself from competitor frozen pizzas based on how much it costs in addition to its proposed aesthetic and nutritional value. Consumers are thus permitted to make a judgement regarding the product’s value, upon initial examination of the product in stores, evaluating whether the product’s offering aligns with their personal lifestyle behaviours and motivations.

• Forecasting Spreadsheet (5 Years):

Summary:

It becomes clear that due to rising health concerns among Australian consumers, the frozen pizza industry has thus adopted a myriad of innovations to production and quality to adapt to shifting concerns and behaviours among consumers. It is by these shifts that the existing landscape of the frozen pizza market is widely perceived as an ‘unhealthy’ food option, a notion significantly detrimental to the industry’s current and future economic success and stability. However, through the premiumisation of product packaging and most importantly, the inclusion of organic, high-quality ingredients, the industry is demonstrating its response to rapidly shifting consumer concerns. Innovative approaches to manufacturing involve the incorporation of allergy and vegan friendly options within traditional pizza flavours, such as the development of gluten free and plant-based pizza bases. Furthermore, brands are increasingly developing bases with reduced carbohydrates and fat in addition to sauces with less salt and sugar content. As a result, healthier, more nutritious options for frozen pizza products are allowing consumers to enjoy this convenient food option without the compromise on their personal concerns and, or motivations.