Los Angeles, CA (PRWEB) December 27, 2012
The frozen pizza manufacturing industry experienced solid revenue growth during the recession but struggled against new obstacles in 2011 and 2012 when consumers had less disposable income.
In response, firms developed and introduced new pizzas made with healthier ingredients, including organic and gluten-free varieties, says IBISWorld industry analyst Olivia Tang.
Firms also added gourmet ingredients to make frozen pizza more competitive against restaurant meals. As a result, revenue increased 0.8% per year on average to $ 3.1 billion in the five years to 2012. The rather anemic rate stems from greater preference for restaurant dining, which caused revenue to fall 5.0% and 3.8% in 2011 and 2012, respectively.
Profit Challenges in Frozen Pizza Manufacturing
Profit faced challenges from rising commodity costs and price competition from private label producers. The price of frozen pizza’s main ingredients, including wheat flour, cheese, vegetables and meat all increased in the past five years, raising purchase costs and cutting into profit.
Consumers’ desire to spend less on food also made generic brand products’ low prices more enticing to purchase. However, because major players control the majority of the market, their brand-loyal customers were willing to pay higher prices for pizza, even when firms raised prices in response to expensive inputs.
In addition, firms used more machinery to automate processes for efficiency, lowering per-unit production costs. The popular healthy and gourmet options also allowed firms to raise prices further. Therefore, profit expanded from 13.2% of revenue in 2007 to 14.5% in 2012.
Future Outlook and Market Concentration
In the next five years, the industry is forecast to grow slowly, but steadily. As the economy continues to recover, consumers will have more spending money, allowing them to afford eating at restaurants.
Nevertheless, more Americans will be busier as they return to work, prompting demand for convenient meals to prepare at home. Healthy and gourmet frozen pizza options will also grow in popularity, boosting demand. Consequently, revenue is projected to rise at a slow annual rate through 2017.
Key Players and Acquisitions
According to Tang, the Frozen Pizza Production industry has a high level of market share concentration. In 2012, just the top two major players alone (The Schwann Food Company and Nestle) make up about 69.6% of industry revenue.
Concentration has increased in the past five years as these major players have made significant acquisitions. For example, in 2010 Nestle acquired Kraft’s frozen pizza business, which added brands such as DiGiorno, Tombstone and California Pizza Kitchen to its product mix.
Concentration is expected to continue in the next five years as major players continue to grow through advanced technology, acquisitions and their ability to bypass wholesalers and sell directly to retailers. For more information, visit IBISWorlds Frozen Pizza Manufacturing in the US industry report page.
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About This IBISWorld Report
IBISWorld industry Report Key Topics
This industry produces pizzas, which are then frozen, packaged, and distributed to downstream markets including grocery wholesalers, supermarkets and other retailers. This industry excludes refrigerated pizzas.
Industry Performance
Executive Summary
Key External Drivers
Current Performance
Industry Outlook
Industry Life Cycle
Products & Markets
Supply Chain
Products & Services
Major Markets
Globalization & Trade
Business Locations
Competitive Landscape
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
Major Companies
Operating Conditions
Capital Intensity
Key Statistics
Industry Data
Annual Change
Key Ratios
This comprehensive report offers an in-depth analysis of the current state and future trajectory of frozen pizza manufacturing across the United States.
About IBISWorld Inc.
Recognized as the nations most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.
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