Los Angeles, CA (PRWEB) December 27, 2012

The Frozen Pizza Production industry experienced solid revenue growth during the recession, but struggled against new obstacles in 2011 and 2012. When consumers had less disposable income during the recession, they tightened food budgets and bought frozen pizza as a cheap and convenient meal to eat at home, boosting demand. However, as the economy recovered, consumers returned to eating at expensive restaurants instead of buying frozen foods. Additionally, health-conscious Americans perceived fresh food as nutritionally superior to frozen, hampering demand for industry products.

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 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.

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. 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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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

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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.