Any Way You Slice It
By Bob Garrison
Schwan’s Global Consumer Brands group is taking pizza in new directions.
How does the saying go? The proof is in the pizza? Okay, that’s not really it. But the message is the same: Results are what count. Actions speak louder than words.
A 20-year veteran of The Schwan Food Co., Greg Flack has heard his share of words in company planning sessions. Then again, Flack — now president of Schwan’s Global Consumer Brands — says a recent meeting spurred “the most significant change” in years at this Marshall, Minn.-based company.
In late 2005, Consumer Brands management brought in nearly 300 managers to talk about how the would become “bigger, better and stronger.” Why? Because today’s food market is more challenging, with fast-paced product trends, greater blurring between sales channels and increasing customer demand for meaningful sales solutions (not just more new products).
The bottom line: Successful companies not only must embrace change, but also must step up and lead. That said, Flack says he has challenged Schwan’s personnel to make “individual leadership commitments” to exemplify dedicated, proactive workplace behaviors and, in turn, accelerate company growth.
Keep in mind that Schwan already is a significant player. With a global multibillion dollar business, the company bills itself as one of the world’s largest frozen food companies, with 22,000 employees, as well as distribution across retail, foodservice and home delivery channels.
Besides its trademark yellow home delivery trucks, Schwan’s Global Consumer Brands unit (one of four major groups) might be the company’s most recognized business. Its portfolio includes such well-known retail frozen pizza brands as Freschetta, Red Baron and Tony’s.
As for the “proof in the pizza,” Flack says his group, which is based in suburban Minneapolis, has been quite active. During the past two years, it has branched into entirely new retail space (refrigerated products, all-natural foods, new retail channels), supported its core frozen pizza line with steady new product introductions, supported customers with localized sales programs, and re-launched its Asian Sensations snack and side dish business.
“The slowdown in annual retail sales growth tells us there’s not only a need in frozen pizza — but in all frozen areas — to innovate and develop real consumer value in new products in a more effective way,” Flack says.
Platforms for Expansion
Flack notes that households with children — the frozen pizza category’s traditional core buyer group — are projected to continue to decline in the coming years. As a result, Schwan and others must appeal to demographic evolution and consumer need states in new and more creative ways. And while this $2.8 billion retail frozen pizza category posted robust sales during each of the past four decades, it’s been flat as of late.
Takeout, delivery and take-and-bake outlets also present greater competition for at-home pizza consumption.
“I view challenges as opportunities,” Flack continues. “The way we have to respond to demographic changes is to look for new and innovative ways to connect consumers to our category. We will do that by offering new forms of convenience, increasing the quality level and premium nature of our products and delivering foods that meet consumers’ health and wellness concerns.”
Mark Jansen, vice president of product strategy, emphasizes that it takes money to make money. He says Schwan quite literally did its homework by investing “significant dollars” to study consumer usage occasions (“need states”), as well as all types and sources of pizza consumed at home.
“We created a matrix that breaks down those eating occasions, as well as where products are purchased,” Jansen says. “Then we were in a better position to look at where the white spaces [gaps in the market] were and where we could drive incremental growth for both ourselves and our customers.”
With that, Jansen says, Schwan shifted its approach to customers from saying, “we’re the frozen pizza guys” to “we’re the people who understand pizza eaten at home, regardless of where the product came from.”
Schwan likewise has embraced a position as the “world’s largest frozen pizza manufacturer,” considering its production and sales volumes with U.S. and overseas operations and sales across multiple U.S. channels.
For the record, Schwan is the second-largest player in the traditional U.S. retail frozen pizza category, with more than a 26% share of dollar sales volume, according to Jansen, who cites ACNielsen 52-week tracking data combined for traditional supermarkets and Wal-Mart stores.
Most recently, Schwan rang up 9.4% and 11.9% dollar and unit volume gains, respectively, during an ACNielsen 24-week period ending December 9, 2006. During that same period, the frozen pizza category posted a 2.6% dollar increase and a 2.1% unit volume increase.
Story Behind the Story
What’s the story? Last year saw Schwan support its Freschetta and Red Baron lines with several new crusts (Freschetta Ultra Thin, Red Baron Microwavable), new package offerings (Freschetta two-pack single-serve) and new sizes (such as the 33-oz. Red Baron “Big Baron”).
Schwan’s biggest news, however, is that it has left the freezercase and ventured — for the first time — into the grocer’s refrigerated section on the store perimeter. Last September, it introduced Freschetta Build & Bake, a premium pizza-component product line with individually packaged cheese, meat, crust and sauce. Schwan unveiled the line in Wal-Mart Supercenters in the Northeast.
“We discovered an eating occasion that was underserved, yet one where there was a great deal of consumer passion,” Jansen says. “In this instance, it’s more about creating something and the experience of working together to make food. We had mothers saying, ‘My teenage daughter and I barely talk anymore, but this is something we can do together.’ We also had husbands and wives saying, ‘We love to cook but we just don’t have the time. This is something we can do together while we share a glass of wine.’”
Freschetta Build & Bake crusts come in two sizes (12 in. and 7 in.) and two styles (Traditional and Crispy Italian Thin). There are two grades of 4-Blend Cheese (Traditional and Premium) and two options for sauce and meat, as well (Traditional Pizza Sauce and Zesty Italian; Italian Style Pepperoni and Deli-Style Canadian Bacon).
“When you think about soda [just in the retail environment], you realize it’s no longer relegated to just one aisle,” Jansen says. “You find it in stand-up merchandising at the checkout or — in larger retail venues — at a fountain. We’re bringing that same approach to pizza because it has the same level of consumer consciousness. It’s America’s favorite prepared food.
“We’re going to retailers and saying, ‘Here’s your store. Here’s the traditional frozen grocery area, the deli, the dairy case, the prepared meal section and the takeout area. All of these departments are relevant for pizza,’” he continues. “No matter what, our goal is to collaborate and create ‘wins’ in the marketplace for our customers.”
Schwan worked extensively to develop, price, package and merchandise Freschetta Build & Bake, Jansen notes. Although the products may be sold in any refrigerated space, depending on store layout, he thinks they’re perhaps best suited in the deli or near cheeses in the dairy case.
Taking its interest in product collaboration one step further, Schwan teamed up with celebrity chef Wolfgang Puck in a licensing agreement to produce and market a six-item line of Wolfgang Puck all-natural frozen gourmet pizzas. The premium offerings carry a suggested supermarket retail price of $5.99 and range in size from 12.3 oz. to 14.8 oz. Varieties are Spicy Chicken, Four-Cheese, Barbecue Chicken, Margherita, Pepperoni and Cheese.
“We’ve seen the trend toward all-natural, but we heard consumers saying, ‘Don’t give me a brand that I already see in the rest of grocery and tell me that it’s now organic or all-natural,’” Jansen says. “We also looked at other brands that are organic and all-natural, and their positioning has been just that — that they are [only] organic or all-natural.
“At the end of the day, people buy food because it tastes really good,” he continues. “We think bringing Wolfgang Puck into the all-natural segment is a chance to build a true culinary experience. Our positioning — very consciously — is taste first, all-natural second.”
Schwan certainly has demonstrated its brand-building skills in other areas of the freezercase. For example, it took a sleepy Pagoda frozen egg roll line and recast it as Pagoda Asian Sensations. In doing so, Schwan repackaged, resized, reformulated and expanded the line (from 10 items to 14 items today) to embrace a broader snacking occasion. Where consumers used to think of Pagoda as egg rolls (just as an occasional specialty ethnic side dish), Asian Sensations now is associated with such offerings as Crab Rangoon, Cream Cheese Wontons, Southwest Style Chicken Egg Rolls and Teriyaki Beef Wontons.
Last year also saw Schwan more than double its annual marketing investment in multimedia advertising and promotion for Asian Sensations, which now carries the tagline “Everyday Asian for any occasion.”
Talk about good fortune cookies. According to Jansen, Schwan’s efforts paved the way for its own success with two years of double-digit sales growth for the brand and a clear boost to the $2.3 billion snack and handheld category, as well.
“This is all about taking an occasion in Asian food and bringing it into the snacking mainstream,” Jansen says. “When you look at the development of restaurants and ethnic food relative to the popularity of that food at retail, you see high ratios of crossover with pizza and Mexican foods. The least-developed of those ethnic categories is Asian. Until now, there hasn’t been a solution that effectively leveraged what people love to eat in Asian restaurants and brought it home in a mainstream way.”
While Schwan builds its frozen snack business, Flack promises to keep pushing the edge of the envelope.
“One of our goals is to be the supply chain solutions leader for our customers, the market growth leader in the channels we participate in, and the product value and innovation leader in the categories in which we play,” he says. “And we will lead by innovating. Products that weren’t in the portfolio two years ago are now generating revenues close to 20% of our total revenues. That’s a rate we look to accelerate in the future. We have to deliver on innovation because it’s the oxygen, so to speak, of our business, and new life and growth for our organization and its people.” SF&WB
Editor’s Note: Bob Garrison is editor of Refrigerated & Frozen Foods, a Stagnito Communications publication. This article originally appeared in January 2007.
At a Glance
Description: Schwan’s Global Consumer Brand is one of four units belonging to The Schwan Food Co. The Bloomington, Minn.-based group processes and markets branded retail products in more than 50 nations.
Brands: Frozen Pizza — Freschetta, Red Baron, Tony’s in the U.S. and Chicago Town pizza, which included frozen desserts and distributed overseas. Breakfast Entrees — Red Baron Scrambles and Mini Scrambles. Egg Rolls & Appetizers — Asian Sensations. Snacks & Side Dishes — Larry’s Potatoes, Tony’s Pouches.
Top Executive: Gregory Flack, president.