Business and Operations
marketing insights: June 2009
What’s in store?
This is a common statement made when we find ourselves in adverse
circumstances, such as the current global economy. Of course, if we
were clairvoyant we would have saved for a rainy day, moved our money
into secure GICs and not assumed so much debt.
This is a common statement made when we find ourselves in adverse circumstances, such as the current global economy. Of course, if we were clairvoyant we would have saved for a rainy day, moved our money into secure GICs and not assumed so much debt. Our grandmothers would argue that clairvoyance be damned; most of this stuff is just common sense. They’re right (darn it). While we can’t read the future, we can anticipate our response to potential challenges and shore up our bets. Knowing the trends in your industry will help you create initiatives that drive future growth. With the help of some pizza industry experts, we’ve highlighted a few sectors worth a second look and some tips and tools to help you to target these hot trends.
Consumer flight to value
Frugal is the new black. Neilson reports that in 2008, 20 per cent of consumer discussions online referenced strategies for managing grocery budgets. Visits to price comparison websites were up significantly this year. Value brands are enjoying a surge in popularity too. Dollar sales of Spam are up 14 per cent versus a year ago. Dry pasta dollar sales are up 25 per cent over last year. Pizza is one of the most economical menu items for patrons, since one pie will often feed several people and still leave leftovers. Roberto Vergalito, a pizza operator in St. Catharines, Ont., has leveraged some innovative tactics to address consumer budgetary constraints.
“I ran an aggressive promotion recently. I offered a Recession Buster special which included two eight-slice pizzas with one topping for $12.99. It succeeded in attracting new customers and in keeping the existing customers in the habit of buying pizza regularly. I feel that if you can keep the volume up during the tough times, it’s easier to ride the wave when the economy turns around. This way, I don’t have to rebuild the traffic when times get better.”
Traditionally, most immigrants to Canada came from Europe. This trend slowed in the 1980s as the proportion of immigrants born in Asia began to outpace those of European descent. Currently, nearly 60 per cent of immigrants to Canada are born in Asia, creating new taste preferences and opportunities for food service operators. This impact will be felt most keenly in Canada’s largest cities. It is estimated that by 2017, more than one in five Canadians will be what is defined as a visible minority, a proportion that will climb to greater than 50 per cent in cities such as Toronto and Vancouver. Chinese and South Asian immigrants will represent the majority of these new Canadians. Marla Mitchell, food service product manager for Heinz Canada, sees this trend infiltrating the pizza category.
“Our Diana sauces can be used to create pizzas with an interesting twist. Diana’s Thai Sweet and Spicy makes a great base for a Thai pizza. This sauce is very popular. It’s one of our best sellers.”
Good and good for you
In a rocky economy, it could be theorized that consumers might throw healthy foods out the window in favour of less expensive belly fillers.
However, as the old saying goes, if you haven’t got your health, you don’t have anything. Citizens losing employer-funded health benefits may be keen to avoid costly prescriptions. Food intolerances and allergies are more prevalent than ever. A market research firm estimates that sales of gluten-free products will grow 15 to 25 per cent annually (Orlando Sentinel 2008). Rich Products of Canada believes that the gluten-free sector is significant enough for them to launch a pizza crust to address the trend.
“Operators have told us they are being asked for gluten-free pizza crust,” confirms Kevin Spratt, business development manager for Rich Products of Canada. “Our gluten-free sheeted pizza crust comes in its own pan to ensure it’s not exposed to residue from other baking pans in the kitchen.”
Developed by Rich Products with French Meadow Bakery, these par-baked pizza crusts are certified gluten free, lactose free, and casein free. The crusts are 10 and a half inches in diameter, 84 per cent baked, and delivered frozen.
The 100-mile pizza
The 100-mile diet refers to the practice of eating only products grown within a 100-mile radius of where you are. People are keen to buy products produced locally for several reasons. They aren’t transported as far and thus leave a smaller environmental footprint. They employ fellow Canadians and are perceived as being grown under safer conditions. First Lady Michelle Obama has planted a vegetable garden at the White House to bring awareness to urban vegetable gardens.
Co-operative gardening plots are springing up all over in North American cities. Look at your menu items. Do you use ingredients from Canadian suppliers? Are they grown in Canada? You may want to promote Canadian grown ingredients on your menu. Joan Patterson, Heinz Canada’s corporate communications manager, points out that Heinz sauces boast a very specific pedigree of origin.
“All of our Canadian tomato-based products are made from tomatoes sourced from a 60 kilometre radius around our Leamington, Ont., plant. We also import some tomato sauces from Heinz USA but they are all grown from a proprietary Heinz seed. Over the past century our traditional hybriding techniques have created a tomato that’s drought and disease resistant. It’s a hardier plant and therefore requires less water and fewer chemical pesticides to thrive. It’s better for the environment,” says Patterson.
Environmental issues have been at the top of many consumers’ minds over the last two to three years. President Obama has publicly declared green technology a frontline strategy for economic growth.
Some retailers are reporting that 40 per cent of their customers are declining a bag for their purchases at the cash register and grocery retailers are promoting the use of canvas reusable bags. Consider selling a reusable thermal cup for your single-serve soft drinks. If it sports your logo and name it will also serve as a promotional strategy. Are your pizza boxes recyclable? Is it possible to deliver the pizzas in a reusable box? The Heinz plant in Leamington has exemplified sustainability through contributing energy back to the grid and establishing best practices.
“We’ve also worked to make our packaging as lightweight as possible to decrease emissions during transport and throughout the product’s life cycle,” says Patterson.
“Rich’s French Meadow Bakery products are all made from ingredients grown without herbicides and pesticides,” says Jeffrey Solway, associate business development manager for Rich Products of Canada.
Your customers care about these issues so consider the small or big changes your company can make. Once you layer your efforts on top of initiatives undertaken by your suppliers, they will add up to something very significant over time.
Starbucks built an empire successfully mimicking the authentic Seattle coffee house experience. They introduced products with exotic twists that proved to be mini-vacations in a cup. There are similar opportunities in the pizza category. After all, pizza is a romantic food and we forget that amongst all the flyer coupons and fast delivery.
“We’re seeing a lot of buzz about artisan, upscale brick oven baked pizzas,” points out Solway. “If the pizza is shaped into an oblong crust, topped with a sprinkling of quality toppings with fabulous flavour then we’ll often encourage an operator to market it as flat bread instead of a pizza. Often it can command a higher price point.”
Mitchell shares that Heinz is seeing many innovative operators have success with unusual applications for their sauces normally used on pasta.
“We’ve seen our Alfredo sauce used to create a white pizza. It can be topped with chicken and unusual cheeses to create an exotic taste profile.”
Vergalito brings the authenticity theme closer to home. “My family’s restaurant, Espresso Passion, is positioned to truly give customers a genuine taste of Italy. We have a wood-burning pizza oven, cappuccino makers and an ambiance that welcomes and embraces you as only a warm Italian family can.”
Perhaps it’s this connection to the customer that best sums up one of the most important trends of all: A superior retail experience. Every trend we’ve discussed here speaks to longevity for businesses and the planet. If we’ve learned nothing else this past year, it’s got to be that there are no shortcuts to a secure future.
As Vergalito sums up beautifully: “Every customer that walks through my door gets 30 seconds of my undivided attention as I ask them, how are you doing?” They deserve that and it makes them loyal. That’s what gets you through the challenging times.”