Pizza battles for share-of-stomach with mounting pricing issues swaying Canadian consumption

May 22, 2015

Even as Canadians become more aware of how eating habits affect their health, pizza remains a staple of their diets. According to a new report from Mintel, three quarters (74 percent) of Canadian adults ate frozen pizza in the six months preceding 2015 and 81 percent ate restaurant or take-out pizza during the same time period. Despite its popularity, volume and dollar sales of pizza have declined notably over the past five years.

“Aggressive pricing strategies, increased health concerns, competition from foodservice, where Canadian Millennials perceive pizza to be of better quality, as well as disinterest from the ageing population have all led to declining sales,” said Joel Gregoire, Senior Food and Drink Analyst at Mintel. “Mintel forecasts predict a return to positive volume growth. However, competitive pricing pressures will force a continued drop in dollar sales.”

Taste and price outweigh health concerns

There are many variables Canada’s pizza consumers take into account when making a purchase decision. However, 34 percent rank price ahead of brand as a deciding factor. When considering what type of pizza to purchase, nearly as many consumers (31 percent) say they are consistent in their pizza purchase. When deciding between frozen or refrigerated pizza offerings, preferred toppings ranks among the top five reasons for selecting a pizza, with 84 percent of consumers listing this attribute. When asked what their top consideration is, preferred toppings wins out yet again with 35 percent. Rounding out the second and third choice attributes cited as most important are crust thickness (72 percent) and size (72 percent).

45% of Canadian Millennials think price is more important when purchasing frozen pizzaCanadians acknowledge that their overall health depends on eating well, but purchasing factors that relate to health such as caloric content (32 percent), being all-natural/organic (27 percent) and having whole grain crust (25 percent) ranked substantially lower in customers’ purchasing consideration set. However, three in 10 Canadian consumers (31 percent) agree that store-bought pizza is a relatively healthy option. While over half of Canadian adults (54 percent) are identified as overweight or obese, only 32 percent of frozen or refrigerated pizza eaters cite lower-fat or -calorie pizzas as being among their top five considerations when choosing one option over another.

“Canadians demand more selection from frozen and refrigerated pizzas, and they’re also interested in more healthful options. At the same time, the basics of toppings and crust remain most important to consumers when choosing one pizza over another,” continued Gregoire. “As such, manufacturers must strike an artful balance in delivering on innovation and health without diluting the product Canadians have grown to love and expect from their favorite pizza brands.”

Pizza is tossed out by an ageing population

As age increases, frozen pizza purchases decline. Only 56 percent of Canadians aged 65+ report eating frozen pizza, well below the average of 74 percent. Furthermore, this demographic is expecting growth of 19 percent by 2019, which places further financial risk on the faltering frozen pizza market. According to Mintel data, Canadian consumers over 65 may be disinterested in pizzas because of their different pizza-eating habits. This group features an increased likelihood of adding their own toppings before heating up their pizza (44 percent) and a desire for fewer but better quality toppings (43 percent).

“The 26 percent of Canadians who do not eat frozen pizza skew older and are less likely to have children at home. Pizza consumption starts to fall amongst those age 45-54 and continues to decline thereafter,” Gregoire continued. “When children are not present in the home, the share of consumers who do not eat frozen pizza nearly doubles to 31 percent.”

Millennials’ love/hate relationship with pizza

While younger consumers drive volume sales of frozen pizza, they contribute to the pricing pressures that are decreasing revenue. For consumers aged 18-24, price is even more likely to be a factor when purchasing frozen pizza (45 percent vs 34 percent overall). To accommodate this key purchasing group, retailers are forced to reduce the cost of their products so they will stand up to competitive market prices, leading to decreased dollar sales. Canadian consumers under 25 show more interest in buying single-serve (31 percent) and microwavable options (30 percent) at retail locations. Additionally, they are more likely to agree that individual frozen or refrigerated pizza is a good option for lunch and/or school, but primarily prefer takeout and delivery with 40 percent eating it two times or more per month.

Gregoire concluded, “Younger consumers, particularly Millennials, are the driving force behind the pizza category while simultaneously acting as the source of current market pricing pressures. Millennials show the highest penetration of pizza consumption and are the most fervent foodservice customers with 40 percent eating takeout at least twice a month. However, the fact that under a third of consumers aged 18-24 are eating frozen pizza (32 percent) is indicative of the current sales trend in the store-bought pizza market.”

Mintel News

For the latest in consumer and industry news, top trends and market perspectives, stay tuned to Mintel News featuring commentary from Mintel’s team of global category analysts.

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