Cost-effective strategies effective amid high inflation
Premiumization impact after addressing drawbacks
Three-way competition among Ottogi, CJ CheilJedang, and Pulmuone
The frozen pizza market is heating up more and more. Amid rising food costs due to high inflation, a 'cost-effectiveness' strategy?offering taste comparable to specialty stores while keeping the price under 10,000 won per pizza?seems to be effective.
According to market research firm Nielsen Korea on the 21st, last year the domestic frozen pizza market size was 91.9 billion won, marking a 3.7% increase compared to the same period the previous year. The frozen pizza market, which was around 67.4 billion won in 2019, grew to 85.4 billion won in 2020, 88.6 billion won in 2021, and surpassed 90 billion won last year.
The continuous growth of the frozen pizza market is due to increased demand for relatively affordable frozen foods like frozen pizza amid high inflation. According to Statistics Korea, the consumer price index for pizza was 98.91 in 2021 and rose 8.9% to 107.69 in 2022 within one year. Additionally, with increased outdoor activities after the endemic phase, there is a preference for frozen foods, which have a relatively long shelf life and can be stored for extended periods.
Moreover, companies improving factors previously criticized as drawbacks of frozen pizza?such as hard dough or poor toppings?and competing to launch premium products have also influenced market growth. A CJ CheilJedang official explained, “The frozen pizza market, which was previously operated mainly with familiar and somewhat stale menus, is gradually providing novelty and freshness through restaurant-level quality and new menus, which is seen as a key factor.”
As the frozen pizza market grows rapidly, competition among companies is intensifying. In the domestic frozen pizza market, Ottogi holds the leading position, followed by CJ CheilJedang and Pulmuone. Last year, Ottogi had a 37.8% market share, ranking first, with CJ CheilJedang and Pulmuone following at 27.7% and 18.5%, respectively.
Ottogi, which entered the frozen pizza market in May 2016, has solidified its position as a market leader by offering various frozen pizzas such as round pizzas, square pizzas, spoonable cup pizzas, and single-serving pizzas. Ottogi surpassed 100 million cumulative sales by the end of last year, with estimated cumulative sales revenue of about 300 billion won to date. Since last year, Ottogi has focused on premium products like wood-fired style pizzas and crust pizzas, and on the 20th, it launched two types of ‘Basic Cheese Pizza’ as part of its plan to solidify its lead.
An Ottogi official said, “The success of Ottogi pizza is due to consistently introducing products that consider consumer preferences, convenience, and quality in line with changing trends,” adding, “We plan to continue menu research and development to present frozen pizzas that embody Ottogi pizza’s unique technology and know-how.”
However, competitors are also fiercely pursuing. CJ CheilJedang launched ‘Gourmet Premium Pizza’ in December 2020 and sold over 3 million units within a year, intensifying its chase for the lead. As of last year, frozen pizza sales reached about 30 billion won, a 17% increase compared to the previous year. Latecomer Pulmuone is also continuously launching new products, such as this month’s ‘Cheese Waterfall Chicago Pizza Bolognese,’ raising its market share.
In addition to quality improvement and product line expansion, the spread of non-face-to-face consumption has created an environment where frozen products can be easily purchased through online channels, so the frozen pizza market is expected to continue its growth trend for the time being. An Emart official stated, “With recent advances in rapid freezing technology, improvements are being made to satisfy both quality and price,” and predicted, “Market demand for frozen foods, including frozen pizza, will continue to expand.”
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
