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Mar, 01 2007

Simple product, great returns

Pizza continues to be hot among people of all ages. The marketing pie is divided into ready-to-eat, frozen, refrigerated and shelf-stable sections, with the Indian pizza market expected to grow by over 25 per cent

PIZZAS have come a long way from the days of the Italian baker Raffaele Esposito, widely believed to be the creator of the modern day pizza. Today, it has become a favorite food throughout the world, transcending all cultural boundaries. The flexibility of pizza toppings that fit local tastes compliments its worldwide, universal appeal. “Pizza has become the single largest popular food in the world and is growing at a faster pace,” Mr Nirmal Momaya, director, Somkin'' Joe’s, has aptly put it.

Changing demographics, lifestyle and the growth in the affluent consumer groups have been, and will continue to be, significant in determining and shaping the pizza concept.

The pizza restaurant market can be split into three segments, viz, fast food or quick service, delivery and carry out, and full-service restaurants. The core target market is predominantly the under 35 segment, although the takeaway market has a more distinctive youthful core, being most popular with the under 25. The more affluent families in this age group are fuelling a trend for growth in the premium end of the pizza restaurant market.

The pizza restaurant market in the US, estimated at over $16 billion in 2003, has grown 13 per cent from 1998 through 2003. The overall pizza market in the US, including retail and restaurant sales, is a $ 25 to $ 35 billion industry. Each day the reach of the world’s pizza market gets shorter, and the extension of American restaurant brands are a significant contributor to that trend. According to Mr Akbar Khwaja, MD, US Pizza, “European and American markets are quite mature but still not saturated. There might be some saturation in Europe, but not in US.”

Mr Anoop Sequeria, CEO, Pizza Corner, maintains, “The pizza market has grown tremendously over the years with lots of international players, and the market is still growing.”

Confirming that the pizza market is indeed dominated by global players, Mr Neeraj Katoch, head franchise operations, Domino’s says, “The volumes generated by these global players have helped in the reduction of input costs and in making pizzas available to the common man.” Expressing similar views, Mr Sequeria says, “Top international players like Pizza Hut, Domino’s and Papa Jones’ are performing very well in the international market.” Going off at a tangent, Mr Momaya, opines, “The pizza market is not necessarily dominated by international players. Indian players, also are performing quite well in the pizza business.”

Challenges before pizza players

International expansion is quite challenging as there is variation in cultural background, like, language, eating habits, and taste, in each country. Therefore, international pizza companies need to identify and adapt to these variations without sacrificing much on the original successful formula.

As for the competition from non-branded products, Mr Ajay Bansal, director, business development, Yum! Restaurants International, says, “Non-branded market compliments our business and creates new customers. A first time user probably may taste his first pizza from a neighbourhood bakery, but will ultimately graduate to a branded one.”

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