It’s a long way from a movie set 20 years ago to the top 10 of today’s frozen pizza market, but Spartan Foods of America of Spartanburg is getting ready to take on the giants of the industry to put its Mystic Pizza in that elite circle and spin off new products.
With fresh capital and the success of Mama Mary’s Pizza Crust, No. 2 in the pizza crust market, SFA is in a confident growth mode in the chase for a bigger slice of the $40 billion a year Americans spend on pizza, frozen products being a growing segment of that market.
“We’re really trying to grow this business,” said Chief Executive Officer Fred Crowe. “It will come from manufacturing products we’re in, and some of it is going to come from products we’re going to have manufactured on the outside.”
To keep up with current demand, this week the company began running four lines rather than three on a regular basis at its refurbished Spartanburg plant.
The assembly includes a new production line with a state-of-the-art packaging component, the most costly part of the $1-million expansion, said Crowe, who came to SFA 10 months ago after 30-year-career in flexible packaging, much of it in the food industry.
The company put on 30 additional workers to man the production lines, bringing SFA’s total workforce to 175, including six regional sales representatives.
President Thomas P. Baliker, who founded the company in South Florida in 1986 and moved it to Spartanburg in 1994, is confident SFA can build on the success it has had with Mama Mary’s Pizza Crust, which he introduced to grocery shoppers in 1990.
With traditional, crisp and thin, and whole wheat varieties and a price advantage, he said, “we’ve been gaining market share over the last two or three years at 2 ?? to 3 percent a year nationally.” It trails only Boboli.
“Business has been really good,” he said. “We’ve probably increased the size of our business by 20 percent a year, and that’s really without the purchase of Mystic.”
Baliker believes Mystic Pizza, with its reputation for quality and some built-in notoriety nationally, has a good chance of becoming one the nation’s top frozen pizza sellers.
Movie buffs will remember the Mystic Pizza restaurant in Mystic, Conn., as the setting of the 1989 movie of that name starring Julia Roberts in her first screen role.
The movie won huge audiences and so did Mystic Pizza, which became a must-have for tourists and found a loyal following in New England for a frozen version.
Eighteen months ago, SFA, which was purchased in 2005 by the private equity firm Azalea Capital of Greenville, acquired Mystic Pizza’s frozen variety, which is produced, as it was under the previous owners, under contract in Chicago.
“When we bought Mystic Pizza, which was a regional distributor of frozen pizza, our objective was to develop that into a national brand, and that definitely would put us on the map as one of the top 10 in frozen pizza,” said Crowe.
He added that it is going to take time to build the brand nationally and that Mystic Pizza will be going up against competitors with deep pockets.
Food giant Kraft has the No. 1 and No. 3 top selling brands, DiGiorno and Tombstone. The two combined sell $750 million frozen pizzas a year, according to AIB, a baking industry institute. Schwann’s also is a big player with No. 2 Red Baron, No. 5 Freschetta and No. 8 Tony’s. General Mills owns No. 7 Totino’s, as well as Jeno’s.
Baliker and Crowe are convinced, however, that the nimbleness and creativity the company demonstrates in steadily increasing its pizza crust market share and in introducing unique and quality products proves they have a shot.
“We think in Mama Mary’s brand we have a quality value product and a quality value strategy,” said Baliker. “We offer two crusts (per package). Our competitors offer one in most instances at the same price or just slightly lower. Our price per ounce consistently is well below the competition.”
SFA also has an advantage with a vacuum seal that gives Mama Mary’s a shelf life of six months whereas competitors’ products have three months or less, Crowe added. In the dog-eat-dog fight for supermarket space, that’s a plus.
The company also sells frozen pancakes to institutional food services and a “never frozen” pancake in supermarkets. The unfrozen pancake is the only product of its kind in the marketplace, and SFA recently introduced three new flavors: buttermilk, maple and multi-grain.
Baliker and Crowe envision rolling out new frozen products, such as a calzone-like product in testing and a breakfast pizza, under the Mystic Pizza label and adjunct pizza products – toppings and sauces, for example – under the Mama Mary’s name.
In June, the company is rolling out new white crusted frozen pizzas as part of a Tuscan Garden Collection with all natural ingredients, spinach and roasted red pepper and three cheeses and roasted tomato.
They are being produced on the new assembly line in Spartanburg, which has the flexibility to do either dry crusts or pizzas for the frozen market.
Baliker said tracking data showed that a growing number of pizza lovers prefer white pizza, “so we took that and developed two combinations of the most popular ingredients in gourmet recipes.” The response in test marketing “blew us away,” he said.
SFA tests and grades potential new products in a test kitchen it funds at Clemson University’s School of Food Technology.
To strengthen its hand, Baliker said, SFA is pushing to “close every distribution void we have throughout the country” – to improve on its 75 percent share of all shoppers in America who go to a supermarket and can find a SFA product.
Of the nation’s estimated 31,000 supermarkets, two-thirds of them chain stores, SFA is in 20,000. Baliker said SFA recently has made inroads on the West Coast.
Baliker and Crowe talked, too, about the need to extend beyond supermarkets to outlets untapped by SFA.
“If you look at retail grocery,” Crowe said, “there’s not a mass opportunity for growth. There are other channels we’re not in, like convenience stores, mass merchandisers and club stores such as Costco that offer tremendous growth opportunities.”
While the notoriety of the movie helps, Mystic Pizza’s challenge is building public recognition nationally on a tight budget.
Said Crowe, “When you talk to people about Mystic Pizza, older people remember the movie Mystic Pizza that was made 20 years ago. Young people don’t know the movie, but maybe they know the pizza. How do we make that brand more recognizable? How do we extend it?”
Since the company doesn’t have deep enough pockets to spend “millions and millions of dollars” on traditional mass advertising, it is looking at different media options, he said.
“There are very creative ways to expand name recognition and brand awareness through the Internet. That’s not something we’ve done a lot of so we are redesigning our Web site. We are redesigning our approach to online marketing and brand development, and that’s not expensive to do.”
Baliker, who started the company and named its products for his mother, said the sale of majority interest in the company to Azalea Capital has worked out well.
“We felt like we had some really great opportunities, and we needed capital,” he said of the decision to sell to Azalea. “They have provided everything we needed from the standpoint of money and from the standpoint of additional human resources to get to the next level. It’s been a wonderful relationship, and they’ve been great. ”
“They are very good people work with and obviously are very committed to the business,” said Crowe, who was recruited by Azalea to become CEO. “Everything we’ve asked for, they have been willing to help with.”
In separate interviews, Baliker and Crowe were effusive in praising their complimentary working relationship.
“He’s very astute manager-wise,” said Baliker of Crowe. “He has a great background and has helped us immensely, providing us with insights in terms of planning and growth that are immeasurable in how it has helped us.”
“My background is in packaging and manufacturing, and Tom’s is in being very entrepreneurial, very market driven and very product driven,” said Crowe. “He is passionate about the products and making sure we’re satisfying the customer.”
