Frozen Specialties Inc. turns to joint ventures, new products and more for a larger slice of the private label market.
The answer? It depends on the office. Employees at Frozen Specialties Inc., Archbold, Ohio, smiled knowingly when they recently saw company leader Gene Welka mugging for the camera. There was just something about the magazine photo shoot that captured the spirit of FSI and Mr. Welka, a youthful, 52-year-old pizza pusher.
Since purchasing FSI three years ago, this former McCain Ellio's veteran and his executive team have both figuratively and literally revitalized the nation's largest producer of private label and value-priced frozen pizza. Besides bringing a new enthusiasm to the company, Mr. Welka and his team recently spearheaded a $5 million investment in operations.
"Our goal is to do frozen pizza very well in a small segment," Mr. Welka says. "We feel that with our product costs and our plant, we can deliver a great product at a great price to the consumer. The factory is very focused on making pizzas cost effectively with consistent quality."
FSI has carried that charter since its 1954 start-up by Bob Garmire and Harry Wegerif. Since then, the company owned by Beatrice and others has grown to more than $50 million in annual sales. FSI's eight flavor product line boasts more than 20 private label names in addition to FSI's own brands, G*W, Mr. P's and Fox DeLuxe. The company's automated, 110,000-sq.-ft. plant produces 300,000 frozen pizzas daily.
It's certainly a position of strength in a strong, growing market. Market tracker Information Resources Inc. says supermarket frozen pizza sales rose 14.5% to $1.8 billion during a recent 52-week period ended April 27, 1997. FSI officials estimate that their company produces one in every 10 frozen retail pizzas sold daily.
"In any category, the dominant players are always on the top and the bottom of the category. While the super premium segment has been getting all the headlines, the value segment is not only surviving, it :SS growing," Mr. Welka says. "There is a lot of money there for the retailer if he works both ends. We bring in the shopper the retailer wants."
Moreover, there's still of room to grow.
"When we looked at the business, we viewed FSI as a building block to acquire additional frozen food companies and branch into other sectors in the frozen food case," Mr. Welka says.
Adds Jim Delzell, vice president of sales, "This is an excellent time for us. We feel we're well positioned to be a significant vendor in the whole value arena, whether it be value pizzas, stuffed sandwiches or other areas."
FSI officials project to grow their company at a growth rate equivalent to that of the frozen pizza category during the next three years. Moreover, FSI plans to double its sales in the next five years - 50 percent of that from joint ventures and acquisitions. Meanwhile, FSI remains committed to internal growth fueled by new products and production efficiencies.
That commitment started with FSI's management-led buyout in 1994. Officials wasted little time to invest more than $5 million in new production lines, dough sheeting systems, ovens and topping applicators. FSI researchers likewise reformulated the company's products to improve crust, topping and sauce profiles.
"In the past, the company had a good quality control system but not nearly as focused as today," Mr. Welka says. "We no longer look at pizza primarily from a price-point basis. You have to deliver a quality product regardless if it's branded or private label."
Now that FSI has strengthened its own operations, officials believe it's poised to branch out and look for acquisitions. Mr. Welka acknowledges that FSI would like to acquire other frozen pizza and/or snack processors with bakery and dough technology expertise. FSI believes it could quickly leverage its national truckload distribution network to grow a regional company's sales exposure.
FSI isn't biding its time for a big deal. The company also has an aggressive stance toward joint venture partnerships to quickly expand its product line. An undisclosed stuffed sandwich processor has been co-packing items for FSI since this past spring.
"We're very excited about this," Mr. Delzell says. "Hand-held snacks, such as stuffed sandwiches, represent a big area of high potential for private label. There is a void in the market and a need for standard private label products with a good price-value relationship to the brand. Also, our dough formula matches the leading national brand as it is sheeted and not extruded like some competitors."
FSI last month began offering hand-held, non-breakfast frozen snacks in pepperoni, ham & cheese, and beef & cheddar varieties. FSI developed a proprietary formula for the 4.5-oz. products, which carry a suggested retail of $1.99 or less.
"Our position is to offer a private label product of equal or better quality than the leading national brand," Mr. Welka says. "When the retailer looks at its SKUs in the hand-held non-breakfast snack area, it will see that there's a clear opportunity. Sales volume there is close to $750 million."
Meanwhile, FSI has developed more new frozen pizza offerings to reach other niches in its own category. Long known for its 7-inch and 9-inch offerings, the company last winter deputed a four-item line of 10-inch, 16-oz. pizzas. The popular segment has little private label competition. Morever, the segment has almost $300 million in retail sales with an average retail price over $2.50 per package. FSI's private label product will retail between $1.79 and $1.99.
