The past year has been one of significant change in the pizza segment. What is potentially the biggest game-changing move has yet to fully play out, as Vevey, Switzerland-based Nestle S.A. is in the initial stages of integrating Kraft’s frozen pizza business, which it acquired in March. In any event, it would seem Nestle has a winner on its hands.

In the most recent 52 weeks ended May 16, Kraft Foods’ frozen pizza business was the runaway leader in dollar sales, ringing up $1,283,062,000 of the total $3,221,828,000 in the segment, according to SymphonyIRI Group, a Chicago-based market research firm. Equally impressive was the 9% year-over-year gain in dollar sales and 8.5% gain in unit sales scored by the Northfield, Ill.-based company’s frozen pizza business during the period.

By comparison, Nestle USA Inc. experienced an 11% decline in dollar sales, to $205,901,000, and a 9% drop in unit sales, to 78,441,170, during the 52 weeks ended May 16, making it the fourth-largest frozen pizza maker prior to its acquisition of Kraft Foods’ business.

Brad Alford, chairman and chief executive officer of Nestle USA, noted in a Jan. 7 conference call to discuss the transaction that Nestle expected to realize distribution synergies as a result of the acquisition. He also said the company expects to incorporate some “brand stretching opportunities,” specifically mentioning DiGiorno, which under Kraft’s direction has soared to a commanding No. 1 brand position in frozen pizza with $663,393,900 in dollar sales in the 52 weeks ended May 16, up 24% from the same period a year ago. The brand recently received a boost from its Pizza & Breadsticks combo product.

“Can you take the DiGiorno brand into sandwiches?” Mr. Alford asked. “There is a lot of opportunity to play our brands across one another.”

Schwan, General Mills push value

Growth in frozen pizza has not been limited to Nestle/Kraft, though.

Schwan Food Co., Marshall, Minn., posted a 20% gain in unit sales and 5% increase in dollar sales in the period ended May 16, according to SymphonyIRI. With $736,956,800 in sales, Schwan’s frozen pizza business is firmly entrenched as the No. 2 player, and much of the company’s recent success may be attributed to the Tony’s brand.

With the tagline “More varieties, more value, more fun!,” Tony’s pizza is the seventh largest brand in terms of dollar sales, but its 25% dollar sales growth and 70% unit sales growth made it the most successful brand (among the top 15 tracked by SymphonyIRI) in terms of percentage change over the past 52 weeks ended May 16.

A key driving factor was the “value” initiative, as Schwan slashed the average price of its Tony’s pizza by 70c, giving it an average unit price of $1.94 in a market where most similar-sized pizzas cost more than $3. According to SymphonyIRI, while no leading brands raised the average price of their pizza since May 2009, no one came close to Tony’s price cuts. Of the top 10 brands, only Kraft’s California Pizza Kitchen and Schwan’s Freschetta reduced unit pricing by more than 10c, with cuts of 22c and 15c, respectively.

Besides Tony’s, Schwan’s also has seen strong demand for its Red Baron (dollar sales up 5%, unit sales up 7%) and Freschetta (dollar sales up 4%, unit sales up 7%) brands over the past year.

The third major player in the category, General Mills, Inc., Minneapolis, also has used value to its advantage in building up sales. At a price point of $1.31 per unit, Totino’s are one of the most inexpensive options in the market, a trait that has served it well in a difficult economic environment. In the 52 weeks ended May 16 the brand accounted for more than 75% of General Mills’ total frozen pizza sales of $215,530,500, according to SymphonyIRI. Totino’s dollar and unit sales both rose 8% during the period.

Niche products gather momentum

While the “big boys” are having their day in the category, some emerging trends have opened the door for niche players to make their mark as well.

An increased awareness of food allergies and demand for better tasting gluten-free food spurred Gluten Free & Fabulous, L.L.C. to launch a line of frozen pizzas in 2009. The Westlake Village, Calif.-based company was founded in 2005, and recently announced that Ralphs grocery chain has joined Kroger and Sprouts in carrying the company’s frozen pizza.

“The driving factor for the demand of G.F.&F. products is that the gluten-free industry is one of the fastest growing sectors of the food manufacturing industry,” said Shari Cole, founder and c.e.o. “Grocers want to capitalize on the growth trend.”

G.F.&F. offers 8-inch, 10-oz pizzas at a suggested retail price of $7.99. They are available in five varieties: pepperoni, cheese, vegetable margherita, pesto margherita, and spinach feta. The company said pepperoni is the top seller, followed by cheese.

Tofutti Brands, Inc., Cranford, N.J., is another company looking to carve out freezer space. David Mintz, c.e.o. and chairman of Tofutti, said during the company’s June 10 annual meeting that a re-formulated frozen pizza with a dairy-free, trans fat-free cheese topping is in the pipeline. The product, Pan Crust Pizza Pizzaz, is expected to hit store shelves within the next six months, he said.