Nestle Refrigerated Foods: Contadina Pasta & Pizza

Nestle Refrigerated Foods (“Nestle”) must determine whether or not to introduce a refrigerated “Pizza Kit” product. Nestle must address several issues prior to product rollout:

• Unproven concept вЂ" crust packaged together with separate packets of cheese and sauce ready for home use was a new concept.

• Product positioningвЂ"the Pizza Kit must be positioned to attract most of its customers from the takeout/delivered (75% of total market) segment.

• Brand awareness & extensionвЂ"the product is in the same ethnic food group as its pasta & sauce product, and could damage this product if it is a bad product.

Nestle should bring the Pizza Kit concept to market and position it as a high quality, reasonably priced alternative to both the takeout/delivered and frozen pizza segments. The Pizza Kit concept registered a high probability of buying similar to that of Nestle’s successful pasta & sauce product, and the refrigerated pizza market is not currently serviced by its competitors. Further, Nestle has a sizable advertising budget to go along with the rollout. Year 1 Pizza Kit & Toppings sales are estimated at 22.0 million units for a total of $54.9 million. Sensitivities performed on Contadina’s brand awareness indicated sales of $50.9 million and $46.5 million for 15% and 5% awareness, respectively. Year 3 product volume and sales are estimated at 72.6 million and $193.4 million.

However, Nestle could damage its current Contadina Pasta & Sauce product line if the Pizza Kit product is not received well in the marketplace. Brand extenuation could hurt in this regard. Further, Kraft, a competitor to Nestle, had an unsuccessful launch in the refrigerated pizza segment that was not adequately researched by Nestle. The reasons behind this failure would be invaluable