Northern to fight back with Goodfella's campaign

Industry consolidation and fierce competition have seen the Leeds-based group's frozen pizza sales lose ground to rivals over the past year.

Northern is launching the campaign, believed to be a multi-million pound investment, to turn Goodfella's into a "master brand". Goodfella's pizzas, complete with new packaging and ingredients, are already landing on supermarket shelves across the country in anticipation of next month's TV, print and internet launch.

Northern has seen its Goodfella's market share slide about 10 per cent in the face of a sustained assault by German food manufacturer Dr Oetker. Analysts have highlighted this loss of market share as an area of key concern.

Dr Oetker, which has its UK arm based in Leeds, last year bought the European frozen pizza business of US-based The Schwan Food Company. After an initial probe by the Office of Fair Trading on competition concerns, the takeover was subsequently waved through.

The deal included the Chicago Town brand, and saw Dr Oetker leapfrog Northern Foods to seize 43 per cent of the frozen pizza market. Dr Oetker also recently announced a marketing drive to bolster its Chicago Town brand, ploughing 1.3m into an ad campaign.

Northern said Goodfella's share of the 380m UK frozen pizza market has fallen from about 26 per cent in November to 22.4 per cent and has acknowledged it is up against a "very credible competitor". It hopes the relaunch will replicate the success of other recent media campaigns.

"We have seen good success with our Fox's biscuits investment and now we are seeking to invest behind the Goodfella's brand," said a Northern spokes-man. "(The aim is) to establish it as a master brand, create a cohesive product portfolio, achieve added presence on shelf and increase sales."

Northern was yesterday tight-lipped on how much it is spending on Goodfella's, but it is thought to exceed Dr Oetker's investment in Chicago Town. Analysts speculated it is likely to be "in the low millions" to match investment in other Northern brands.

"Given their success with the Fox's relaunch I think they have proven they are pretty good at it," said Alex Sloane, analyst at Evolution Securities. "They have lost quite a lot of share over the last 18 months to Dr Oetker – around about 10 per cent. Dr Oetker has been very promotional and promotions are very important in this market.

"The fact that Northern has pulled back on advertising and promotions ahead of the launch has exacerbated the poor performance in the last quarter and probably in this one coming up."

The loss of market share contributed to Northern's total flat sales performance between 13 weeks to the end of December. Its frozen food arm reported a 10 per cent fall in volume.

"Chasing market share for market share's sake is a very expensive exercise," said Clive Black, analyst at Shore Capital. "But against that it's important to retain a healthy market share.

"What they're trying to do with Goodfella's is improve the product and deliver a sales response but on healthy margins.

"It (Goodfella's relaunch) is necessary because the market is starting to question the sustainability of its dividend."

The new Goodfella's will feature four sub-brands comprising 33 products. Thin and Deep, Takeaway, Speciale and Pocco's will target a range of appetites, from consumers trading down from a takeaway pizza, to those on a diet. The range has also been enhanced using ingredients such as improved cheeses.

Northern makes around 200m frozen and chilled pizzas annually at its factories in Ireland. Own brands make up two thirds of its pizza manufacturing.

The power of advertising

Northern Foods has ploughed millions into boosting its core brands with repeated success.

Its campaign to increase sales of Fox's biscuits was launched in 2008 and cost 7m. Adverts across TV, radio, print and online featured an animated cross between a panda and a dog, Vinnie. Recent third quarter figures showed bakery revenues up 1.4 per cent thanks to strong biscuits growth.

Northern used advertising agency Mother for the Fox's relaunch, and the firm also worked on Northern's 1.5m Rocky biscuit campaign.

The Rocky campaign has increased the brand's household penetration by 1.4m.