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In the dessert category, it's about delivering great flavor to those who aren't willing to give up indulgences
At least we’ve got our cheesecake.
The dessert category, which features the most comfortable of comfort foods, is thriving amidst the uncertainty in the rest of the economy. It turns out that dessert is indeed the one thing that people aren’t willing to sacrifice in tough times.
“People have had to give up getting a new car and going out to eat,” says Vince Mannese, the national retail sales manager for Lawler’s Foods, based in Humble, Texas. “But dessert is the one indulgence they’re keeping. We produce a premium line of desserts, and they’re all doing well right now. They can’t afford the car, but they’ll buy the cheesecake.”
The national numbers back up Mannese’s experience.
Sales of prepared cakes and pies have grown during the recession, according to Mintel International Group Ltd., Chicago. Between 2005 and 2010, sales of those sweet treats increased 19 percent. Refrigerated pies and cakes were one of the biggest areas of growth, with a 31 percent increase between 2008 and 2010, according to estimates from Mintel. The Mintel numbers exclude Walmart sales.
The success of the cake and pie category reflects the national trend that’s brought added attention to baked desserts in particular. TV shows like Cake Boss, Cupcake Wars and Ace of Cakes get good ratings. Dessert-specific bakeries like Sprinkles Cupcakes and Crumbs Bake Shop are popping up in cities all over the country in response to the market for high-end indulgences.
For ready-to-eat cakes and pies, this has been helpful in growing the category. But it also means consumers are demanding more creativity and expecting high-end flavor from store-bought desserts. While they may not expect to pull out an imaginative creation along the lines of Ace of Cakes’ Chef Duff from the grocery freezer, they do expect it to taste really good if they’re treating it as their indulgence for the week.
That focus on taste-this is dessert, after all-has meant that the short-lived trend on healthy desserts is no longer on anyone’s radar.
“That lasted about three days,” Mannese jokes.
“Taste is definitely why people buy desserts,” says Liz Rosenberg, a manager at Distinctive Foods, Wheeling, Ill. “We have zero trans-fat brownies that we’re excited about. But they also taste really good.”
While single-serving packs are a growing trend, the idea of limiting them to 100-calorie servings is loosing momentum. According to a Mintel survey, only 18 percent of consumers are seeking out reduced-calorie packs. Instead, they want a serving that looks like a full serving to them, rather than a set number of calories. After all, if it’s an indulgence, they would rather indulge than feel unsatisfied from a 100-calorie taste.
New gluten-free and allergy-free products continue to be introduced, but remain very small segments of the category. The year 2009 brought 431 gluten-free product introductions, according to Mintel, down from 711 new products the year before. Only 6 percent of respondents to a consumer survey in 2009 actively sought out gluten-free products. But this doesn’t mean that there aren’t opportunities for private-label manufacturers.
“Gluten-free is still growing, even though it is small,” Mannese says. “But it’s a totally unique manufacturing process, so there aren’t many people who do it. Unfortunately a lot more people are being diagnosed with celiac disease and other food allergies. So you may see that category growing.”
Sugar-free desserts have gained a foothold primarily for those with diabetes. But sugar may be a selling point in other desserts.
“I think you’re going to see people promoting that they use real sugar, as opposed to artificial sweeteners,” says Mike Brown, vice president of Steuben Foods, Elma, N.Y. “You’ve seen it in soft drinks, and I think you’ll be seeing it more in desserts.”
One of the biggest success stories in the grocery aisles in recent years has been the growth of Greek yogurt. Turns out that American’s newfound enjoyment of the tart treat has translated to desserts as well.
Bloomingdale, Ill.-based Metsovo Baking Company has introduced the YoGo Greek Yogurt Cake, which are available for private labeling, and it has barely been able to keep with demand.
“We’ve doubled in sales the last year, and it keeps going,” Paul Vadevoulis says. “We grew up making cakes out of Greek yogurt, so we knew they tasted good. Now other people are figuring it out.”
The individually packed cakes are selling well at places like Walgreens and are one of the few desserts that have managed to make a healthy pitch work for it. The company promotes the YoGo as the “equilibrium between health conscious and sweet tooth” and highlights the antioxidants found in blueberries in one of their flavors. Still, it seems the tie-in to the Greek yogurt boom is the real selling point for the cakes.
“The momentum of Greek yogurt is amazing,” Vadevoulis says. “It blows me away.”
Metsovo wasn’t the only company to notice the focus on yogurts.
“You see a lot more yogurts using dessert-like flavors, like key-lime pie,” Brown says. “I think you’ll see a lot more companies taking some of the space from the yogurt shelves with products that are more like a dessert.”
Blending categories of food seems to be another trend, with Lawler’s Foods “fusion” cakes, which combine their cheesecake with a traditional baked cake.
“It’s the best of both worlds in one shot,” Mannese says. “They’ve become very popular.”
As for the future of the category, Mintel predicts continued growth.
“While consumers had less disposable income to spend during the recession, many managed to find money for comfort foods such as prepared cakes and pies,” according to the report. “Sales of prepared cakes and pies through FDMx are forecast to grow by more than 5 percent per annum from 2011 to 2015 as the economy begins to recover and consumers become less concerned with saving money.”
While cakes and baked goods continue to grow, fewer people are adding a scoop of ice cream to the plate. Spoonable desserts continue to slump. The category dropped 2.9 percent to $7.9 billion in total retail sales for 2010, according to Mintel. The bulk of those sales come from ice cream, which makes up more than 70 percent of the category, or about $6 billion a year.
Pudding sales, however, took the hardest hit in the category, with a sales decline of 6.4 percent. Gelatins didn’t fare much better, down nearly 5 percent. Possible factors for the declines include increased concerns about on childhood obesity. First Lady Michelle Obama has made the issue a national priority, and attention on it has lead to increased media scrutiny.
Frozen yogurt is the one bright spot in the category-the only segment to feature growth last year. The perceived health benefits may be a factor, as well as the increased popularity of stand-alone frozen yogurt stores. After tasting frozen yogurt in a shop, consumers may be more willing to bring it home from the grocery store.
Smaller ice cream packaging also could be a factor in the category’s overall decline. Rather than pass increased costs on to the consumer, manufactures decreased the size of the package from the traditional half-gallon. Consumers noticed the switch, and while the change kept prices in-line, it caused many to believe that they were paying more for less.
Expect sales in spoonable desserts to remain relatively flat through 2015.
“By 2014, the category is expected to have rebounded to 2008 levels,” according to the Mintel report. ”On an inflation-adjusted basis, the next few years are expected to show sales declines, but not as steep as 2010.”