Category Reviews / Food Reviews
Category Review: Cookies & Crackers

Crunch Time

June 15, 2012
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After making inroads during the recession, private label producers of cookies and crackers look to hold their position.

With more than $8.5 billion in combined sales, cookies and crackers are among the larger packaged goods categories available at grocery. They’re also mature categories, meaning that you generally don’t see huge fluctuations in the size of the market.

During the recession, cookies faired relatively well, as most people viewed them as an acceptable indulgence during tough economic times. But as with other products, the recession did allow for private label to make greater inroads into the overall category.

According to a report from Mintel International Group Ltd., Chicago, “The biggest increase came between 2008–09, as the initial impact of the recession was being felt by consumers. Back in 2005, private label was one of the smaller segments in the category, but has since moved well ahead of healthy and premium cookies to rank second in category sales.”

The jump in sales gave private label more money to develop a wider range of products and more sophisticated marketing campaigns, according to Mintel.

However, that growth now has leveled off, as name-brand manufacturers have closed some of the price gap with private label, and consumers have opened their wallets a bit wider.

“We’ve really seen a narrowing of the price gap between private label (and the national brands),” says Todd Phillips, vice president of marketing for Lance Private Brands at Snyder’s Lance, Inc., Charlotte, N.C. “It was probably to be expected. They weren’t about to take that loss of market share lying down.”

Sales of cookies and crackers have increased in the past year. According to a report from SymphonyIRI Group, dollar sales of cookies went up 3.17 percent in the past 52 weeks, ending Feb. 19,   while cracker sales increased 4.9 percent during the same period. But for private label cookies, the news wasn’t so positive.

Overall sales actually declined 1.55 percent over that same period, according to the SymphonyIRI report. Although private label crackers didn’t match the growth of the category as whole, they did still manage to grow 2.11 percent.

And while private label increased market share during the recession, it still is a relatively small percentage of the overall market. Private label cookies represent 14.95 percent of dollar share, while crackers command 8.32 percent of the market, according to SymphonyIRI.

Now the challenge to private label manufacturers is how to maintain and grow that market share.

THE COOKIE CHALLENGE

Traditionally, private label cookies have had trouble overcoming the perception of the cookie as an “indulgence.” If you’re going to indulge, you’re not necessarily looking to choose the cheapest product. Consumers are willing to spend an extra 50 cents or a dollar to indulge themselves.

Cookies also have a strong nostalgic element for many adults. As Mintel notes in a report Cookies—The Decision Making Process and The Role of Private Label, “Shoppers tend to have their favorite brands that they grew up with and continue to enjoy as adults.”

According to the report, more than half of the respondents to a consumer survey say they buy the brands they want to buy and put less emphasis on price.

But with the recession causing more consumers to think twice about that price difference, private label was able to increase market share by developing alternatives that still satisfied consumer’s “indulgent” sweet tooth.

“Consumers are much savvier about such things then in the past,” says Gavin Yellen, president of Barry’s Bakery, a Tolleson, Ariz.-based manufacturer that focuses on lower-calorie sweets. “Private label cookies and snacks allow a retailer to use the strength of their own brand to sell products. This can help reduce costs and focus on the end product. In the end, the consumer is the winner.”

But getting consumers to try new cookies, private label or otherwise, has been the challenge. The oxymoronic category of “healthy cookies” has been declining steadily over the past five years, and premium cookies have been relatively flat. But that’s not to say that relatively small private label manufacturers can’t find success by looking at the cookie in a non-traditional way.

“The desire for healthier-for-you foods that taste great is a constant demand,” Yellen says. “The key to our success has been to be ahead of the curve. As a small family business, we cannot afford to jump on every trend. Low-fat and low-calorie snacks are not a trend for us; we have been doing this for more than 20 years, and it is precisely why we got into the business.”

Manufacturers might have to be more creative in their product offerings since demographic trends do not predict much growth in the overall category. The fact is, households with children consume many more cookies than those without. Although parents might be eating the cookies with their kids, they’re less likely to buy them when the kids are gone. And population data gathered by Mintel shows a mixed bag in terms of growing the market through 2015.

On the plus side, U.S. Census data predicts that the strongest population growth by 2015 will be seen among children under six and those ages 6-11, which should help cookie sales. But the percentage of children under age 18 is expected to remain relatively constant, meaning no overall population growth to boost cookie demand in this demographic.

ARTISANAL & SPECIALTY CRACKERS

Unlike cookies, which also have to deal with the bad press surrounding childhood obesity in the U.S., crackers have been able to sell the concept of “healthy” much more successfully. Whole-grain and all-natural crackers are seen as positive additions to the diet, instead of an occasional indulgence.

Crackers as a whole, however, did not get the boost from the recession that cookies did.

“You have to remember that people are buying crackers to entertain,” says Michael Thompson, president and CEO of Venus Wafers, Hingham, Mass. “When the economy is bad, people aren’t entertaining as much.”

Much like bread, crackers have been able to take advantage of consumers’ willingness to experiment with different flavors, styles and textures. Artisanal products have broken into the mainstream part of the grocery store.

“When I broke into the cracker business 30 years ago, those just weren’t seen, or were in a different part of the store,” Thompson says. “In the last 10 years, that’s completely changed. Now ‘natural’ is a very important word for us. (Consumers) want these artisanal products that are healthy and flavorful.”

Once obscure flavors are becoming more popular, and even national brands are experimenting with a wide variety of flavors. Specialty crackers still are only 10 percent of the total market, according to Thompson, but it’s a much bigger piece of the pie than in the past.

“I think it’s probably a reflection of our population as a whole,” he says. “We travel more widely and there are more dchrriverse ethnic backgrounds, so we want to try new things. But we’re still a small part of the market—we’re not trying to go after Nabisco.”

 

Eye On The National Brands
When it comes to cookies, Kraft is the elephant in the room, with more than triple the sales of second place Kellogg Co. Kraft’s biggest sales come from its subsidiary Nabisco, producer of both Chips Ahoy! and Oreo, which is celebrating its 100th birthday in 2012, with much fanfare. A limited-edition birthday cake flavor of Oreo helped fuel the celebration. Nabisco’s Ritz brand Crackerfuls, which come with cheese already sandwiched between two crackers, has introduced three new multigrain crackers to the mix. Nabisco’s Triscuit has introduced a new flavor—Dill, Sea Salt & Olive Oil, its first new flavor since 2008. You can also download an app to your iPhone to suggest wine pairings to go with Triscuit flavors. Keebler, a subsidiary of Kellogg, now offers a bite-size snack that resembles s’mores with its Fudge & Graham Sandwich Crackers. Keebler also has a new version of its popular Sandies cookies, this one with crunchy toffee bits baked into them. Pepperidge Farm offers crackers with some bite with their Jingos! brand. The Lime & Sweet Chili flavor offers the biggest punch. 

 

 

 

 

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