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- RESEARCH & AWARDS
Faced with rising grocery prices - and job losses, temporary layoffs or salary reductions - many consumers have been forced to make tough decisions related to weekly food purchases. Not surprisingly, cookies and crackers, usually deemed “non-essentials,” have been dropped, at least temporarily, from scores of shopping lists.
According to data from Chicago-based Information Resources Inc. (IRI), dollar sales for the overall cookies category rose just 0.4 percent during the 52 weeks ending April 19, 2009, while the more-telling unit sales fell 6.2 percent. Dollar sales for the total crackers category, meanwhile, increased 5.1 percent, but unit sales were off 3.5 percent.
Fortunately, that’s not the way the cookie has been crumbling on the private label side of the category. Instead, private label dollar and unit sales realized steep gains, rising 11.4 percent and 5.1 percent, respectively in the cookies sector, and 22.7 percent and 9.2 percent, respectively, in the crackers sector. Seems a lot of cash-strapped folks have discovered that store brands help to keep these sweet and crunchy indulgences in the pantry.
“Private label cookies are very strong as consumers continue to worry about price,” says Chad Cosgrove, marketing manager for Interbake Foods LLC.
Eye on HealthOn both the cookie and crackers sides, better-for-you options boast strong appeal. According to Claire Metzger, owner and CEO of Bow, N.H.-based Healthfulicious Inc., many consumers are steering away from artificial flavors, additives and the like. They’re also looking for higher fiber content.
“Retailers can take advantage of these trends by moving away from artificial flavors and additives and going back to ingredients that customers recognize,” she says. “I find that most recipes can be altered to cut the sugar in half without noticing any difference in the flavor and texture of the product.”
Manufacturers also can use whole grain ingredients and fruit for fiber, she adds, and can include nuts for omega 3 fatty acids. As for Healthfulicious, it’s using Ultragrain and Sustagrain flours (from ConAgra Foods), which have the consistency of white flour, but when combined, triple the amount of fiber in the finished product.
Frankie Whitman, vice president of marketing for Newark, Calif.-based FullBloom Baking Co., agrees with the health-minded focus, adding trans-fat-free, gluten-free, all-natural and even vegan options to the mix.
Although zero trans fat has gained fairly wide acceptance, Whitman notes that high fructose corn syrup, preservatives and artificial flavors are still prevalent in many in-store bakeries.
“Even in some whole grain items you find these artificial ingredients, which seems like a contradiction in terms,” she adds. “Consumers are more health-conscious than ever and are seeking healthy alternatives. Retailers can take advantage of these health and flavor trends by educating customers that they are committed to supplying bakery items that are good for people and the planet.”
Whitman notes that FullBloom recently moved into a 95,000-square-foot facility to accommodate its growing array of private label baked and frozen, baked and fresh, and bakeable batters and doughs. The plant was designed to be platinum-level LEED certified by the U.S. Green Building Council.
When it comes to more healthful crackers, ancient grains (such as amaranth, millet and quinoa) are of growing interest because of their higher fiber content, notes Don Lindeman, vice president of sales for Richmond, Ind.-based Richmond Bakery - a custom manufacturer that can handle even limited runs or smallish orders that others won’t accommodate. This is particularly true on the “upscale” side of crackers, where retailers need to really differentiate themselves from competitors.
Although portion control also remains a hot topic, consumers aren’t necessarily interested in additional 100-calorie pack options. According to a new report from Mintel International Group Ltd., a Chicago market research firm, interest in portion-control packaging is on the decline. Only about 14 percent of adults currently buy pre-measured packs, the report says. And the majority of those who do buy them do so for the sake of convenience, with weight management only the second-most common reason.
“Interest in portioned products is much higher than the incidence of purchase,” the report notes, “indicating that price and/or availability can be significant barriers to purchase.”
Many respondents who said they are interested in portion control are taking steps to save money, the report says, buying snacks in bulk and creating their own portions. Meanwhile, 49 percent of non-buyers said they don’t choose pre-measured foods simply because they aren’t interested in portion-control packaging, preferring instead to eat until they’re satisfied.
A better fit for today’s consumers? The report suggests premeasured packages with slightly larger portions (perhaps 150 instead of 100 calories), as well as lower-calorie products that also offer other better-for-you benefits that help to justify their higher price tag.
Aim for the Middle - and TopBut health and wellness options certainly don’t represent the only - or even the greatest - opportunity for private label cookies and crackers. In fact, growth of organic items, certainly deemed better-for-you in nature, is almost at a stand still, notes Todd Phillips, vice president of marketing for Lance Private Brands, Burlington, Iowa. He points to national-brand-equivalent (NBE) and premium, upscale items as having the strongest opportunities, with particular emphasis on NBE.
“The mid tier or the mainstream, what we call the national-brand-equivalent portion of the line, seems to be the one that people are focusing on right now,” he says. “Premium is still very strong and growing, but it’s not anywhere near the size of that mid tier.”
Retailers that build clearly defined brands here now will be the ones that win down the road, Phillips notes. The quality improvements and the current recession are coming together to create a “once in every few decades” opportunity for retailers to grab cookie and cracker share - and to keep at least a piece of that share post-recession.
“Private label is starting to take some significant share by virtue of the economic impact,” he says. “People are clearly recognizing the quality improvements, which I think is a huge leap forward for this industry. The focus and the emphasis on NBE by many retailers, especially with Walmart’s [Great Value] re-launch right now, is helping to drive and raise the bar on product quality for all manufacturers.”
Phillips adds that Lance’s focus on category insights, along with NBE and premium products, enables the company to take an advisory role with retailers here - and help them develop a successful private label program.
Speaking of premium products, retailers have a real chance to create cookie and cracker options shoppers simply cannot purchase anywhere else.
“Innovation is no longer left for just the brands - a few retailers pride themselves on the assortment of the private label categories, and their sales reflect a positive trend in sales,” Cosgrove says.
Lindeman says the story’s the same on the cracker side.
“I think the store brand people can help differentiate themselves by looking at more specialty [products],” he says. “Consumers can walk up and down the aisle and see the Ritz[es], the Saltines, the Wheat Thins, all day long. But a lot of our customers are coming to us and saying ‘We want something that stands out on the shelf and is unique and will be at a price point that makes people want to buy it opposed to run of the mill.'”
Get NoticedKey to getting - and keeping - consumers will be quality packaging, Cosgrove notes, as well as keeping a close eye on food safety as “more and more products are imported, and there are more layers involved from production to shelf.”
Phillips says quality packaging is vital, but he believes some retailers just don’t understand that yet.
“It seems they spend a lot of time on getting that product right and don’t spend time understanding how to position it [in terms of packaging],” he says.
Lindeman notes that gable-top boxes with strong graphics boost shelf appeal, giving an impression of a more upscale-type product.
Clamshells dominate the in-store bakery space, but Whitman believes packaging needs to catch up with trends toward more natural materials. Her company has been seeking alternatives to clamshells, developing an attractive corrugated box for retailing here.
And sometimes a simple high-quality package works very well, Metzger contends.
“My cookies are vacuum-sealed to keep the freshness and just packaged in a simple white bakery bag,” she explains. “The customer can see the product; it fits well on the shelves and fits in with the idea of my company.”
Outside the packaging arena, sampling programs always prove effective for getting new quality cookie and cracker products into shoppers’ mouths and baskets, Whitman says.
And Phillips advises retailers to embrace the tactics of consumer packaged goods companies when it comes to merchandising and promotion.
“Some of the retailers that are doing a great job are the ones that are pulling in marketing people from CPG companies, who understand how to develop a brand and build equity,” he adds. PLB