Category Review: Cookies, Crackers & Bars -- Ready for a Comeback

July 14, 2008
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Data from Chicago-based Information Resources Inc. show recent unit sale declines for the total cookie and crackers categories. But some industry insiders predict better days for these categories -- specifically for their private label product residents.

 





The cookie and cracker categories just can’t seem to catch a break. First they suffered through -- and somehow survived -- the low-carb craze a few years back. Then cookies had to defend themselves when Cookie Monster developed a health obsession and declared that cookies were a “sometime” food. And now these battle-weary categories are facing sky-high flour, fuel and other costs.

Data from Chicago-based Information Resources Inc. (IRI) show dollar and unit sale declines for the total cookie category during the 52 weeks ending April 20, 2008. And although the total cracker category realized a very slight gain in dollar sales, unit sales were down here, too. Private label fared only slightly better in the cookie category, and actually performed even worse (unit sales-wise) in the cracker sector.

Some might say too bad -- that’s just the way the cookie crumbles. But others predict better days for these categories -- specifically for their private label product residents.

“We are already seeing acceleration due to economic conditions, and we believe this will continue,” says Todd Phillips, vice president of marketing for Lance Private Brands, Charlotte, N.C. “During the last economic downturn in 2000 to 2001, there was a surge in private label food product market shares, and we believe this is happening again.”

Selena Sanderson, vice president of sales and marketing for Interbake Foods LLC, Richmond, Va., points to a recent Wall Street Journal article that says private label is profiting from the slowing economy and consumers’ need for dollar-stretching value items.

“The unknown question is whether private label manufacturers and retailers working together can take advantage of this increase in ‘audience’ to win the consumers long-term once the economy bounces back,” she says.



Cash in on Crazes

Indeed, private label gives folks a value option that further helps ensure cookie and cracker indulgences remain on the grocery list. However, it’s important that store brand options keep pace with current trends.

Speaking of trends, Mintel International Group, Chicago, predicts that consumer interest in health and wellness will continue to impact both the cookie and cracker segments globally, driving growth in healthful formulations (including functional and fortified products). In addition, premium products and convenient, portion-controlled formats will continue to be important.

Sanderson agrees with the trend toward portion control in the cookie category. She notes that four 100-calorie options launched in 2007 finished the year with $1 million in retail sales.

The trend will continue in 2008 and 2009, Sanderson adds, thanks to such growth drivers as convenience, health concerns and on-the-go lifestyles. More than half (55 percent) of all consumers eat ready-to-eat/easy-to-prepare/easy-to-transport convenience foods at lunch, she says, while a significant percentage also eat them at breakfast, dinner and/or for a mid-afternoon snack.

All-natural products -- with no artificial flavors, colors or preservatives -- also are of interest, notes Catherine Glowczewski, market development manager for Tradition Fine Foods Ltd., Toronto.

“I believe it’s important for consumers to be able to recognize each and every ingredient that is on their food product’s label,” she says. “For this reason, Tradition is working hard to eliminate as many -- if not all -- artificial ingredients from each of its muffin, cookie and croissant formulations.”

Upscale options also are hot in both the cookie and cracker segments, and new private label products are reflecting that reality.

“Premium cookies [are] emerging as a strong trend, with most retailers realizing that they can compete effectively with high-end brands like Pepperidge Farm and Mrs. Fields with their own labels,” Phillips says. “This part of the private label cookie category is growing 15 percent, something which helped to drive our decision to purchase the Brent & Sam’s cookie company.”

The company to which Phillips refers is Brent & Sam’s Inc. of North Little Rock, Ark., which produces a wide variety of gourmet-style cookies sold under the Brent & Sam’s brand, as well as retail customers’ private label brands. The move meshes well with the rebranding of Lance Private Label Brands (formerly Vista Bakery) to mark its transition from a value-only supplier to a “complete supplier” of a wide range of private label cookie and cracker products, Phillips says.

Speaking of premium, Tradition now has no limits on the size of particulates, Glowczewski notes. For example, the company’s new cookie machinery can accommodate a formula loaded with whole almonds and jumbo dark chocolate chips.

Chocolate-flavored items will continue to see demand on the cookie side, too, Sanderson says, whether the chocolate enrobes the cookie or appears in the base cake or as inclusions. Here, you can thank chocolate’s perceived health benefits (antioxidants, when it comes to dark chocolate) and indulgence.

“However, finding a sustainable winner will be hard,” Sanderson says, “so manufacturers have to be prepared to launch new [items] with no national brand counterpart - items whose lifecycle will be short but steep.”

Portion-control offerings continue to be important on the cracker side as well, and healthier whole-wheat and multigrain options still are attracting interest, a number of experts say.

But the biggest news here, based on a look at Mintel’s Global New Products Database, is an abundance of cracker offerings that tout their “baked” status or show off their thin and crispy side. What’s more, cracker “hybrids” -- including newfangled extruded cracker sticks and cracker-pretzel mergers -- also are attracting consumer attention.

Premium offerings, including artisan products and natural and organic renditions -- will remain important in the cracker market, Mintel says. However, fortified crackers are expected to remain “niche,” as more consumers turn to products that are naturally rich in nutrients and fiber.


Sway the Shopper

Of course, even the best store brand cookie or cracker needs a little help conveying that quality message to the consumer. Here, packaging plays a huge role in attracting the consumer.

Consumer awareness of ingredients and nutrition has never been higher, Sanderson stresses. Shoppers demand package labeling that conveys the nutritional message and overall packaging that projects the right image.

“Generation Y, the generation on the doorstep of increasing wealth, has traditionally been a branded generation,” she says, “so any packaging and new private label products must give the impression of quality.”

Philips agrees, and suggests that retailers treat their store brand offers like brands.

“The retailers who brand themselves with high-quality graphics and quality and [are] not afraid to take on national brands in this regard are winning,” he says.

Mintel also points to biodegradable plastic packaging (in conjunction with regionally sourced ingredients) as having the potential to win over the growing base of eco-conscious consumers.

But Glowczewski stresses that retailers need to think outside the cookie aisle and offer a private label cookie option in their in-store bakeries. She recommends use of a thaw-and-sell format to ensure a consistent product look from store to store -- in a convenient prepackaged, prelabeled format.

“However, I believe that private label option would have to have some special characteristics that would allow it to stand alone and not be competing head to head with traditional cookies such as chocolate chip, oatmeal raisin and snickerdoodle,” she says. “Characteristics could be functional through the use of ‘new’ ingredient substitutes like agave syrup for sugar.”

In fact, Glowczewski contends that growth across the entire cookies, crackers and bars segment will come from items that offer unique, positive characteristics.

“The market is already saturated with private label items that have emulated national brands at equal or better quality, but at a more competitive price,” she says. “So if real growth is desired, the next step is to work closely with private label manufacturers ... who specialize in developing custom products that will appeal to the masses.”

Targeted merchandising and promotion strategies also can help.

“Cross-merchandising with strong brands and/or differentiating items from other cookie look-alikes is important,” Sanderson says. “Great-tasting healthy and indulgent cookies will continue to be a focus, as will unique, great-tasting crackers.” PLB


Raising the Bar

Things might not look so great in the cookie and cracker categories right now, but the snack bar/granola bar sector is really on a roll. Data from Chicago-based Information Resources Inc. (IRI) show dollar and unit sales gains of 7.7 and 6.4 percent, respectively, for the total category during the 52 weeks ending April 20, 2008. And private label bars performed even better, racking up 11.5 and 11.6 percent respective dollar and unit sales increases. Moreover, some snack bar/granola bar subcategories realized even more impressive gains.

With consumer interest in health and wellness at an all-time high, it should come as no surprise that this nutritionally rich category is doing so well. And its grab-and-go convenience certainly doesn’t hurt, either.

In a survey conducted last December by Kerry Ingredients & Flavours, Americas Region (part of the Tralee, Ireland-based Kerry Group), almost half of the 1,430 consumer respondents (694) admitted to eating at least one cereal, granola, energy or other form of food bar within the past 30 days. Most respondents (90 percent) cited “good taste” as an important food bar characteristic, but whole grains, natural ingredients, fiber, protein, and vitamins and minerals also were important to many of them.

As for food bar benefits, adult female respondents picked hunger management and weight loss assistance as the top two (at 21 and 20 percent, respectively), Kerry says. In contrast, adult men pointed to hunger management (17 percent) and heart-health benefits (15 percent). For children, food bar consumption was greatest for school and after school snacking occasions (both at 26 percent), with breakfast close behind (22 percent).

According to Nima Fotovat, director of sales, private label for Markham, Ontario-based Shandiz Natural Foods, future category growth will take place on the natural and organic sides of things -- particularly when it comes to fruit and nut bars.

“You can even see this shift beginning to happen with the national brands as well,” Fotovat says. “I think more innovation and differentiation will come about in the private label sector as the national brands gear up to stay competitive by starting to offer the benefits of natural, clean ingredients.” PLB

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