Thin to win

by Eric Schroeder
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When it comes to the bagel business, thin is in.

Since the beginning of the year, two of the nation’s largest baking companies have taken steps to capitalize on a trend that is generating some buzz in the bagel category: thinly sliced bagels.

In late January, Bimbo Bakeries USA, Horsham, Pa., took to the Internet to promote its Thomas Bagel Thins on Facebook. Available in plain and 100% whole wheat varieties, the bagels contain 110 calories and retail for $2.99 for a package of eight.

Meanwhile, Thomasville, Ga.-based Flowers Foods, Inc. on Feb. 1 launched Nature’s Own Thin Sliced Bagels. With a diameter of 4 inches, the Thin Sliced Bagels fit into a toaster like a traditional bagel, but have 140 to 150 calories, significantly less than standard bagels, Flowers said.

Thin Sliced Bagels are available in 8-count packages in two varieties: original or 100% whole wheat. The 100% whole wheat variety contains 33 grams of whole grain and 5 grams of fiber per serving.

“We are always looking for ways to keep our bagel line fresh with new and different items,” said Sherry Harper, brand manager for Flowers Foods. “These bagels are slimmer (half the height of a normal bagel) and lower calorie (140 to 150 calories per bagel compared to the average 300 calories), but they still deliver the traditional bagel taste and texture people love.”

In a Feb. 4 conference call with analysts to discuss financials, Allen Shiver, president and chief operating officer of Flowers, elaborated on the decision behind the new product launch.

“I think one of the common denominators you’ll see in our new product effort is trying to identify the value-added attributes that consumers are really turned into,” Mr. Shiver said. “We do that from a research standpoint, trying to identify exactly which buttons to push. And I think the sandwich rounds, the bagel thins, and some of our other new products that you’ll see in the remainder of the year, they have a value-added benefit that also helps us improve the margin with those products as we sell through.”

Both the Sandwich Rounds and the Thin Sliced Bagels have a suggested retail price of $2.49.

The timing of the introduction of thin-sliced bagels is no coincidence. In 2009, the fresh bread industry received a boost from similar thin-sliced product launches such as Deli Flats from Pepperidge Farm, Inc., Norwalk, Conn., and Arnold Select Sandwich Thins from Bimbo Bakeries. In both cases, companies are hoping to provide products that are more appealing to a broader consumer base for meals throughout the day.

A need for creativity

The innovation is much needed for the overall bagel category, where the number of new product launches fell to 27 in 2009 after reaching 56 in 2008 and 55 in 2007, according to Mintel International Group Ltd. Unflavored/plain bagels accounted for 19 of the new product launches, with cinnamon and raisin varieties and apple and cinnamon varieties each accounting for two. While the category does not typically lend itself to a large number of flavored products, the absence of unique flavors was in stark contrast to previous years, according to Mintel.

As far as claims on packaging are concerned, the types of nutritional messages that companies are making has not changed much in the past few years. According to Mintel, kosher claims topped the charts on new bagel product launches in 2009, with 12, followed by low/no/reduced trans fat (11), low/no/reduced cholesterol (9), low/no/reduced fat (8) and whole grain (7). Those five claims were among the top six claims made on new bagel products in both 2008 and 2007 as well, Mintel said. The exception to the status quo in the marketplace was the launch of three new bagel products featuring the “gluten-free” claim in 2009. According to Mintel, no products were launched with the claim in either 2008 or 2007. The gluten-free trend is even carrying over into food service (see story on Page 28).

Fresh flourishing, frozen floundering

The lack of innovation has been reflected in sales figures, as well, with refrigerated bagel unit sales down 1.7% and frozen bagel unit sales down 10% in the 52 weeks ended Dec. 27, 2009. Of the leading refrigerated and frozen bagel brands, only Northfield, Ill.-based Kraft Foods Inc.’s Bagel-fuls has managed to churn out significant unit sales growth over the past 52 weeks, according to I.R.I. Even private label products, which have performed well in most grain-based foods categories during the past few years, have struggled, with refrigerated bagel unit sales down 0.6% and frozen bagel unit sales down 16% in the most recent 52-week period tracked by I.R.I.

The results have been better in the fresh bagel category, where more new products have been introduced recently, as dollar sales climbed 2.4% to $572,138,400, and unit sales rose 4.4% to 193,475,100, according to I.R.I.

“Fresh bagels are comparable in quality, flavor and ‘chewiness’ to frozen bagels,” said Ms. Harper of Flowers Foods. “We’re not quite sure why they are enjoying growing popularity at this time, though it may have to do with increased availability, more varieties, and overall confidence.”

Leading the charge in fresh bagels was Bimbo Bakeries’ Thomas brand, which generated nearly $285 million in sales, up almost 10% from the previous 52-week period behind a 13% gain in unit sales.

The No. 2 fresh bagel brand, Sara Lee, suffered a 14% drop in dollar sales to $75,387,450 and a 14% decline in unit sales to 23,512,300, according to I.R.I. But news was not all bad for the Downers Grove, Ill.-based company, as Sara Lee Soft & Smooth Made with Whole Grain Mini Bagels quickly have become a hit with consumers. The 100-calorie bagels were introduced last fall and are available in four varieties: 100% Whole Wheat, Made with Whole Grain blueberry, Made with Whole Grain cinnamon, and Made with Whole Grain plain.

“Families today lead increasingly busy lives and are looking for nutritious products that can be prepared quickly and consumed whether they are in the kitchen or in the car,” said Heather Collins, director of marketing for Sara Lee Fresh Bakery. “That was our aim with the new Soft & Smooth Mini Bagels launch in August 2009 — they are easily portable for an on-the-go food option and can be used as both a snack or incorporated into a lunch or other meal.

“We continually evaluate the needs of our consumer for any opportunity for expansion. In the bagel sector in particular, we believe nutrition will continue to play an influential role in shaping the industry and fueling sales, with the focus being on lower calorie and increased nutrition.”

The Made with Whole Grain mini bagels contain 9 grams of whole grain per serving, which is nearly 30% of the U.S. Department of Agriculture daily intake recommendation for children ages 2 to 8. Meanwhile, the 100% Whole Wheat mini bagels have 20 grams of whole grain per serving, which is more than 40% of the recommended intake level.

Innovation at Einstein

DENVER — For a company that considers itself on the cutting edge when it comes to bagel innovation, it is only fitting that Einstein Noah Restaurant Group would be at the forefront of introducing a popular trend to its customers: gluten-free bagels.

Beginning in March, Einstein will start rolling out gluten-free bagels across its system. The company, which partnered with Denver-based Udi’s to test the product in the Denver area, is in the process of finalizing its supply chain for distribution of the product on a national scale during the next three to four months, said James O’Reilly, chief concept officer for Einstein Noah Restaurant Group.

“Our company is a leader in bagel innovation and we saw the growing need for gluten-free products in our industry,” Mr. O’Reilly said. “When we looked at trends as part of the innovation process, we uncovered the gluten-free process. We felt a product like this should come from us, and consumers expect that.”

Mr. O’Reilly said Einstein initially will offer the gluten-free bagel in a plain variety, but if tests and feedback are positive, the company will evaluate expanding the line. The gluten-free bagel will be available individually or in a six-pack at a still-to-be-determined premium price point, he said.

Mr. O’Reilly said the biggest challenge in developing the gluten-free product was creating a product that the company deemed of a high enough quality to carry the Einstein name.

“It took a while to develop the product, and we actually talked to both gluten-free customers and our regular customers,” he said. “The response was strong enough that we felt it could be successful in all markets.”

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