Recovery mode

by Eric Schroeder
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Convincing consumers confronted by tight budgets and expanding waistlines to choose cookies as their preferred snack has proved challenging over the past year.

The difficulties facing cookie makers were tersely summarized recently by John Bryant, chief operating officer and executive vice-president of the Kellogg Co., speaking in a review of the Battle Creek, Mich.-based company’s business, stressing that more challenging times remain.

“We expect cookies to continue to be a tough category for the remainder of the year,” Mr. Bryant said.

Kellogg, through its Keebler unit, is the second-largest cookie maker in the United States, trailing only Kraft Foods Inc. and its Nabisco unit. In the 52 weeks ended Aug. 8, Keebler sales fell 5% to $401,456,400 while unit sales slipped a shade less than 1%, according to SymphonyIRI Group, a Chicago-based market research firm. The company’s top selling brand, Chips Deluxe,to $54,925,580 and a 7% drop in unit sales to 22,066,440.

Despite some of its struggles, Kellogg also exhibited bright spots, including Fudge Shoppe Fudge Stripes, which posted a 12% increase in dollar sales and 21% gain in unit sales during the 12-month period. Likewise, the reintroduction of Mother’s cookies that began in the spring of 2009 is providing a boost. In the period ended Aug. 8, dollar sales of Mother’s cookies were up 28% to $31,678,700, while unit sales rose 26% to 10,790,080, according to SymphonyIRI.

Mr. Bryant said more new products are coming to help the category rebound.

“Recent innovations, including Fudge Shoppe Coconut Dreams and 100-calorie Right Bites Mini Brownies, are performing well,” he said.

The new products being introduced by Kellogg signal a resurgence in innovation in the category, though not to the degree of several years ago. According to the Mintel Global New Product Database, 491 sweet biscuits/cookies have been introduced in the United States through Aug. 23, nearly equal to the 495 new products introduced in all of 2009. By comparison, 910 new sweet biscuits/cookies were introduced in 2007 and 658 were launched in 2008.

Oreo drives Kraft

Like Kellogg, Kraft Foods has found the going in cookies to be tough. Despite dollar sales growth of 1% and unit sales growth of 2% over the past 52 weeks, the Northfield, Ill.-based company has experienced sluggish performance from a number of brands. Category leading Chips Ahoy! suffered a 1% decline in dollar sales in the period ended Aug. 8, falling to $313,683,800. Meanwhile, dollar sales of Newtons were down 6%, Nilla fell 7%, and Teddy Grahams were down 13%.

Propping up Kraft was the strength of its Oreo cookie brand. With dollar sales of $290,575,500, Oreo trails only Chips Ahoy!, and is closing fast on the category leader due to an 11% gain in dollar sales and 12% increase in unit sales in the period ended Aug. 8. Golden Oreo, introduced in 2004, posted dollar sales of $82,045,780 in the most recent period tracked by SymphonyIRI, up 47% from the same period a year ago. Unit sales for the brand were up an impressive 45%.

Relaunch on tap at Pepperidge

The third ranked cookie maker, Pepperidge Farm, Inc., Norwalk, Conn., sustained a 4% decline in dollar sales and 1% drop in unit sales during the 52 weeks ended Aug. 8, according to SymphonyIRI, but remains optimistic that recent attention given to the business will spur better results going forward.

“We have a strong (cookie) business in markets in both the U.S. and Australia,” said Mark Alexander, chief customer officer at Campbell Soup Co. and president of North America Baking and Snacking. “Our Chunk cookies, we have a big opportunity to improve the taste delivery there, improve the packaging there, and bring some new items in. And so we’ll be relaunching that line this year. We have high expectations for that.

Speculation also swirled late last month that Pepperidge Farm’s parent, Campbell Soup Co., was considering a £1.5 billion bid to acquire U.K. biscuit maker United Biscuits.

Watching out for Wal-Mart
While the branded cookie business has been challenged over the past year, private label filled the breach.

In the 52 weeks ended Aug. 8, dollar sales of private label cookies totaled $637,642,900, up 8% from the same period a year ago, while unit sales rose 9% to 282,733,500, according to SymphonyIRI Group.
Although SymphonyIRI data does not include sales at Wal-Mart Stores, Inc., the Bentonville, Ark.-based company has been a key player in the private label category, and in March 2009 took steps to enhance that position by revamping its Great Value brand.

The company said it worked with several hundred suppliers and product testing facilities to evaluate 5,250 products against leading national brands and conducted more than 2,700 consumer tests to compare flavor, aroma, texture, color and appearance of its products. Its findings resulted in formula changes for 750 items, including cookies. Additionally, more than 80 new private label food and beverage products were introduced, including double stuffed sandwich cookies.

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