The leading U.S. retail donut brand needs a new baker.
U.S. retail sales of Donettes brand donuts reached $357,604,000 for the 52 weeks ended Dec. 2, 2012, which was down 4% from the previous 52-week period, according to SymphonyIRI Group, a Chicago-based market research firm. The sales covered U.S. multi-outlets and included convenience stores, supermarkets, drug stores, mass market retailers, military commissaries and select club and dollar retail chains.
Hostess Brands, Inc., Irving, Texas, which has owned the Donettes brand, was the leading packaged donut vendor with sales of $470,377,700 for the 52 weeks ended Dec. 2, which was down 2% from the previous 52 weeks. Since Hostess has gone out of business and now is analyzing bids for its brands, another company soon may be baking Donettes.
According to published reports, two companies that already have a stake in the donut category are potential buyers of Hostess assets.
Mexico City-based Grupo Bimbo S.A.B. de C.V. expanded into the U.S. donut category in 2009 when it acquired the U.S. fresh baked foods business of George Weston Ltd. and the company’s Entenmann’s brand. Bimbo Bakeries USA, Horsham, Pa., the U.S. business of Grupo Bimbo S.A.B. de C.V., had retail donut sales of $321,074,800 for the 52-week period ended Dec. 2, which was up 4%.
The Department of Justice may have a say in any future Bimbo acquisitions. After Grupo Bimbo bought the North American fresh bakery business of Sara Lee Corp. in 2011, the Department of Justice ruled Bimbo must make certain divestments. A Bimbo divestiture of bread brands in Kansas City is pending.
McKee Foods Corp., another reported potential buyer of Hostess assets, continues to grow in the donut category. Retail sales for its Little Debbie donuts rose 28% to $168,440,000 for the 52 weeks ended Dec. 2. McKee Foods, based in Collegedale, Tenn., is investing $19 million to expand production at a manufacturing facility in Stuarts Draft, Va. The added equipment will allow the company to produce its mini-donuts there. The plant already makes Little Debbie snack cakes.
Over the 52-week period ended Dec. 2, the overall donut category experienced sales growth of 3% to $1,624,927,700 and unit sales growth of 2% to 814,608,100.
Krispy Kreme Doughnut Corp., Winston-Salem, N.C., increased its presence at retail with 52-week sales of $219,685,700, up 2%.
On the food service side, Krispy Kreme has international expansion plans. The company in 2012 announced plans to open 40 Krispy Kreme shops in Moscow, 80 in India and 15 franchise locations in Singapore. As of Dec. 6, 2012, Krispy Kreme had 730 locations in 21 countries.
“Our current goal is to approximately double the number of international shops to around 900 by the end of fiscal 2017,” said Jim Morgan, chairman, president and chief executive officer of Krispy Kreme, during the CL King & Associates Best Ideas conference Sept. 12, 2012, in New York. “We currently have franchise commitments for almost 400 new shops between now and fiscal 2019 internationally. So we believe the target of 900 shops by January 2017 is a realistic goal.”
Dunkin Brands Group, Inc., Canton, Mass., plans to expand domestically as well as internationally. In 2012 the National DCP, L.L.C., the Dunkin’ Donuts franchise-owned distribution and purchasing cooperative, signed an agreement to lease a distribution center in Phoenix. It marked the seventh warehouse in the National DCP network and the first located west of the Mississippi river.
While more than 7,200 Dunkin’ Donuts restaurants are in the United States, that number eventually may grow above 15,000, said Paul Carbone, chief financial officer, at the NASDAQ OMX International Investor Program Dec. 5 in London.
“Forty per cent of our next phase of growth is coming in states east of the Mississippi and then 5,000 restaurants west of the Mississippi,” he said.