KANSAS CITY — A resurgence is taking place across the sweet goods industry, and for some companies, going small is paying off big on the bottom line.
In the 52 weeks ended Nov. 5, dollar sales in the bakery snacks category totaled $3,413,967,122, up 2.9% from the same period a year ago, boosted by a 3.6% increase in unit sales during the period, according to Information Resources, Inc., a Chicago-based market research firm. Dollar sales also moved higher for several other sweet goods categories, including pastry/donuts (up 2.8%), pies and cakes (up 2.1%) and muffins (up 9%).
Hostess Brands, Inc., Kansas City, has been instrumental in the revival of the sweet goods category. Since rebounding from bankruptcy several years ago, Hostess has been on a mission to not only regain its foothold in traditional sweet goods segments but also to forge a path into new areas.
The company’s Bakery Petites fits the bill as a product that Hostess sees elevating the sweet goods category. Called “Petites” for a reason, the sweet goods are smaller versions of cake bites, brownies and crispy cookies and are marketed as Cake Delights, Brownie Delights and Crispi Thins, respectively. The products were introduced in the marketplace over the past few months and will continue to gain distribution into 2018, William Toler, president and chief executive officer, said during a Nov. 7 conference call with analysts.
“We think it’s category elevating and really fits into the trend of permissible indulgence, fits into millennials eating these kind of products, doing more of the snacking and grazing-type things,” Mr. Toler said. “We’re really comfortable with where this is from a strategic perspective. These products have very good margins. We’re making probably 80% of the volume from these items in-house in one of our most effective lines — effective parts of the business. And we have very good margins on this and expect to be able to market, drive trial and do all the things we want to do to build our brand and to elevate a category like this.”
Hostess also is making new “friends” in the industry, partnering with Nestle S.A. and Mondelez International, Inc. on new products. Hostess and Nestle recently debuted Hostess Brownies made with Butterfinger. The new product features a brownie enrobed in fudge coating with Butterfinger candy pieces sprinkled on top.
As important as new product introductions are to growing the category, Mr. Toler also has stressed the importance of renovating to make sure the best product is being offered. Hostess took that philosophy to heart with the re-release of The Chocodile, which is a fudge-covered Twinkie.
“We’ve replaced and upgraded the quality of that product, both with the coating and the size of the cake underneath,” he said.
Fudge and cake also go together in a new product launched by Bimbo Bakeries USA, Horsham, Pa. The company’s Entenmann’s Minis fudge iced golden cakes come in boxes of eight individually-wrapped cakes.
“The sweet goods category, overall, as a total category, is performing fairly well,” Fred Penny, president of B.B.U., said during an Oct. 27 conference call with analysts. “And it’s really a combination of our focus on strategic brands, some innovation and then the programming that we’ve brought to the market.”
Another sweet goods product performing well for B.B.U. is Entenmann’s Little Bites. The company kicked off 2017 by expanding the line with a Chocolate Party Cakes variety. The bite-size snack cakes are similar to the original golden Little Bites Party Cakes in that they feature rainbow sprinkles.
McKee Foods Corp., Collegedale, Tenn., also got into the fudge act in 2017, expanding its Drake’s snack cake portfolio with new Fudge Dipped Devil Dogs. The sweet treat features two devil’s food cakes sandwiched around vanilla-flavored crème all dipped in fudge.
Earlier in the year, McKee Foods unveiled new “family-friendly” designs and revamped recipes for its Little Debbie Mini Muffins and Mini Brownies. The company said it mixed over 200 recipes and, guided by the feedback from hundreds of children and moms, refined them until they met expectations.
“One of the most interesting changes to the recipes should have been obvious,” said Cheryl Hilling, director of quality for McKee Foods. “Kids told us they preferred milk chocolate chips over semi-sweet chips because of their slightly bitter aftertaste. With ingredients like real blueberries and real cocoa, these new recipes are sure to please the entire family.”