Mondelez International, East Hanover, N.J., is far and away the category leader, with sales of more than $3 billion. Year-over-year dollar sales were up 7% in the 52 weeks ended July 13 on an 8% increase in unit sales, according to I.R.I. Mondelez benefited from continued strength in its Oreo and Chips Ahoy! brands, where dollar sales increased 11% and 10%, respectively, during the period.
To help support its priority cookie and cracker brands and product platforms, Mondelez earlier this year said it would invest more than $130 million in new biscuit manufacturing technology and capabilities in its U.S. network. The investment will focus on bakeries in Fair Lawn, N.J., and Richmond, Va. Consolidating its U.S. biscuit manufacturing footprint on the East coast will result in the closing of the Philadelphia bakery in 2015.
Mondelez also continues to see strong demand for its belVita brand. The company expanded the belVita brand with the launch of soft baked breakfast biscuits last fall, and the introduction has belVita on the fast track to becoming a $200 million brand. In the 52 weeks ended July 13, dollar sales of belVita cookies totaled $183,741,488, up 95% from the same period a year ago, according to I.R.I.
Growth in biscuits, driven by new belVita Soft Baked breakfast biscuits and Reese’s Peanut Butter Cup Oreo cookies, contributed to 2.7% growth in North America at Mondelez in the second quarter ended June 30.
Pepperidge plays vital role
While Pepperidge Farm Inc.’s 4.8% share of the cookies market pales in comparison to Mondelez’s 40% share, the Norwalk, Conn.-based subsidiary of Campbell Soup Co. is an important player, particularly for its ability to be a trend setter.
“Our cookies have continued to grow, driven by smart, relevant marketing, successful flavor innovation and focused execution in merchandising,” Irene Chang Britt, president of Pepperidge Farm, said during Campbell’s July 21 investor day conference. “In addition, the introduction of our Dessert Shop range of large, soft cookies has attracted new consumers to the portfolio and delivered incremental sales.”
Inspired by what Ms. Britt described as “America’s love for traditional desserts,” the Dessert Shop line of cookies feature limited-edition seasonal cookie versions of cheese cakes and pies.
“The range has proved popular and delivered incremental growth to our sweet cookie portfolio,” she said. “This year we will continue to innovate with flavors such as blueberry cobbler and chocolate brownie, and rotate seasonal variations such as pumpkin cheesecake.”
Pepperidge also is grabbing hold of the opportunity to create cookies for the morning daypart.
“You see, over 25% of the cookie category volume is eaten before noon as consumers like to either start the day with something to go with their hot beverage or punctuate mid-morning with a little pick me up,” Ms. Britt said. “So we leveraged our soft cookie baking expertise to create treats tailored to this consumer occasion. This new range called Coffee Shop cookies reimagines café favorites such as cinnamon bun and banana nut, and we just launched them this month (July).”
Pepperidge Farm’s core Milano range posted sales of $127,617,376 in the 52 weeks ended July 13, according to I.R.I., up 18% from the same period a year ago. Ms. Britt attributed the brand’s success to advertising built around the insight that the brand’s target consumers, women ages 25 to 44, need a “Milano moment,” a few minutes just for themselves. The company plans to feature the advertising campaign again in fiscal 2015 on digital television platforms. This fall, Pepperidge will launch its first fall Milano flavor: pumpkin spice.
Keebler maintains share
Dollar sales at Kellogg Co., Battle Creek, Mich., fell 2% in the 52 weeks ended July 13, according to I.R.I. However, John Bryant, chairman and chief executive officer, noted during a July 31 conference call with analysts to discuss second-quarter earnings that the Keebler cookie brand maintained share in the quarter.
“The Chips Deluxe line saw good growth as the new cookies co-branded with M&Ms continue to do well,” Mr. Bryant said. “However, we posted lower consumption and shipments in our 100-calorie packs, and we actively reduced s.k.u.s (stock-keeping units) in the segment. We have some new products that recently launched, including Keebler Smalls and a new variety of our successful Simply Made cookies, which will have a positive impact on results. However, the effect of reductions in the number of s.k.u.s in the tail will continue for the balance of this year and into early next year.”
Identifying other occasions
General Mills, Inc. may not rank among the leading wholesale cookie makers, but the Minneapolis-based company is making its mark in the category. The company last year launched Pillsbury soft cookies in C-stores, and company executives noted they are already turning in the top third of their category. Available in chocolate chip and snickerdoodle, the cookies are available in a 3-oz bag for $1.49.
General Mills is currently in about 50,000 C-stores across the country and will continue to increase distribution and strengthen its portfolio. To that end, the company is partnering with Crossmark Brokerage to enter an additional 50,000 convenient store locations.