DO-SI-DOUGH!

STEPHANIE FAGNANI

While nothing can really compare to a fresh-made cake when the sweet tooth attacks, industry experts told SN that the right price, a hearty variety and a good location keep consumers shopping for commercial cakes as well.

Stalwart brands including Hostess, Drake's, Entenmann's and Friehoffer's all offer shoppers boxed cakes for the taking, but the retailers that spoke with SN said one "little" lady simply takes the cake in terms of sales at their stores.

"All I can tell you is that Little Debbie is selling the socks off everybody," said Jerry Mountin, owner of a Piggly Wiggly unit in Mayville, Wis.

According to Mountin and other sources, the main reason this particular brand of snack cakes is doing so well is reflective of today's financially strapped consumers. "For $1.49, you have room to promote it and run 3 for $5," Mountin added.

"Pricing is a main thing -- when they [Little Debbie] go for 88 cents, nothing really comes close to them; we sell a ton of them," said Matt Ryan, shift leader at a Cub Foods in Woodbury, Minn., which is owned and operated by Jerry's Enterprises, Edina, Minn.

Statistics from market research firm ACNielsen, Schaumburg, Ill., show that the fresh bread and baked goods category saw sales grow about 4% from $11.4 billion for the 52-week period ended May 19, 2001, to $11.8 billion for the 52-week period ended May 18 this year in food stores that generate more than $2 million annually. This category includes all types of fresh cakes and individual snack cakes, like Twinkies, and excludes items like frozen cakes, fresh doughnuts and fresh coffee cakes.

Yet, according to Spencer Hapoienu, president and co-founder of database marketing/CRM firm Insight Out of Chaos, New York, some of the higher-priced boxed cakes could be much better performers if they were promoted and marketed more by both retailers and manufacturers.

"I think the problem is that they are relatively low-margin categories for the retailer, and all the grocery guys have been working so hard for so long on building up their in-store bakeries and fresh bakeries and pushing those.

"It's become like a forgotten category for the most part because it's pretty small, and most of the time they [retailers] don't get very much space in the aisle and they just have small ends," Hapoienu said.

Indeed, the in-store bakery has become the biggest threat to commercial cake sales. "We've got one of the better bakeries of any store that I've ever worked at," said Andy Tews, grocery manager at Mountin's Piggly Wiggly store. "There's a wide variety of breads and cakes and doughnuts, so I think there's a big push there because the variety is always there and it's fresh. The snack cakes, I think, more so, are just for the packaged lunches; they are more for convenience sake," he said.

At the Mayville unit, boxed cakes are not afforded much space and Entenmann's products are merchandised on a table near the in-store bakery, while Little Debbie cakes are located on a front endcap near the registers.

"In this store, the bakery is hands down over any of the box cakes we do; I hardly ever see Entenmann's go through here," Tews said. However, Little Debbie snack cakes do well, a fact that Tews also attributes to price and location. "We have moved it around and it does seem to do a little better where it is now, near the registers."

A spokesman for George Weston Bakeries, owner of the Entenmann's brand, could not be reached for comment at press time.

Cub's Ryan said his store stocks Little Debbie snack cakes on an endcap within the Center Store aisles and also on a separate stand up near the checkouts.

"They do real well in our store, especially when they're on ad. But, even on the normal shelf they do fairly well here," Ryan said.

Sales of Entenmann's cakes have been "pretty level," he said, adding that "they don't sell a whole lot until they do a TPR, then their sales will increase, but they don't sell a ton."

Although pricier than most commercial baked goods, in-store offerings have the advantage of bringing in higher profits for the supermarket retailer than boxed cakes, said Barry Kahn, president of Food Scene, a Colts Neck, N.J.-based frozen and in-store bakery broker.

Yet, Kahn said, "There are a lot of commercial belly-stuffer products that are very good. There's no question that if you put an endcap up by the front registers or by the buy-out tables in the front, they will sell. If there's price and quality, then anything can sell commercial. The better the price, the more people buy and keep in the freezer."

And, while it is not entirely a seasonal category, weather and time of year do play a part in the movement, as well as the appearance of cakes, both commercial and in-store.

"Certainly summer changes the whole look of most baked products; they go from a dark product to a lemon product or something like that on that type of iced products," said Kahn. "There are certain pies that are looked at at certain times of the year, and certain flavors of cakes that are looked at at different times of the year."

Snack cakes are also typically a standard in kids' lunches, according to Tews, who notices that sales tend to pick up a bit during the back-to-school time. However, Tews said, "In the summertime it does lighten up, but I think people's eating habits lighten up in the summertime, too. I don't know if it's because they're watching their weight or because when it's hot, they're just not as hungry."

In an effort to keep product moving year-round and to realize the volume that is unattainable in the grocery arena, Hapoienu said he has noticed that some of the commercial bakers have begun shipping more and more product to other channels of trade, like CVS and Wal-Mart, in particular.

But, he told SN he believes this is to the detriment of these established brands. As consumers stop seeing these products in the supermarket channel, where they have been located for years, it may not occur to them to go looking for them in drug stores, for example.

And, he said, it could be viewed as an indicator of the future of the brands.

"As those brands that have distinct personalities were bought by big CPG companies, they became very small pieces of the bigger organization and they're just milking them as cash cows -- they know exactly the space they're going to get and they know exactly what kind of profit they're going to get on it, and they just do that year in and year out.

"Eventually, they'll get squeezed either by Little Debbie's, who expands, or by the retailer who says, 'I don't really need to give you guys the space anymore; you're not doing very many turns. I'll just put my stuff in here, my private label in here, or somebody else will come along."'