CHICAGO -- A new twin-pack size of Borden's Cracker Jack, suggested by Wal-Mart, is generating 23% more unit volume than its 8-ounce "value pack" and is expected to boost its tonnage 30% above last year's. Hayes Reilly, manager of national accounts for the firm based in Columbus, Ohio, said the new size was born in a "brainstorming" session with the retailer.
"Prior to 1993, Wal-Mart bought Cracker Jack only on an in-and-out basis for seasonal events. In March 1993 we were able to secure a 'Tab Event' on our 8-ounce value-pack item. The event, created by Sam Walton, is a 30-day promotion featured in Wal-Mart's tabloid ad. Every store has to have a display of the items in the tabloid for 30 days," Reilly said.
"The value pack of Cracker Jack sold so well we were put into Wal-Mart's modular as an everyday item," he said.
Cracker Jack became a regular item at Wal-Mart in August 1993 and that year its dollar sales doubled, he said.
Reilly spoke at a conference here titled, "Account-Specific Promotions" hosted by the Strategic Research Institute, New York.
"In October 1993 we sat with a vice president in the food department at Wal-Mart during a business review to discuss how to grow volume in 1994 and beyond," Reilly said.
Wal-Mart wanted to know how the dollar ring in the popcorn category could be increased and how the category could be grown. Borden wanted to know what new package idea would grow the dollar ring and make more gross margin.
Wal-Mart suggested banding together two 8-ounce value packs to create a twin pack. This would reduce the unit cost. With the twin pack, Wal-Mart enjoyed a 4 percentage point higher margin and 91-cent higher per transaction dollar ring, Reilly said.
The twin pack was priced at $1.50. The single 8-ounce value pack had an everyday retail of 97 cents, but was featured at 75 cents during a Tab Event, he said.
A full national launch of the Cracker Jack twin pack was made in 1993, he said.
"We are selling 23% more by adding the new package. In 1994 through October, our sales are basically equal to all of 1993. We are expecting with volume in the fourth quarter to add another 30% to the 1993 tonnage. "Also, over the last two years we have grown our business more than 130% at Wal-Mart," he said.
According to Information Resources' tracking of mass merchandisers for the 52 weeks ended Sept. 18, 1994, Cracker Jack was up 108%, Crunch & Munch was up 18% and the total category was up 22%, Reilly said.
Borden has learned that the Tab Event is the best event to get into with Wal-Mart, better than the Falling Prices event, he said.
The Falling Prices event is tied to the Wal-Mart ads in which price signs are seen falling to the floor. The manufacturer determines how long the price reduction will be effective, such as 30 or 60 days. Borden chose to maintain the reduced price for four months, he said.
"The response was nowhere near the Tab Event of the previous year," Reilly said.
"The value pack responded 77% better in the Tab Event than the twin pack with Falling Prices. With the value-pack promotion, we had endcaps in every store. When Falling Prices ran, we had endcaps in 10% to 20% of the stores. We definitely will target Tab Events in 1995," Reilly said.