SEATTLE -- Associated Grocers here, wholesaler to about 340 independent grocery stores, stocked up on baking supplies to meet anticipated increased demand for the holidays, claiming that 30% of baking sales are transacted in November and 40% in December.
"There's a little spike at Eastertime, but nothing like fourth quarter," said Kathryn Brumble, baking category manager for Associated Grocers. The company increased its supplies of chocolate chips, sugars, flours, spices, nuts, jellied fruit and other baking items.
Quoting information from General Mills and Nestle, both big players in the category, Brumble said baking is a $8.8 billion business for the total United States, with $2.2 billion of that reaped as profit. About 80% of those purchases fall in the grocery channel; the rest go to mass and clubs.
For the total United States, cake mixes and brownie mixes were down about 4.2% in dollars as of May 2000, and flour sales were down 4.1%. It could be that the dot-commers are too busy to bake, yet baking chips saw some growth this year, Brumble said.
Associated Grocers is a retailer-owned cooperative that provides food, general merchandise and retail services to stores in Washington, Oregon, Alaska, Hawaii, Guam and the Pacific Rim.
"A lot of times, price is not the only thing that sells the product. You have to have a total merchandising package. Displays are key. Retailers need to have those up and full by the first of November, and they need to focus on cross merchandising," Brumble added. Chocolate chips usually sell very close to cost, but you can sell baking bars or yeast and other lower-volume ingredients with them, she pointed out, to build displays to increase the gross profit or offset those things which are not high profit.
Associated Grocers has a best cost goods program, called AIM, or advertising in marketing, which encourages planning, displays and endcap activity, as well as advertising, she said. "It's also very important to use private label aggressively on holiday plans.
"Many times a customer will pick up a private-label sugar, selling a few pennies lower than the national brand. In many cases they don't prefer the name brand, which in the Seattle area is C&H," Brumble told SN.
Market research firm SPECTRA does a study on demographics, which shows that "small-town living" tends to index high in the baking ingredients category, she said. "About 26% of our business is done in what is called small-town living areas, so we have a good opportunity in the category to do more business. Just a little over half of the users are responsible for 73% of sales in those categories. Households with income of $50,000 or less, containing three or more people, especially if teens are present, buy the most home-baking supplies, Brumble said.
"In the last couple of years, we've noticed a 5% to 10% increase in sales of individual baking items," said Brad Lindsey, sales and merchandising specialist for Associated Grocers' Town & Country retail member stores.
Martha Stewart and the other TV chefs may be one reason. "When she has a guest on to demonstrate a recipe, we sometimes run out of the ingredients they use," said Lindsey.
