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As grocers report recent stagnant sales in the cookie and cracker categories, industry observers point to the weak economy and unimpressive manufacturer support as reasons for the lackadaisical sales.Most do agree, however, as to which brands top the list of consumers' current preferences.Both fields are clearly dominated by traditional brands like Oreos and Ritz. The growth of the specialty and import

As grocers report recent stagnant sales in the cookie and cracker categories, industry observers point to the weak economy and unimpressive manufacturer support as reasons for the lackadaisical sales.

Most do agree, however, as to which brands top the list of consumers' current preferences.

Both fields are clearly dominated by traditional brands like Oreos and Ritz. The growth of the specialty and import segment appears to have stalled, with the natural and organic categories continuing to offer limited niche opportunities.

Retailers also agree on the attractive margins -- averaging 30% in both categories -- and the strong impulse potential. Yet, those polled by SN said they would like to see these categories showing more movement.

According to Information Resources Inc., Chicago, the cookie and cracker categories, respectively, were showing a 1.7% decrease and a 1.7% increase in dollar sales across channels for the 52-week period ended July 14, 2002. During this time frame, Nabisco accounted for 38.4% of total dollar market share in cookies, and 47.1% in crackers, bearing strong witness to the vendor's powerful position.

Jim Olson, store director and buyer for Lamb's Wilsonville Thriftway, a six-store operation based in Portland, Ore., told SN that while numbers for both categories have been fairly flat in his stores for about a year, the business is definitely trending mainstream.

"The specialty cracker section is down," he said. "People seem to be more interested in the Nabisco and the Keebler.

"Nabisco is actually selling above the store trend by 3% or 4%," he added.

Olson believes the sluggish performance may be due in part to the protracted recession, which is particularly to blame for the decreases in the upscale cookie and cracker lines. However, the performance of these items during the holiday entertaining season remains to be seen, he noted.

In Olson's market, promotional allowances have remained fairly stable over the past year, and service from his vendors has been above par, he said. However, these sentiments are not shared by retailers across the country.

Eileen Heuer, direct-store-delivery buyer for Scolari's Food & Drug, Sparks, Nev., told SN slow sales in the cookie and cracker categories at her stores are primarily due to a lack of promotional funding from some of the major manufacturers.

"We are not getting the trade dollars from Nabisco that we used to," Heuer said. "Keebler is beginning to come forward, and they are showing slight growth, but they are too small to really move the category forward."

Larry Harris, grocery buyer at Pratt Foods Supermarkets, Shawnee, Okla., said the categories have been flat at his stores for the past six to eight months as well.

"I haven't micromanaged either of these categories, so I can't really point to the overriding cause, but the specialty and gourmet segments are definitely down, and that could be due to the current financial situation," Harris said.

In addition, Harris too has noticed a decrease in promotional activity on the part of major brands over the past year or so, an activity that he said is very important in this area of the store.

"You really see a big difference when you go from a box of cookies at $2.99, to a 2 for $5 promotion. You can see the category flatten out when there is nothing to drive it beyond brand recognition," he said.

Many of the retailers SN spoke with were, at press time, preparing for the back-to-school season, typically a strong one for cookies and crackers.

As consumers shun some of the more exotic brands in favor of less expensive national brands, they are also turning to private label as a means to further cut the bill. Harris carries the Best Choice label from Associated Grocers, and he said both categories are doing fairly well in this line. Frequent promotion is part of what drives their success, he said.

At Thriftway, Olson has recently increased his private-label cookie sets -- in the Western Family label -- from four to five feet. Crackers do not sell as well in his market, he said.

Although consumers may be turning away from luxury snack items, those shoppers willing to pay for an ecological stamp of approval continue to do so. The base remains small, but the natural and organic cookie and cracker segments are growing, albeit slowly.

Pratt Foods is a conventional supermarket that attempts to make natural choices accessible to the mainstream public, Harris explained.

"People want to be healthy, and they want to see these options in their snack foods," he said.

As testament, Harris said the natural chip category has shown exceptionally strong growth, and categorizes the rise in cookies and crackers as being fairly strong.

"They move on a relatively small scale in terms of volume," Harris said. "We try to promote an organic or natural cookie and cracker option at least once a quarter."

Pratt's is a fully integrated operation, Harris said, and he does not call too much attention to the promoted items on the shelf. These consumers know where to look to find these products, he added, and brands such as Earth's Best and Healthy Valley have a dedicated, if limited, following.

Over the past few years, "healthy" has taken on new meaning when it comes to food. Today, people equate health with a pure and wholesome lifestyle, as opposed to a fat-free one, and sales of fat-free cookies and crackers have fallen precipitously, retailers told SN. Still, purity quotient of the ingredient panel notwithstanding, the equation is very simple. "If they are going to go for a cookie, they are going to go for something that tastes good," said Thriftway's Olson.

However, modern Americans' proactive stance on health has led to the emergence of a new class of "healthy" snack. According to Olson, sugar-free cookies have been doing very well in his stores. The surge in sugar-free sales has little to do with weight loss, he said, and these new lines are geared toward the growing number of diabetic adults associated with the aging baby boomer population.

"I don't know many people of that generation who haven't been diagnosed with some type of adult-onset diabetes," added Scolari's Heuer.

Sugar-free cookies are a hot item at her stores as well. Mother's has come out with a line of sugar-free cookie, and Heuer anticipates very strong sales.

Still, cookies and crackers are generally more closely associated with fun, and retailers can move a lot of product by targeting kids directly, according to Amy Henry, account supervisor at Geppetto Group, a New York-based consultancy.

"These categories are often marketed to mom as the traditional gatekeeper," Henry said. "But this isn't the only face mom wears today. She wants food to incorporate play, and to give children a sense of empowerment."

Henry held up the cereal aisle as an example of a section in the supermarket that truly speaks to children. It is not uncommon to have three or four boxes of cereal in a single household, she noted. Retailers, and manufacturers alike, should foster that dynamic in the cookie and cracker segments as well.

"Kids are obsessed with big and little and how many things they can fit in their hand," she explained. "Mom can have her box of traditional Ritz crackers, and the kids can have the minis."

Many companies have segmented their brand portfolios in these segments, catering to a cross-generational audience.

"It is comforting for adults to know these products still exist. At the same time, by presenting something different, you really signal to kids that you are breaking the rules," Henry said.