Pleasing consumers with innovation

Whether it’s a uniquely American phenomenon or a more global trend, the fact remains that consumers quickly grow tired of the “same-old, same-old.” Sure, they have their favorite products that they return to year after year, sometimes even for decades. However, even the most staid consumer has an adventurous streak from time and time, when they just want to try something new and different. And while bakery has developed somewhat of an All-American image of Mom and apple pie, that doesn’t mean that people aren’t willing to broaden their horizons, move past the traditional loaf of white bread or saltine crackers and into a brave new world.

Not your grandma’s loaf

While proponents of no-carb and low-carb diets would have people fleeing in droves from the bread aisle, the fact remains that these loaves of freshly baked bakery products are one of the primary staples of the American diet. Whether forming the foundation for a peanut butter and jelly sandwich or served up alongside a pasta dish smothered in butter and garlic, bread is a treasured favorite of many consumers.

Although families with kids most likely always keep a big loaf of traditional white bread in the fridge, it’s the superpremium segment that has garnered the most interest in recent years, experiencing solid 6 to 9 percent increases, while the category as a whole rose just 2.9 percent in dollar sales during the 52-week period ending Dec. 30, 2001, according to Chicago-based Information Resources Inc.

Not surprisingly, the superpremium segment is where wholesale bakers have introduced the bulk of new products over the past year. Topped with honey, butter or added grains, these premium-priced products tend to be double-wrapped, widepan breads that are positioned as natural and better-for-you. Granted, they’re not all truly innovative. However, many of these high-margin breads offer flavorful twists that distinguish them from the competition.

Chicago-based Alpha Baking Co. made its entry into the superpremium category in the fall of 2001 with four varieties of widepan breads — White Potato, Healthy Multi Grain, Whole Wheat, and a Sweet Hawaiian variety with Pineapple. Response was so robust that the company unveiled three new varieties — 9-Grain, Italian and Sweet Corn Bread — in the spring of 2002. All are sold under the S. Rosen’s brand.

United States Bakery, Portland, Ore., has added a unique twist to its line of superpremium breads, naming them after national landmarks in the great Northwest, such as the San Juan Islands. Meanwhile, one of the pioneers of the superpremium trend, Oroweat, was acquired by Fort Worth-based Bimbo Bakeries USA when it purchased the western U.S. baking business of George Weston Ltd. for $610 million.

Pepperidge Farm has outpaced the category twice over with such brands as Natural Whole Grains and Farmhouse. Last year, the Norwalk, Conn.-based company joined forces with Kansas City-based Interstate Bakeries Corp. to introduce its superpremium breads in the West.

Under the agreement, Pepperidge leverages Interstate’s distribution system, while Interstate Baking, the nation’s largest baking company and the baker of Wonder bread, gets to carry a superpremium line of breads, something that is presently lacking in its portfolio.

Meanwhile, Interstate has been busy with its own R&D activities, which include four new varieties of Home Pride bread — Honey Wheat Berry, Stone Ground, Buttermilk and Potato. Although the company has been pleased with the 27 percent boost in sales the new varieties have fueled, executives aren’t delusional when it comes to describing what they have produced.

“There’s nothing sexy there,” says Mark Dirkes, senior vice president of corporate marketing. “They’re not superpremium varieties that compete with Oroweat or Pepperidge Farm. They’re all good, solid, great-tasting everyday loaves of bread.”

While its new Home Pride flavors may not exactly be revolutionary, Interstate Baking’s other primary initiative very well could be. The company has been in the forefront of extending the shelf life of its breads. Consequently, Wonder, Home Pride and other breads now boast up to 10 days of shelf life, which has cut stales from 15 percent to 7 percent and allowed the company to slash hundreds of routes, thus bolstering its bottom line.

With Wonder bread dominating the kids’ market, Flowers Bakeries, Thomasville, Ga., is poised to give Interstate Baking a run for its money with Nature’s Own for Kids, currently being test marketed in the Atlanta area. Although sold in just 16 markets, Nature’s Own racked up more than $300 million in sales last year, earning it the title of top-selling soft variety bread in the nation.

Typically geared towards adult consumption, Nature’s Own has been available in seven varieties, including 100% Wheat, Honey Wheat, Butter Bread, three light bread items and a sugar-free loaf. Now, company executives feel the time is right to broaden the brand’s reach to a younger audience. In fact, Flowers nearly rolled out its youth-oriented product last year, but then backed off at the last minute.

“We were totally comfortable with the concept,” says Janice Anderson, director of marketing at Flowers. “However, we were not totally comfortable with some of our initial effort, so we did some more in-depth research.”

Consequently, Flowers toned down the packaging, producing a bag with less purple, before rolling out Nature’s Own for Kids.

Regardless of what brand they choose for their kids, many parents inevitably find themselves cutting off the crust in order to get their little ones to eat it. In fact, surveys show that 37 percent of parents take the crust off the bread for their children. Recognizing that trend, St. Louis-based Sara Lee Bakery Group began floating the idea of a crustless bread, initially to blank stares. As it turns out, crustless bread was a product that had to be seen to be appreciated.

“We conducted consumer research for a number of years that showed consumers couldn’t comprehend the concept of crustless bread,” says Gary Jensen, senior vice president of marketing at Sara Lee. “Once they saw it, they said it was a great idea.”

This past April, Sara Lee rolled out IronKids Crustless!, a white bread product that the company hoped would add excitement to the bread aisle and potentially expand sales in the category. According to Jensen, the product is so unique that competitors took to loudly belittling the idea as too weird or too expensive. Sara Lee concedes that Crustless! is premium priced, costing about 50-cents more than regular IronKids bread. However, the company is cautiously optimistic about the product’s future, which it hopes also includes adults who want to entertain their guests with finger sandwiches without the mess of manually cutting off the crusts.

Although Crustless! has garnered a lot of attention, it’s far from Sara Lee’s only initiative. The company has also introduced Ball Park hot dog buns, which are touted as being “Just the Right Size” because they are nearly the same length as Sara Lee’s Ball Park hot dogs. As part of its three-year plan to integrate the former Earthgrains and Sara Lee Bakery operations, the company has also rolled out 17 SKUs of Sara Lee branded bagels throughout the former Earthgrains’ territory, which serves 60 percent of the U.S. population. According to Jensen, Sara Lee bagels have distinctive sizes and flavors that complement Earth Grains branded bagels.

Also on the bagel front, Pepperidge Farm introduced bagels in the Eastern United States. The company admits that it wasn’t looking to recreate the bagel, reinvent the bagel or even become the category leader. Rather, former President David Albright saw bagels as “an important component of that breakfast occasion that Swirl [Cinnamon, Cinnamon & Raisin and Apple Cinnamon breads] plays so well in, and we wanted to be competitive in that area.”

Meanwhile, Toronto-based Maple Leaf Bakery Group purchased New York Bagel in the United Kingdom, where it already produces frozen private label bagels. The U.K. operations are intended to be the launching pad for Maple Leaf to establish itself as specialty bakers, serving the European market with unique baked goods.

Good stuff on the inside

With all the snacking that Americans seem to be doing, one would think that sales of cookies and crackers have gone through the roof.

Unfortunately, they seem to be hanging out somewhere on the first floor or even in the basement. According to IRI data, cookie sales fell 0.5 percent in dollars and 3.5 percent in units, while crackers managed to eke out a 1.8 percent increase in dollars, but fell 0.7 percent in units.
The reason for the sluggish performance is relatively simple. Category leaders, such as Nabisco and Keebler, have been in a state of transition as their parent companies — Kraft and Kellogg, respectively — integrate their global businesses. In many instances, product innovation has played second fiddle to integration. Optimism reins supreme, however, as companies begin identifying and responding to opportunities to revitalize the category.

While cheese crackers have been the hot snack over the past few years, wheat crackers seem to be emerging as the latest big trend. Among the few shining stars in the otherwise lackluster cracker category this past year were Keebler’s Wheatables, as well as Nabisco’s Wheat Thins and Triscuits.

“The whole wheat segment of the cracker market is heating up,” says David Vermylen, former president and chief executive officer of Keebler Foods, an Elmhurst, Ill.-based division of Kellogg. “There’s something going on that’s driving this segment, and it involves great-tasting products that are better for you.”

Pepperidge Farm joined the wheat gang this past year, rolling out a wheat version of its Giant Goldfish crackers, which are 300 percent larger than traditional Goldfish, making them better equipped for dipping and topping. Over the past year, the company invested heavily in the Goldfish franchise, which it markets as “the snack that smiles back.” Among the latest line extensions are Giant Goldfish Sandwich Crackers, filled with cheese or peanut butter.

“Goldfish Sandwich Crackers are a classic example of entering a segment that really did not have premium entries in general,” says Albright. “We looked and found a way to bring fun and a unique shape to the party.

Meanwhile, Lance Inc., Charlotte, N.C., introduced three varieties of mini-sandwich crackers — Toastchee Poppers, Nekot S’Mores Poppers and Nipchee Jalapeño Cheddar Poppers. The company is targeting different consumers and multiple-eating occasions by making the product available in several package sizes: a 7-ounce resealable bag for the grocery store market; a six-count tray of 1.5-ounce bags for the grocery/mass channel; and a 3.25-ounce pack for convenience stores.

“The 7-ounce standup resealable bag is revolutionary for us because it moves us beyond the on-the-go eating occasion where we have been strong for years,” says Todd Phillips, senior director of marketing. “It helps us to reach the at-home eating occasion. That’s a huge opportunity for us.”

Northfield, Ill.-based Kraft Foods also caught the sandwich cracker bug, rolling out Ritz Bits Sandwich S’Mores, as well as a line of Teddy Graham Bearwiches, bear-shaped graham sandwich crackers with a lightly sweetened crème filling. Other new Kraft cracker products included Honey Maid Grahams Sticks in honey and cinnamon varieties. Designed to make graham cracker consumption easy, the product features no cumbersome cellophane, no breaking crackers into pieces and no mess.

On the cookies side, Kraft focused its efforts on the world’s most famous sandwich cookie — the Oreo — rolling out two Double Delight Oreo flavors: Peanut Butter ‘n’ Chocolate Crème and Mint ‘n’ Crème. The new varieties build upon the success that Kraft experienced in 2001 with chocolate-filled Oreos. Last year, Kraft took Chips Ahoy!, the nation’s top-selling chocolate chip cookie into the sandwich cookie segment with the introduction of its Cremewiches line. This year, the company added a chocolate crème variety.

Meanwhile, Keebler teamed up with the Cartoon Network for a duo of co-branded products – Scooby cookies, timed to coincide with the release of the Scooby Doo movie, and Power Puff Girls sandwich cookies. The goal was to give consumers something new to look for in the cookie aisle and, hopefully, build category sales by adding something new and exciting for kids.

Pepperidge Farm focused its cookie R&D efforts on the indulgent adult market, launching its Dessert Bliss cookie line of cup-shaped cookies with rich, creamy fillings. Unlike Milano, which promises to be “wonderfully light” in texture, Bliss offers a more complex snack experience.
“It’s a very indulgent product that almost pushes into the confection area, rather than just being a cookie,” says Albright.

Those grown-ups seeking a more traditional cookie need not worry, however, as Pepperidge Farm rolled out two new flavors in its Chocolate Chunk big cookies line – Chocolate Chunk Sedona, with dark chocolate, toffee and pecan bits and Chocolate Chunk Carmel soft-baked cookies, featuring milk chocolate and chewy caramel bits.

R&D takes the cake…and the pie

Ah… the Twinkie — a sweet, cushiony, cream-filled reminder of childhood… plunged into a vat of oil and topped with confectioner’s sugar?

Believe it or not, Deep-Fried Twinkies have become an emerging fad, thanks to a classically trained French chef living in Brooklyn, N.Y. Facing this kind of competition — and perhaps even outright plagiarism, of sorts — it’s no wonder baked sweet goods makers are focusing heavily on new products, particularly those that borrow a degree of rich, gooey indulgence from other dessert categories.

Take a look at Interstate Bakeries Corp., which recently introduced the chocolate-enrobed Hostess Coconut Cake, a product that’s said to taste just like a Mounds bar. That’s not particularly surprising because Mounds served as the model for the new snack item.

“Snack cake items compete with other snack items like candy and salty snacks,” says Dirkes. “The Coconut Cake is right out of the candy section.”
A similar phenomenon has been taking place in the freezer case where bakers have practically done somersaults in their efforts to raise the quality and the indulgence level of their offerings. In many cases, frozen baked producers are cranking out desserts that rival restaurants in quality. Consequently, American consumers are trading up in their purchases of frozen pies and desserts.

Just a few years ago, pie producers flooded the freezer case with low-quality 99-cent products. Today, they’re enticing consumers to pay $6.00 to $6.50 for a new generation of super-premium products, such as Mrs. Smith’s deep-dish apple pie.

“Our pies are as good as homemade,” says Gene Lewis, director of marketing for the retail frozen products division of Mrs. Smith’s Bakeries. “If you look under the top crust, you’ll see an abundance of fruit and spices, just like what you would make at home.”

Meanwhile, Edwards Fine Foods prides itself on creating complex desserts that consumers most likely would not be making at home.

Boasting multiple textures and complementary flavor profiles, Edwards products are made with cookie-based crusts, sweetened condensed milk, chocolate chunks and other particulates added to the filling.

“The thing that differentiates us from others is our line of distinctive products,” says Connie Day, director of marketing for the retail channel. “They’re not me-too items or the type of products that you would make at home.”

Take sweet potato pie, for example, a southern favorite that many consumers actually prefer over pumpkin pie. Edwards uses a graham cracker crust instead of the traditional pastry one, adds the sweet potato filling and then tops the dessert with pecan streusel toppings.

“It’s almost like a sweet potato soufflé,” says Day. “That’s a perfect example of how we come out with something different instead of the same old thing by putting a twist on tradition.”

That same philosophy of putting a twist on tradition has helped revitalize the frozen garlic bread category over the past several years. In fact, frozen garlic loaves were the first meal accompaniment that brought high quality to an area of the supermarket where quality was severely lacking.

With a variety of cheese toppings, bakers heightened the premium perception of frozen garlic bread. Over time, the full loaves of French bread with a 30-minute baking time gave way to handy garlic toast slices, which only take five minutes to bake off and can be served alone, made into bruchetta or added to a hamburger to create a meal.

Although a lack of innovation has hurt the refrigerated dough category, Pillsbury unleashed its R&D muscle this spring, rolling out Dulce de Leche Caramel Rolls in two California markets. The indulgent product, which is topped with a creamy dulce de leche topping, has baking instructions in both English and Spanish, reflecting the Hispanic origins of the popular caramel flavor.

Raising the bar

The snack bars category has become one of the heavyweights of the industry, racking up more than $1.3 billion in annual sales, according to IRI. This past year was no exception, as IRI reports dollar sales rising 12.9 percent, while units increased by 6.7 percent.

Once a trendy little niche dominated by mom-and-pop companies and sports enthusiasts, today’s snack bars category is dominated by some of the giants of the food industry, including Kraft, Kellogg and Quaker, which together account for nearly half of all retail sales. Even Power Bar, which was once an independent company owned by a Berkeley, Calif.-based athlete, has given in to acquisition fever and is now part of Nestle, one of the world’s largest food companies.

Traditionally considered a morning meal replacement, snack bars are increasingly emerging as a lunchtime treat or afternoon snack. Innovations such as Quaker Bites and Kellogg’s Nutri-Grain Minis and Nutri-Grain Yogurt Bars have helped fuel this trend by positioning bars as poppable snacks. The most successful brands will be those that offer a variety of products targeting multiple consumers and multiple eating occasions, predicts Keebler’s Vermylen. Keebler distributes Nutri-Grain bars, as well as Rice Krispies Treats bars.

According to Vermylen, Nutri-Grain bars are consumed primarily by adults in the morning or mid-day. With the introduction of Nutri-Grain Minis in strawberry and blueberry flavors, Keebler hopes to extend the brand to a younger audience with a poppable and portable on-the-go snack in the afternoon.

Quaker had a similar goal in mind when it rolled out Quaker Bits snack bars, as did Kraft when it introduced Chips Ahoy! and Oreo Cookie Barz. These products are geared towards the 3 o’clock crash time when consumers — and frequently, after school kids — need an old-fashioned sugar high to finish off the day.

Not everyone is merely looking for a temporary energy boost from snack bars, of course. Some consumers actually desire nutritional benefits in a portable snack. By seeking out fortified products, they can rationalize eating an indulgent snack, which might very well contain a significant amount of calories and fat. Kraft’s Balance Oasis bar, for example, is fortified specifically for women with calcium, iron and folic acid. Power Bar also released a line of female-oriented bars, dubbed Pria. Both products contain nutrients that help build bone strength and may alleviate some of the daily pains that affect many female consumers.

That’s not to say that men have been left out of the equation. The Pros-Tect bar, endorsed by legendary golfer Arnold Palmer, is specifically formulated for men’s energy and prostate health, according to Laurent Leduc, vice president and general manager of Acatris USA.

Focusing on “healthy indulgence,” Balance Bar rolled out two new bars under its Balance Bar Gold line. Both new varieties — Caramel Nut Blast and Chocolate Peanut Butter — combine the indulgence of a candy bar with the nutrition of a traditional snack bar, explains Beth Gilmartin, senior brand manager. In spite of the rich taste, these new offerings hold fast to Balance’s 40-30-30 nutrition plan. That’s 40 percent carbohydrates, 30 percent protein and 30 percent dietary fat, the supposed ideal combination of nutrients. Power Bar has also ramped up the indulgence of its products, rolling out “dipped” energy bars in carrot cake and double chocolate flavors.

Snack bar producers pounced on the healthy indulgence trend after monitoring purchasing patterns. According to Roeland Polet, vice president of sales and marketing for Evansville, Ind.-based Carbolite Foods Inc., consumers initially try products based on function, but repeatedly buy products based on taste. Therefore, those snack bars that promise more energy or offer added nutrients will achieve high trial rates, but will fail to build a loyal following of repeat customers if they fail to deliver on taste.

Flavor rules

The past 18 months have been nothing short of traumatic for most Americans. From catastrophic terrorist attacks and an ongoing sense of unease to a massive economic slowdown that not only left many people out of work, but cleaned out their retirement savings as well. When you consider these factors, as well as the growing number of studies on obesity rates and the related health risks, it only makes sense to assume that Americans wouldn’t be blowing their money on empty calories, so-called gut busters.

Think again. Consumers just can’t seem to get enough of crunchy, tasty, salty snacks. Consequently, the $21.8 billion salted snacks industry beat the odds, growing 5.1 percent in 2001. Granted, that’s not quite as vigorous growth as in recent years, but in light of the country’s current situation, it’s pretty impressive.

So why are consumers stocking up on chips, pretzels, nuts, sunflower seeds and cheese snacks? It’s basic human nature. When crisis hits, people instinctively engage in a variety of behaviors. Some increase their consumption of alcohol or tobacco products; some “cave,” staying close to home and hearth where they feel relatively safe; and many seek out comfort food, setting aside concerns over fat, salt or cholesterol intake.

For many consumers, there’s nothing more comforting than curling up on the couch with a big bag of potato chips and the television remote. Although viewing of cable news networks has soared since 9/11, consumption of salty snacks extends far beyond the home environment.

During quick pit stops at gas stations or convenience stores, consumers frequently grab a single-serve pack of their favorite salty concoction to eat on the road, in the office, or at the soccer field.

Recognizing the growing acceptance of salted snacks, manufacturers have invested heavily in product innovation, often taking an existing product and adding a new flavor. Over the past couple of years, manufacturers have debuted a number of products that are not merely more flavorful, but more intensely flavorful, often featuring much more spicy flavors, such as jalapeño.

For example, Lance Inc. launched a line of kettle-cooked potato chips dubbed Thunder Boomers in Jalapeño, Cheddar, Spicy Barbecue and Cajun flavors. Philips says the “boldly-seasoned, high-crunch, masculine product” has done amazingly well in its first few months of availability.

Likewise, Chicago-based Jays Foods LLC, rolled out three extra-hearty versions of its Kruncher! line ˜— Original, Mesquite and Jalapeño.

Along with such specialty chip offerings as Barbecue, Open Pit Barbecue Ridged and Hot Stuff, Jays has joined the race to produce the kind of machismo chip demanded by many chip aficionados.

As hearty, flavorful chips build up a loyal following, many of the “healthy alternative” chips are falling by the wayside. Sales of Pringles’ Fat Free chips plummeted 14.5 percent in dollars and 15.1 percent in units, while Pringles Right Crisps sank 13.8 percent and 20.2 percent, respectively. In the spring, Plano, Texas-based Frito-Lay pulled its fat-free Wow! chips off some retail shelves, following a drop of 10.6 percent in dollar sales and 23.4 percent in unit sales. The decision represented both a failed attempt to please the health-conscious niche and the fallout from negative publicity surrounding the fat substitute, Olestra.

The flavor trend has expanded into the tortilla chip segment as well, where Frito-Lay has reaped extraordinary success with its heavily spiced Doritos Extreme line. In a joint effort with its Mexican-based sister company, Sabritas, Frito-Lay has developed Doritos Ranchero and Doritos Salsa Verde tortilla chips, Fritos Sabrositas lime and chile corn chips, Churrumais fried corn strips with chili and lime seasonings and Crujitos queso and chili flavor puffed corn twists.

Flavor intensification is also the name of the game in the vastly popular cheese snacks category, where Lance’s Cheese Explosion serves as a definite example of a product designed to entice consumers with a fun appearance and zesty taste.

Meanwhile, Frito-Lay launched two new Chee-tos varieties – Flamin’ Hot and Mystery Colorz Snacks. With the latter, the neon orange-colored product turns the consumer’s tongue either blue or green, thanks to an FDA-approved, water-soluble, saliva-activated color-changing additive. F&BR

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