Time Is Right To Secure Bread Gains
March 3, 2010
BY KENNETH ROBESON
Retailers of frozen bread and dough, having benefited from a rough recession, can consolidate category advances with some dedicated effort in the improving economy.
In uncertain times, consumers returned to basics, and retailers can build on that shift through cross-merchandising and product development that focuses on value. Yet, as recovery proceeds, category players must address a trend in consumer priorities towards wellness and convenience if they are to hold on to the gains they have lately enjoyed.
For the 52 weeks ending Nov. 1, 2009, the frozen bread/dough category notched total sales of $690.5 million, according to Information Resources Inc., Chicago, an increase of 3.8%. Pastry dough saw an 8.1% rise to $133.3 million, while cookie dough showed similar growth, up 8.7% to $5.7 million. Private label products showed a 6.1% sales decline in the pastry dough segment, but a 28.4% gain in the cookie dough segment.
According to Ken Farnsworth, Jr., CEO of Murray, Utah-based Rhodes Bake-N-Serv (801-327-7465), the frozen bread and dough category has been “way off the charts” because more consumers have returned to preparing baked goods at home.
“The loaves are up, the rolls are up, everything is selling better than ever,” he says.
Over the holidays, Rhodes ran overtime at its plant.
“We’ve got [retail] customers whose sales are up as much as 35%, and we had the best November in our company’s 51 years,” Farnsworth says.
If consumers should remain frugal, Farnsworth notes, sales at Rhodes should continue to roll.
“You really see what’s happening when you look at sales in Michigan, Indiana, Ohio: right through the roof,” he says.
Value obviously has been a major factor in driving sales, Farnsworth adds.
“The retail price of Rhodes bread is under a dollar a loaf,” he notes. “There is no question that people have gone back to baking. Our rolls are 11 cents or 12 cents each, so it’s a way they can feed their families really great product at a good value.”
For some consumers, traditional products such as the thaw-proof-bake-and-serve provide a degree of reassurance.
“You would think, intuitively, that people would be coming into the retailer to find value and stretch their food dollars, and I believe that’s the case,” says Dan Yost, senior vice president of Bridgford Foods Corp., Anaheim, Calif. (714-526-5533), which produces such traditional products. “When they do, we feel we’ve got the perfect match.”
Consumers relate freshness and quality with thaw-proof-bake product, Yost asserts, adding, “And generally, it’s going to cost half as much as you would pay for a pre-baked item.”
Holding off on new product development, Furlani’s Food Corp. in Mississauga, Ont, (905-602-6102), has stuck to its knitting over the past 18 months, as Paul DaRe, vice president of sales and marketing, characterizes the company’s approach to the market in the soft economy. Yet, he promises introductions in the months ahead, with convenience being the theme.
Focusing on frozen bread advantages is critical at a time when cost and value are so closely scrutinized.
“In order for us, as a manufacturer, to gain momentum, we need to focus on our core products and be as cost competitive as possible,” says Amanda Osorio, marketing manager, Country Home Bakers division, Bellmawr, N.J.-based J&J Snack Foods Corp. (856-665-9533). “Country Home Bakers does not manufacture artisan-type items. We have noticed our customers are more concerned with receiving the highest-quality product at the best value, which they in turn can pass onto the consumer.”However, Osorio says, she also has seen a “strong focus” on health and wellness, including products made with whole grains such as J&J’s reduced-fat cookies.
Grab-and-go convenience remains “key in the in-store bakery channel,” she adds.
Convenience is important to consumers, too, but not only them.
“As more and more Americans reduce the amount of meals purchased outside of the home, they are looking for low-cost, conveniently packaged bakery items to eat at home,” Osorio says. “Another trend we as a manufacturer are noticing is that many of our in-store bakery customers are interested in thaw-and-serve — that is, no-bake — items.”
Product Focus
Although they must be well conceived and crisply executed today, product introductions remain critical to gaining consumer attention, and that includes getting shoppers to notice innovations meant to address their state of mind.
New items “are always important,” Farnsworth says. Rhodes introduced seven new products from late 2008 to early 2009, and plans to roll out two or three warm-and-serve entries in the coming months. The par-baked items are ready in 15 minutes or less, and include crusty, soft white and whole wheat rolls.
Value is the price of doing business, but new products must address other consumer preferences if they are to become established.
“I think everybody is after good value right now,” Angela Rosenquist, vice president of sales and marketing at Boboli International LLC in Stockton, Calif. (209-473-3507), explains, “so you don’t really see anything too over the top. As far as innovation goes, I think people are still getting creative with flavors, sizes and offerings. But it still has to translate into good value for the customer and into something fun but functional.”
Growth can be had, Rosenquist maintains, if manufacturers employ and retailers embrace focused product development. New items must address current trends if they are going to make their way to the consumer. The latest offering from Boboli is its frozen Ambretta Tuscan Flatbread, which is eight inches long and comes in a two-pack. It retails for $2.99 to $3.99.
“I think companies are really pulling back, looking at economies of scale versus premium growth, and more at organic growth than they’ve done in the past. I think you might see conservative product development. You’re not going to see 15 to 20 new breads come out of one single company,” she says.Convenience Demand
Conservatism may be sensible, yet Bridgford intends to develop new “quick and easy” products going forward, Yost says, including items that can go from freezer to table in under five minutes, satisfying the continuing consumer demand for convenience. The company’s recent introductions, including Cinnamon Pull-Apart and Garlic Parmesan Monkey Breads, were developed for convenience of use.
“What’s neat about those is that they were intended for the microwave,” he says. “Intuitively you might think, ‘Gosh, you put bread in the microwave, and it’s not going to come out very good.’ But these are the exact opposite. They were intended for the microwave.”
The formulation that Bridgford used in developing its monkey breads takes the microwave heating process into consideration. So, whether cinnamon or garlic parmesan, when Bridgford’s monkey breads emerge from microwave ovens, “they’re remarkably good,” Yost contends.
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