Bakery goes bulk and quality becomes key.
According to an annual in-store survey by Bakery magazine, a publication serving the bakery industry, bulk merchandised baked goods accounted for 15% of in-store bakery sales last year. Usually limited to rolls or bagels at most stores, the concept has even been extended to include sweet goods at chains such as Rochester-based Wegmans.
"Our customers saw it as a way for bakery to participate in the bulk food trend," says Bill Arnold of Atlanta-headquartered Country Home Bakers, a manufacturer of frozen finished and unfinished items. He calls rolls "the cornerstone of the business," and--like other frozen dough producers--supports the "roll bin" concept 100%.
"The bins dramatically increase roll sales--from a minimum of 25% of a maximum of 300%," he says, adding that some operators have been apprehensive about getting into bulk baked goods due to the sanitation considerations inherent in bulk foods merchandising.
Arnold says crusty bread and roll merchandising is the new trend to watch, and Country Home Bakers has put together a program in cooperation with Cryovac, which has designed a special perforated bag to keep rolls crisp. He points out that these crusty items are best suited for prepackaged self-serve or service bakery sections, as opposed to bulk bins.
At the Wetterau Baking Division in Hazelwood, Mo., sales increased 20% last year, and Marketing Director Don Noot says bread and rolls continue to account for the lion's share of his business. To further increase this segment's share, a new line of frozen San Francisco-style sour dough bread and rolls has just been unveiled. Similarly, Buffalo-based Rich Products has just added wheat French bread and a wheat Kaiser roll to its frozen dough bread and roll line.
While neither Rich nor Country Home Bakers has gotten into the frozen bagel business yet. Connecticut-based Lender's Bagel Bakery offers its Bake 'n Sell line to grocers for serve-yourself bulk merchandising, service selling or prepackaging. The frozen bagels must be left at room temperature for 30 to 45 minutes, be proofed for an additional eight to 10 minutes and then baked for another eight minutes.
According to Rich's northeastern zone manager, Steve Adams, last year was a growth year for the entire frozen dough category, and future prospects seem bright. "We're seeing a return from some of the scratch/mix operations to combination frozen/mix bakeries in supers," he syas, citing the labor expense factor and high equipment investments required for making doughs from scratch. Fast-rising croissant
The company's big thrust last year was a frozen dough croissant in butter and margarine varieties. "We came into croissants a little late," Adams says, "so we came up with a product that takes only 40 to 50 minutes to rise in a proof box. We wanted a niche, and felt our product--coming in so late--simply had to be better."
Rich is also heavily into the doughnut business, offering both unfried and pre-fried frozen varieties. The pre-fried doughnut is part of the company's Donut Shoppe concept, designed for stores that do not have bakery sections. The self-contained baking/merchandising unit is equipped with a convection oven where the doughnuts can be "made" in about three minutes. "It's really taken off," says Adams. "It's a good way for a smaller operation to catch some of the doughnut traffic and it can lead to a store eventually setting up a small bakery section if it does well."
Some industry observers feel the proliferation of in-store bakeries has had a negative impact on commercially packaged lines, especially on bread and middle-to-low-end baked goods.
At the Entenmann's division of General Foods Company, which distributes top-end commercial baked goods to over 40% of the country, Manager Ray O'Brien says, "In-store bakery operations are very formidable competitors, but there's apparently a market for both of us." He credits Entenmann's new product activities and "value upgrades" for the company's upward sales trends. One successful new product is individually wrapped brownies, which were introduced last July. An example of a value upgrade is the Entenmann's doughnuts, which went from a six-pack to an eight-pack and were decreased slightly in size. Service counter competition
At Lakeland, Fla.-based Publix Supermarkets, which has Danish Bakeries in 185 of its stores, Vice President of Bakery Operations Gene Succow says, "We outsell commercial baked items 10 to one." He explains that the chain's bakery plant also produces a line of packaged private label items that is designed for sale in stores that do not have service bakeries and is sometimes sold at the service counters of some units.
Interestingly enough, Lauren Batty, chairman and CEO of ITT Continental Baking Company in Rye, N.Y., producer of Hostess snack cakes, Wonder bread and other variety breads, views in-store bakeries positively. "I think they enhance commercial bakery sales and I feel their very odor and presence serves to make consumers very bread and cake conscious. Of course, I don't think we're appealing to the same audience that the in-store bakery is with our white bread and snack cakes, but we are with our variety breads." Batty says his only concern is that some operators might start to restrict commercial lines.
Although he says the snack cake category as a whole has suffered some serious tonnage declines over the last two years, Batty believes that Hostess sales did not decline as much as those of other manufacturers, due to its niche in the marketplace. "This year, so far, the Hostess line has been running ahead strongly," he says, citing the brighter economic picture, quality improvements and new product intros as the primary reasons.
Bob Vanasse, vice president of marketing at Interstate Brands, which produces the Dolly Madison snack cake line, attributes the category's poor performance to nutritional concerns and to the declining number of children, who are the primary consumers of these products.
Although commercial white breads have been on the decline for several years, Pat Callahan of Conn.-based Pepperidge Farms Bakery Division says that 1983 saw a slowing down of that erosion. "Just as the decline in white bread has been stabilizing, growth in variety breads has also been stabilizing," he adds.
ITT Continental Chairman Batty agrees. "Although white bread sales as a whole were down in 1983, sales during the last three months of '83 were running higher than the prior year. In 1984 thus far, we're seeing an increase in white bread, but one quarter doesn't make a year," he adds, stressing that Wonder bread sales have been good.
Batty also gives private label, some of which ITT produces, credit for improving white bread's tonnage picture. "We believe a great deal more white bread was sold than has been identified," he says, "due to private label white bread sales which market research studies might not be able to record."
Bob Vanasse of Interstate Brands, which also produces a variety of white breads across the country under brand names such as Butternut, Weber's, Sweetheart, Eddy's, Millbrook, Whole-some and Mrs. Karl's, as well as specialty breads, calls private label, "white bread's biggest enemy." He says price spreads--sometimes as big as 70 cents a loaf--are difficult to compete against. His company's white bread ads are centered around quality.
The same is true of advertising for Campbell-Taggert's white bread which tells consumers, "We've Got the Best Right Here." According to Steve Savino, executive assistant to the vice president of the bakery division, sales of the company's white breads, including the Colonial, Rainbow and Kilpatrick brands, were up 2% last year over the year before. "Most of our tonnage increases have come at the expense of our competition," he says, explaining that the firm has become more promotionally aggressive and has been actively pursuing more shelf space.
Sales of Campbell-Taggert's grainy variety Earth Grains brand, now six years old, are presently running approximately 10% ahead of the same time period last year, says Savino. The ad campaign supporting the line promises consumers, "Bread at Its Best."
With so much emphasis being placed on quality these days, and such keen competition from in-store bakeries, it's no wonder that commercial bakers continue to offer upscale new products and line extensions of their own. After all, Jerry Fahey, president of California-based Vons Grocery Company, recently announced at a Retail Bakers of America conference. "We have had the incredible experience of seeing an item like croissants actually become the highest unit sale item in one of our major supermarkets. We're selling more croissants--and we ring them up one at a time--in that store than packaged cigarettes, milk and baby food."
Commercial baked goods manufacturers got the message, and, while croissants may be stale news in some gourmet circles by now, they're still hot stuff at the supermarket self-service shelf. Sara Lee started the commercial ball rolling a few years back in the frozen food case, and Pepperidge Farm followed with fresh packaged croissants, which went into test market in 1982 and rolled out from Virginia on up the eastern seaboard and into the Dallas, St. Louis, Chicago and Minneapolis metro areas last year. The product, available in all-butter, cinnamon, almond, raisin and walnut varieties in various areas, is called "The Great American Croissant" in TV ads. Latest croissant entry
Joining the Pepperidge Farm croissant on the supermarket shelf in two test markets are Thomas' Original French Bakery Croissants from S.B. Thomas Inc. Available in butter, almond and chocolate flavors, they are being backed with TV ads, freestanding inserts, direct mail couponing and refund offers.
Nina Henderson, vice president of product management at S.B. Thomas points out that, unlike the products of other manufacturers, Thomas' lines, including its English muffins and Sahara pita breads, stand on their own in terms of packages design because each goes after a specific consumer franchise.
Whatever direction the supermarket bakery department takes in the future--be it a crusty bread bonanza or a bagel boom--it's a safe bet that product quality will continue to count, and that commercial bakers will keep upgrading their lines for a bigger piece of the profitable pie.