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Soft touch turns cookies hot.

After years of quiet, all is suddenly very noisy on the cookie front. And industry people are hoping it will get hotter, bringing new life and customers to the cookie aisle.

The reason for all the activity and excitement in what had been a fairly flat growth category back to the late 1970s is the emergence of soft, or moist and chewy cookies. So far, Nabisco Brands, Keebler, Frito-Lay and Procter & Gamble have all rolled out soft cookies and as the products move toward national distribution, the companies are watching what they hope is the birth of a new market.

Michael Brown, president of the Biscuit and Cracker Manufacturers Association, says the first statistics he has seen bear out the potential growth soft cookies have brought the category. Brown says production figures for the first quarter of this year are up nearly 10% from the previous quarter, "the first time in a long time that has happened." In recent years, he says, production in the $3 billion cookie industry declined quarter to quarter. Total supermarket cookie and cracker sales in 1983 were just about 4%, barely ahead of inflation and below the total growth recorded throughout the supermarket. And for years, crackers have been taking increasingly bigger bites out of the category's total.

Industry spokesmen agree that soft may be the start of something big. Mel Grayson of Nabisco, the industry's leader, says there is little fear that soft cookies will steal away customers from the established parts of the category. The East Hanover, N.J.-based company, which makes the country's best selling cookie, Oreo, found through consumer studies "that there was a desire on the part of the public for a soft, or moist cookie," Grayson says. "This indicated an additional market to be tapped."

That market is expected to come from consumers who want the texture and taste of homemade cookies, without the bother of having to make them. A recipe for success

Procter & Gamble led the march to the new market with its Duncan Hines cookies. The first glimpse of the success that awaited the cookie was shown in test markets, where cookie sales overall increased as much as 25% after soft cookies made their debut. When fully national, the soft cookie market is expected by some to bring in possibly as much as $500 million in sales. Business Week recently reported that Nabisco's Almost Home line is selling at an annual rate of $250 million, only 10 months after it was introduced.

Within the soft cookie market, the companies are trying to meet the tastes of as many consumers as possible. Nabisco has brought out 15 varieties of Almost Home, including chocolate chip, fruit filled, creme sandwich, peanut butter, iced, granola, oatmeal, and a brownie bar. Procter & Gamble's Duncan Hines offers chocolate chip, almond fudge, butterscotch chocolate chip, mint chocolate chip, peanut butter and fudge chocolate chip.

Grandma's Rich 'n Chewy, Frito-Lay's brand, comes in chocolate chip, peanut butter, pecan chocolate chip, chocolate chocolate chip and rocky road. Keebler's Soft Batch, which was introduced earlier this year, comes in chocolate chip, mint chocolate chip, walnut chocolate chip, peanut butter, peanut butter fudge chocolate chip, fudge almond coconut, oatmeal raisin and a sugar cookie with lemon.

The cookies are made through an unusual two-step baking process that includes the greater use of fructose to help give the cookies a softer texture. They are then sealed in foil lined bags to help preserve the fresh quality.

For Keebler, the nation's second largest cookie company with about $600 million in annual sales, the added interest in the cookie aisle has brought a competitive challenge with three of the food industry's giants. "If you want to paint a David vs. Goliath situation, you can," says David Mishur, a spokesman for the Elmhurst, Ill., company. But Mishur says Keebler is confident that it will not lose its number two position.

Mishur, like his counterparts from other companies, says he believes the new soft cookie field will eventually go to the company with the best cookies. Not surprisingly, he says that company is Keebler. The others disagree.

While the cookie companies say they don't expect soft cookies to cut into the regular cookie-eater market, the battle for shelf space does not look as simple. In test markets, slower selling brands have fallen victim to the soft cookies and the heavy advertising and promotional support they received.

But no one criticized all the activity. "This was a very staid industry, but not anymore," Brown says. While the soft cookies have been receiving the lion's share of the publicity, he says there is also considerable activity in the upscale cookie niche and Anheuser-Busch might be following fellow giants Procter & Gamble and Frito-Lay into the cookie category.

In the upscale end, Burry-Lu, a subsidiary of Generale Biscuit of France, has expanded to three manufacturing plants and is starting to market an extensive line of cookies. However, Pepperidge Farm, a dominant force in the upscale side, doesn't seem worried.

"We have our niche," says Cathy O'Donnell of the Norwalk, Conn.-based company. O'Donnell says Pepperidge Farm has not seen any erosion in its market, either to soft cookies or other companies. Pepperidge Farm is planning to roll out fruit cookies--in blueberry and orange marmalade--soon, and a special collection line that promises to be even more distinctive than the company's current line.

Pepperidge Farm may have a niche, but it apparently does not have the Force. The company has given up on its Star Wars cookie line, which it introduced last year to tap the children's market when the movie "Return of the Jedi" was released. When the popular movie closed, the market followed, O'Donnell says. Happy birthday

While cookies held the spotlight this year, crackers, which have been steadily gaining in total sales had a fairly usual year. Crackers, however, now account for 40% of the total $5 billion cookie and cracker category.

Ritz crackers, the category's big seller, will pass a milestone this year, celebrating its 50th birthday. Grayson says the success of Ritz is based on the same formula Nabisco has used throughout its business. "The secret of our success is our universal appeal," he says. While other manufacturers aim at niches, Ritz, he says, has managed to appeal to all consumers.

Grayson says Nabisco isn't planning anything special for the birthday, although there will be a promotion tie-in with RCA, through which consumers can get rebates up to $100 on selected RCA items like televisions and videocassette recorders.

At the upscale end of the cracker category, Pepperidge Farm brought out a Distinctive Line of crackers to go with its cookies. O'Donnell says the cookies are marketed to be eaten alone or with something on them.

Mishur says Keebler is also working on some new items for the cracker category. In the last year, Keebler introduced Wheatsbury, which, he says, "attempts to break through to the hearty taste of wheat." Mishur says the cracker is made through an entirely different process.
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Publication:Progressive Grocer
Date:Jul 1, 1984
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