Consumers’ creativity and desire to save money, along with the availability of high-quality products, continue to drive sales in the baking mix category.
By Craig Levitt
Interest in food-related television programs is at an all-time high and some of the most popular are cake design shows such as The Food Network’s Ace of Cakes and TLC’s Cake Boss. While most consumers clearly are unable to create cakes near the level of the ones seen on television, industry observers say such programs have sparked interested in cake design at home, thus helping boost sales in the baking mix category.
Greg Greene, marketing director for Mountain Lakes, N.J.-based Pinnacle Foods’ Duncan Hines division, says the value of these shows shouldn’t be underestimated. He refers back to late 2008 early 2009 when an episode of The Food Network’s Throwndown! with Bobby Flay featured a red velvet cupcake. Greene says Duncan Hines was the only major manufacturer at the time offering a red velvet cake option.
“We saw sales of that cake take off,” says Greene. “Red velvet cakes became a very popular trend overall in bakery and in restaurants and that has spilled over into the grocery division as sales of red velvet have increased double-digit over the past year.”
In addition to the excitement generated by television boosting specific products, observers say that since the recession hit more consumers are doing their own baking. Observers also attribute the rise in sales to the improved quality of baking products and consumers’ perceived value compared to restaurants or bakery items.
The cake/cupcake mix segment of the category has been relatively flat for the last 52 weeks ended May 16, according to the Chicago-based SymphonyIRI Group. Dollar sales, which accounted for more than $393 million, were down slightly, 0.3%, though unit sales were up 1.4%. Brownie mixes fared slightly better, with dollar sales accounting for more than $276 million, up 1.8% with unit sales up a healthy 4.1%.
The big three
When it comes to cake mixes, Duncan Hines, Betty Crocker and Pillsbury dominate the baking aisle. Unlike most other categories, private label items have yet to infringe on brand sales, and observers don’t believe they will anytime soon.
“One of the reasons [private label sales are low] is because there are three great brands out there with Duncan Hines, Betty Crocker and Pillsbury,” says Greene. “The products we sell have a great value and are very affordable to the public at large. So where private label usually comes in and undercuts with price, with the quality and brand value equation of our products, as well as the competition, provides enough where the consumer is not willing to trade down.”
That said, the competition among the top three is pretty fierce and manufacturers can’t sit on their laurels, lest risk losing valuable market share. One of the surefire ways to entice consumers is with the introduction of new products.
“Innovation presents an important opportunity to drive differentiation beyond price, both to the customer and consumer,” says David Eisen, marketing manager, baking division for Minneapolis-based General Mills, which owns the Betty Crocker brand.
According to Eisen, Betty Crocker has launched three restaurant-inspired mixes to its Decadent Supreme line. The new mixes are Chocolate Mousse, Chocolate Molten Lava and Cinnamon Swirl. Also new, he says, are Mississippi Mud bars, which he describes as a decadent Southern dessert with layers of chocolate cookie crumbs sprinkled over mini marshmallows in a chewy chocolate center and a crunchy chocolate cookie crust.
New from Pillsbury, part of the Orrville, Ohio-based J.M. Smucker Co., are sugar-free classic yellow cake, devil’s food cake, chocolate fudge and milk chocolate brownies along with raspberry and caramel filled brownies and snickerdoodle and oatmeal chocolate chunk cookies.
Duncan Hines is adding to its Decadent Cake line, which was first launched in fall of 2008. A Triple Chocolate Cake with real chocolate chunks and rich fudge along with an Apple Caramel Cake with real apples and rich caramel hit retailer shelves in July. Duncan Hines also put its research to good use when developing the Amazing Glazes line, a microwavable glaze that pours onto the cake to form a decorative thin glaze.
“We learned from our research that about 40% of the time, when cakes are purchased frosting is not used,” says Greene. “We found that a lot of people were using homemade glazes, powdered sugar, fruit or some other accoutrement. They wanted something that was a little bit lighter that they could use to make a nicer appearance or a ‘tada’-type moment.”
Dressing things up
Duncan Hines is also rolling out new packaging to coincide with the new products, which Greene says is a bit more upscale. The goal, he says, is to get back to the heritage and quality of the brand. The new packaging features bolder richer colors such as deep purple and black, as well as a lighter shade of green. There is also a close-up of the finished product along with more descriptive text.
“We took a closer look at our brand within the category and thought that we needed a facelift across all of our packaging,” says Greene.
The packaging addresses the different tiers (premium line and decadent line) of Duncan Hines product in the marketplace. “We want people to understand that we are continuing with the times and our brand is as contemporary as ever,” says Greene. He adds that the brownie mixes and decadent cake mixes have already been redesigned, while the premium cake mix is scheduled to change this autumn.
Retailers need to do more than simply rely on manufacturers to develop new packaging and new products if they want to take advantage of the category. Observers say that in addition to providing the appropriate amount of feature and display, retailers would be wise to promote the category with recipe and usage ideas. Industry studies suggest that shoppers in the category are interested in doing different things with their cakes.
“Consumers are not just looking to load up on cake or frosting and have it in the pantry,” says Greene. “About 50% of products are purchased for everyday occasions and 50% are purchased for special occasions, so a lot of times people are coming in with an idea in mind. What we see is when people have those ideas they are not just inspired to buy, but actually make those products and return in the next couple of weeks to make another purchase.”
Rise and shine
While purchases in the cake mix segment are nearly evenly divided between impulse and planned, most observers agree that pancake mixes are typically a planned purchase.
Most people, when they talk about “eating out” are usually referring to dinner. However, how many families traditionally spend a Saturday or Sunday morning at a local eatery enjoying fresh pancakes or Belgian waffles?
Certainly fewer than five years ago. That is not to say that families are giving up their weekend breakfasts. However, instead of eating out, plenty of moms and dads are whipping up their own breakfast batters at home and one of the biggest baking mix categories is pancake/waffle mixes. According to the SymphonyIRI Group, products in this category accounted for more than $122 million in sales last year.
“The pancake mix category is growing slightly, due, in part, because consumers are increasing their purchases of brandS that they trust most,” says Josh Jacobson, marketing manager for Aunt Jemima, which is owned by Purchase, N.Y.-based PepsiCo. “They are less likely to experiment given the money constraints of the recession. Pancake mix is also growing because of the immense value it offers.”
Observers say that retailers also have an opportunity to take that planned pancake mix purchase and generate additional impulse purchases.
“When shoppers are in that aisle, we need to have attractive packaging that stands out to the consumer when looking at the category,” says Ray Martin, vice president of sales and marketing for Effingham, Ill.-based Hodgson Mill. “Product glamour shots should entice customers to try other products. They may be shopping for yellow cake mix, but we want them to be attracted to how good the muffins look as well, driving incremental purchases.”
Like cake mixes, providing consumers with recipes can be also useful when trying to generate additional pancake mix sales. Jacobson says the Aunt Jemima website provides more than 100 recipes for all types of meal occasions.
Also making homemade pancakes more appealing is the plethora of “better-for-you” options available on supermarket shelves. For example, Hodgson Mill, a manufacturer of gluten free products, has a line of Gluten free baking mixes aimed to meet the needs of those with Celiac disease. Quaker, a division PepsiCo, now offers a Quaker Oatmeal Pancake mix with 100% whole grain, which company officials say provides a unique alternative to consumers looking for healthier choices. Duncan Hines has switched all of its muffins to 100% whole grain as well as removed the trans fat.
“We are trying to make adjustments where possible,” says Duncan Hines’ Greene. “Looking towards the future, we can make small tweaks to make products a little cleaner and better for you, but at the same time deliver the rich decadent taste that people are looking for.”
Icing on the cake
Whether for a birthday, anniversary, graduation or simply a relaxing Saturday night at home with the family, consumers are always looking for creative ways to decorate their cakes.
Of course the simplest and fastest way to do so is with premade frostings. Industry studies suggest that nearly 50% of consumers that buy cake mix refrain from buying frosting which means half of the consumers in the cake aisle indulge in the various readily available cake toppings—translating into a pretty big slice of profit for retailers.
“Canned cake icing and cookie icing have proven to be extremely popular with consumers as an easy way to decorate,” says Nando Zucchi, senior vice president, marketing for Ocala, Fla.-based Signature Brands, a maker of dessert decorations. “Finding innovative ways to help consumers decorate desserts has been extremely important to the category.”
An area that retailers can take advantage of is with seasonal items. Observers say that because baked goods play such a large role in consumers’ seasonal celebrations the ability to decorate these baked goods drives consumer excitement. Cross-promotional opportunities exist as well, industry executives note.
“Retailers can take advantage of seasonal displays and tie price promotions of baking mixes to full priced sales of decorating products to increase sales and margins,” says Zucchi.