Cater to their sweet tooth
The American market for sweet bakery goods is forecast to grow at 3 percent annually, states global market researcher Mintel in its September 2015 report, “Category Insight: Cakes, Pastries and Sweet Goods.” Volume consumption, meanwhile, per capita for sweet bakery goods in the United States is approximately 7.7 pounds (3.5 kilograms) annually.
Emphasize health and wellness
But health and wellness attributes are becoming a powerful sales trigger in the baked goods and desserts sector. Shoppers continue to seek out better-for-you options and items that serve their unique lifestyles.
Overall volume sales for baked goods in the United States rose just 1 percent last year. Unpackaged pastries had the strongest growth in the category at 3 percent. Consumer interest in natural foods and a resurgence of the bakery section in retail outlets could be one reason for unpackaged pastries’ growth. Or it could be because shoppers often believe unpackaged pastries are fresher and more healthful than packaged options, notes London-based Euromonitor International Inc. in its October 2015 “Baked Goods in the US” report.
Many consumers view packaged pastries as being “laden with chemical preservatives,” Euromonitor states. “Because unpackaged foods generally do not include an ingredients list, consumers are more likely to make a positive assumption as to their nutritional content.”
Indeed, most baked goods and desserts could benefit from a health and wellness makeover.
“Private label shoppers are looking for deals, but more importantly, they want healthy products that are great tasting,” states Luca Nava, general manager of New York-based Bauli USA Inc.
For instance, consumers are looking for products that are lower in calories, all-natural and free of gluten and GMOs, he says.
Baby boomers and Generation X, in particular, are interested in healthful dessert options, notes Michel Saillant, president of Boulart Inc., Lachine, Quebec. While baby boomers typically look for classic flavors and formulations that are more healthful, Generation X is often seeking out healthful on-the-go options.
Be the best possible
Of course, consumers want their healthful desserts and other baked goods to taste great, too.
“Customers may buy an item once because it is GMO- or gluten-free, but if they don’t find that it tastes great, they won’t repeat the sale,” Nava states.
Therefore, it is vital that private label selections are high-quality and innovative, especially if they are going to stand apart from the national brands, Saillant notes.
Because many consumers shop by price, private label selections should typically cost 10 to 15 percent less than comparable national brands, Nava says.
Offering store brands at lower prices than the national brand offerings is especially important when launching new products, says Mike Pinkowski, president and owner of SatisPie LLC, Rochester, N.Y.
Retailers that launch lower-priced and higher-quality store brands might gradually squeeze some national brands out of the freezer cases, Pinkowski states.
“Three or four varieties of national brands will turn into one or two because there is only so much space in a planogram,” he adds. “If you have too many national brands, you are doing private label a disservice.”
It is important, however, for retailers to continue to offer some national brands. Consumers want to have a choice and want to know their favorite national brands are still available to them, Pinkowski says.
Place it in plain sight
Crucial to store brand baked goods and dessert success is ensuring that they’re highly visible, especially new products. For instance, retailers could situate store brand baked goods and desserts on end caps and spotlight the products in print ads, Pinkowski says.
Or they could merchandise store brand products around the store’s perimeter to reach the time-crunched and freshness-oriented shoppers who avoid the center store, Nava adds. And retailers should not forget to offer in-store samples as a way of acquainting shoppers with store brands.
Creative package designs, meanwhile, could help store brands stand out on shelves.
Packaging should denote quality, as it’s the first thing to influence consumers, Nava says. He recommends that the packaging include a shiny or glossy finish and detail critical product features such as health attributes.
While product photos on packaging should be appetizing, Photoshop work should be kept to a minimum, Pinkowski says. Private brands should undersell and over-deliver. In addition, the package colors and print should differ from those of the national selections.
“Retailers need to get away from blandness so the product stands out,” Pinkowski notes.
Optimal packaging and product development, meanwhile, often results from a strong collaborative relationship between retailers and suppliers.
“They should have brainstorming sessions to improve products instead of copying other retailers,” Saillant says. “Simplicity, innovation and execution should lead the way.”
But retailers must be realistic in assessing the cost of developing and launching new store brand products, Pinkowski states. A supplier must be able to make a profit while producing high-quality products.
“While retailers want the best possible price from their suppliers, they must consider that suppliers also have overhead and must generate enough revenue to invest back into their businesses,” he notes.
And a long-term relationship — when retailers and suppliers commit to working together for three to five years — is often the most powerful, Nava states. Without a long-term arrangement, suppliers will be reluctant to develop new selections for fear that the retailer will then manufacture the unique items elsewhere.
“It is not hard for a retailer to find a supplier to replicate what their current manufacturer is doing,” Nava adds. “If a retailer wants their private label products to be novel, they have to commit to a long arrangement with their supplier.”
Do offer baked goods and desserts with more healthful attributes.
Don’t use on-pack product imagery that sets unrealistic expectations.
Do form long-term retailer/ supplier relationships to improve product innovation.
Don’t skimp on quality; a low price is important, but taste will keep consumers coming back.