Holding Steady
Store brand cookies and crackers are holding their own against the national brands by tapping into consumers’ desire for healthy, unique snacks.
Scores of fan websites debate the merits of new Trader Joe's items, particularly the retailer's own line of snacks such as crackers and cookies. Although Monrovia, Calif.-based Trader Joe's has spent decades building up its store brands and reputation — as it introduced non-foodie consumers to gourmet and organic products — other grocery stores have the same opportunity to tap into consumers' desire today for healthy, unique snacks, as well as to offer something more gourmet than the standard fare.
According to "Crackers — US," a February 2009 report from global market research company Mintel International, the crackers category, for one, is registering slow but steady dollar sales, mostly related to increased prices.
In fact, the numbers bear this out: Store brand crackers are holding steady, posting a 3.0 percent dollar sales increase and a 1.5 percent unit sales decline during the 52 weeks ending Aug. 7 (food, drug and mass merchandiser stores, including Walmart, according to The Nielsen Co., New York). Store brand cookies, on the other hand, are really taking off, with dollar sales increasing by 10.3 percent and unit sales rising 11.4 percent during the same timeframe.
"Our [cookie] demand is most definitely up," says Greg Darham, director of sales and marketing for J&M Foods, based in Little Rock, Ark. "In this marketplace, the consumer sees more value in buying private label brands. Our business used to be 60 percent branded, 40 percent private label, and now we are at 65 percent private label and 35 percent branded."
Do remember that although consumers seek out value, they also want healthful snacks with clean ingredient decks.
Health matters
Consumers are interested in value more than ever, Darham says.
"I don't care if it's a box of crackers, a Rolex or a shirt, consumers want to buy products cheaper than they did a year ago, and they know they can do that," he adds. "Retailers know that too, and are always running specials now."
Many new cookie and cracker product launches, therefore, are formulated to fit into the national-brand-equivalent tier of pricing and quality.
"National brand equivalent [is a good opportunity for retailers] because that's what the consumer usually buys, and their [national brands'] pricing got out of whack," says
Michael Thompson, president of Venus Wafers Inc., headquartered in Hingham, Mass. "There is some additional interest in organic, if it is competitively priced."
Caprice Pearce, director of marketing, media and public relations for Kent, Wash.-based Partners Crackers, says shoppers are looking for more organic and gourmet crackers, adding that "consumers are requesting more natural and wholesome products without chemicals."
To that end, Pearce notes that Partners Crackers does not use preservatives, fillers or pork or beef enzymes in its crackers.
Darham agrees that consumers want more healthful snacks with clean ingredient decks.
And the cookie aisle is not immune to the "healthification" of the snack category.
Cookie manufacturers are introducing smaller portion sizes and better-for-you products with no trans fats, less sodium and less than 2 percent saturated fat per serving, but still have a ways to go before their products are considered to be truly healthful, says MaryAnn Pijar, vice president of sales and innovation for FullBloom Baking Co., Newark, Calif.
"Most store brands are price-driven, though," she says. "And as such, the ingredients are not 'clean' or healthy."
But that reality seems to be changing a bit. Joe Semder, president of Sylmar, Calif.-based Fantasy Cookie, notes that his company's focus also is on high-quality healthful, organic and more upscale cookies.
"Walmart sells a lot of cookies that aren't in that category, but the trend is toward healthier, less artificial flavors and colors," he says.
However, taste still matters, too. Semder says consumers also are embracing store brand cookies because they taste as good as, if not better than, the national brands' versions. He points out that since Pleasanton, Calif.-based Safeway launched its Tuxedo cookie in 2001, the cookie has beaten or tied Nabisco's Oreos in numerous unofficial blind taste tests run by newspapers and blogs.
Don't hurt store brands' chances by carrying too many brands of what essentially is the same cookie or cracker product.
Take the time to do it right
Safeway — and Trader Joe's for that matter — have successful store brand programs because they take the time and care to pick out the right products for their customers, and then develop, promote and execute their strategies, Semder says.
"If you're not going to give your store brand 100 percent effort, then you won't get the success you want," he says. "Just putting a product on the shelf won't get you into the private label business. Retailers need to expend as much effort as national brand manufacturers do."
Semder adds that highly visible, high-volume categories such as cookies also make a logical starting point for retailers just beginning to dip their feet in the store brand business.
"They need to pick a visible category to get the most bang for their buck," he says.
Retailers also need to remain flexible with their schematics and review them in a timely manner, Pearce says. She points to Quality Foods Centers (QFC), a banner of Cincinnati-based Kroger, as a retailer that knows how to do this well.
"QFC has been very receptive to new products and changing its schematics, and is instrumental in getting new store brands on its shelf," she says. "They have bent over backwards to be helpful and are a fantastic partner."
Pearce also counts Costco Wholesale Corp., Issaquah, Wash., among her company's successful partners, noting that the club store retailer turns over large quantities very quickly.
"Slow turnover is a common problem," she says, adding that slow decision-making also can be costly for retailers. Indeed, retailers can damage their relationships with manufacturers if they send them down a rabbit trail that does not result in business.
"When manufacturers dedicate R&D money and time to a project and then it's stalled or stopped, this situation will damage the retailer's relationship with the manufacturer and make the manufacturer more cautious about working with the retailer again," Pijar says.
Retailers also have to have a firm grasp of their cracker or cookie assortment plan, so they don't wind up with too many products on the shelf — diluting their impact and confusing consumers, Darham says.
"I'll see six cheese straw products on the shelf, when the consumers is only going to buy one or two," he notes. "Retailers are trying to figure out which brand or style is going to sell, but they are putting out too many manufacturers of the same product."
Do consider hosting product demos to build trial for new store brand cookies and crackers.
Don't risk your relationship with store brand manufacturers by sending them down a 'rabbit trail' that fails to result in new business.
Stand out in a crowd
Despite these hurdles, store brands can stand out with better packaging design, merchandising support and cross-merchandising.
On the packaging side, Pearce says Partners Crackers tries to keep its products as green as possible by using biodegradable packaging.
Some niche cracker manufacturers also are changing the top of their packaging from the more unusual gable tops (the fold at the top of the box looks like the gable-end of a house) to standard flat tops, Darham says, but he notes that a gable top projects a more gourmet image.
When it comes to merchandising cookies and crackers, Thompson believes executive management needs to allow the store manager to sell the products anywhere he or she determines would work best.
In addition, store managers should be granted the autonomy to create "a separate standalone rack that speaks to their cookies' uniqueness," Pijar says.
They could also host demonstrations that allow customers to try store brand cookies and crackers — and, therefore, feel more comfortable about purchasing them. Such efforts could be supported by fliers and coupons.
"Demos have always worked for us," Darham says. "We'll sell 40 percent to 50 percent more product after them."
Thompson also encourages retailers to think outside the boundaries of the cookie and cracker categories by marketing the products against another category in their stores.
"The trick would be to grow this category versus a competitive one that does not obtain as high a gross margin for the store," he says.
The cookie aisle is not immune to the healthification' of the snack category.
Top 5 Markets for Cookies and Crackers
- Pittsburgh, Pa., Metro
- Grand Rapids, Wyoming, Mich., Metro
- Tulsa, Okla., Metro
- Louisville, Jefferson County, Ky./Ind., Metro
- Allentown, Bethlehem, Easton, Pa./N.J., Metro
Regions with the largest percentage of people with a tendency to buy store brand cookies and crackers, reported by Core Based Statistical Areas (CBSA) defined by the U.S. Office of Management and Budget.
Source: Buxton Co., Fort Worth. Texas.
