Industry Overvieew

The low carb fad is over. Baked goods are back in favor as consumers look toward glycemic indexes and the incorporation of more grains in their diets. While the category is one that experts see as mature, a quick rundown from industry analysts shows there is room for inventory improvements and innovations that will inspire sales.

The Bakery Aisle

Whole grains are expected to build interest in the baked goods category as consumers seek everything--from pancakes to muffins to cookies and crackers--packed with whole grains goodness. (Look for our feature on Great Grains next month.)

Manufacturers are working toward adding more grains into their recipes, and luckily, whole grains are much easier to incorporate than the reformulation of recipes to eliminate trans fats. According to Mintel's research, the number of whole grain bakery product introductions increased 530 percent from 2001 to 2005. This count actually includes a significant number of breakfast food items like waffles, pancakes, etc.

Consumers have shown a willingness to embrace healthier food products, although taste will always dominate, especially in a sweet and dessert category such as cakes and pies. The convenience of more grain products fits into their desire for more healthy solutions to be delivered through the foods they consume.

Minters Cookies U.S., Update, April 2005 reported that many of the new cookie product introductions in 2004-2005 were health-oriented innovations. Pepperidge Farm, for example, introduced sugar-free Chocolate Chip Chunk cookies, offering a healthier premium cookie option.

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A new report from Packaged Facts, Cookies in the U.S., reaffirms this healthy alternative. Removing trans fats, upscaling to gourmet and organic, and doubling the amount of chocolate in signature cookie brands may transform the U.S. cookie market. These are just a few of the upgrades making their way into best-selling cookie bags as marketers scramble to stave off sagging sales which saw the market drop from just over $6 billion in 2001 to $5.56 billion in 2005.

Packaged Facts estimates that total cookie sales declined by 8.25 percent in 2005, from their peak in 2001. Industry success, however, has been accomplished in so-called premium adult cookies where both industry leaders and boutique marketers have experienced growth. Similarly, sales growth experienced by individual marketers of natural and organic cookies attests to the fact that this market sector is no longer just a niche.

"While the extension of flagship brands such as Nabisco's Oreo and Pepperidge Farm's Milano lines have met with great success, these successes alone have merely slowed down the quickly eroding market," notes Don Montuori, the publisher of Packaged Facts. "By tapping into the national 'snacking healthy' boom that is currently in process, cookie marketers have a major opportunity to broaden their offerings by meeting consumer needs for higher protein, high fiber, fortified, and lower-fat, lower-sugar, and lower-salt varieties," he said.

Based on these successes and the potential for future expansion in the "healthy cookie" sector, Packaged Facts anticipates market growth over the next five years in the 1-3 percent range, with expected sales reaching $6.1 billion in 2010.

Russ Vernon, president of Akron, Ohio-based West Point Market, said their shelf-stable crackers and cookies are great categories for the store. Even with their highly successful in-store bakery, West Point Market customers are still browsing and buying in this extensive section.

"This is a profitable volume category and an extension of our cheese shop. It falls into the affordable luxury category," Vernon said. "Our selection is broad and deep with five decks and 28 lineal feet devoted to this category."

Healthy Alternatives

Health and wellness are top priorities with consumers who increasingly want a diet that includes more wholesome, traditional baked goods similar to that which their parents or grandparents might have eaten in decades past.

The general trend toward healthier eating has resulted in American consumers turning away from carefree snacks and opting instead for healthier products, according to Snack Food Trends in the U.S., a report by Packaged Facts.

Published this July, the report reveals that the nation's snack food market reached $61.4 billion in 2005, a moderate increase of 1.5 percent from the previous year.

But the market has witnessed some internal shifts, with sales of "carefree" snacks such as cookies and baked goods falling to make way for an increase in the demand for better-for-you options.

According to the report,