Baking & Snack - October 2016 - 51

Baking industry growth categories overshadow those in decline
Billions

Edibles: Absolute dollar loss/gain versus four years ago
Increases (in millions)

1.
2.
3.
4.
5.
6.
7.
8.
9.

$4
$3
$2

Cookies: $719
Snack Cakes: $554
Crackers: $355
Baked Bread: $68
Refrigerated Dough & Wraps: $24
Mexican Tortilla: $18
Refrigerated Bread: $6.2
Frozen Pizza Crust: $2.8
Ice Cream Cones: $1.5

Decreases (in millions)

1.
2.
3.
4.
5.
6.
7.
8.

Refrigerated Baked Goods: $91)
Frozen Toaster Pastries: ($37)
Frozen Sweet Goods: ($36)
Breading & Stuffing: ($20)
Pie Crusts - Mixes & Prepared: ($16)
Frozen Bagels: ($11)
Frozen Baked Goods: ($8.5)
Frozen Waffles, Pancakes,
& French Toast: ($1.5)
9. Toaster Pastry: ($0.7)
10. Refrigerated Wraps: ($0.1)

$0
($1)
($2)
($3)
Nielsen Answers, Total U.S. - All Outlets Combined (plus Convenience), 52 weeks ending 7/2/2016 (vs. 4-years ago), 190 major edibles category groupings

harder to win with mass-marketing techniques.
When it comes to brands vs. private labels, brands
are much better positioned to capitalize on retail
trends than most private labels, Mr. Hale observed.
Brands have more capacity for innovation and the ability to target niche markets, and they invest in research
to understand where new opportunities will arise.
"Brands that are better connected with population
segments that are going to drive population growth in
the future stand the best chance of finding success,"
Mr. Hale said.
And with each successive generation in the US becoming more multicultural, the importance of growing in non-white markets is even greater. According
to Nielsen, the "Gen Next" population, as defined by
Nielsen as children under the age of 19, are already
reaching the 46-51% multicultural level, meaning half of
them are an ethnicity other than white, non-Hispanic.
That's compared to just 24-30% multicultural population in the Boomer generation, ages 50-69.
These population changes present several challenges for the baking industry. For example, snack
cakes maintained average sales in white and black
households during the 52 weeks ending Dec. 26,
2015. However, that may change as the white population continues to shrink. Meanwhile, snack cakes are
performing well below average in Asian and Hispanic
households. Mr. Hale cautioned that companies producing snack cakes that are underperforming in these
growing markets need to watch this trend closely.
"If you fast-forward, if demand among these groups
doesn't change as we move ahead over time, then it's

going to have a negative impact on some bread and
other baked good categories because of underdevelopment of sales today," Mr. Hale pointed out.
Crackers are maintaining average sales among
white and Hispanic households but are underperforming in black and Asian households, according
to Nielsen. The largest growth opportunity as identified by Nielsen currently is Mexican products and
taco shells, which are both peaking among Hispanic
households.
Mr. Hale said there are simple ways for companies
to increase sales among these groups through advertising and product differentiation. For example, he
said, large pizza chains such as Domino's, Pizza Hut
and Papa John's, which have websites that allow consumers to order in Spanish, are doing much better
than companies that are not adapting to the changing
consumer landscape. He said advertisements portraying consumers that resemble the target demographics
are also an easy and proven way to increase sales in
those populations.
TH Foods, Inc., Loves Park, IL, released a new
gluten-free cracker, Crunchmaster Fiesta Lime, made
with rice and black beans. The product not only features elements that might attract Hispanic consumers,
but it is also non-GMO Project Verified and contains
no artificial colors or flavors. The Kellogg Company,
Battle Creek, MI, also introduced a Cheesy Quesadilla
flavor to its Pringles line this year.
But consumer trends are more than cultural demographics. Trends like health and better-for-you foods
are spanning across all ages and segments of society,

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