Milling & Baking News - September 30, 2014 - 7

Editorial



Seeking insights from a rare success

ecause of both difficulties created by the un- There's a tremendous amount of interest in these reeven economic recovery and challenges with- ality baking shows, there's a lot of interest in young
in the industry itself, success stories this year people around baking, and they invest a lot of time
among makers of grain-based foods, as measured when they bake. So if you can give them a slightly
by quarterly financial results, have been as rare as better result, or I should say a much better result at
at any point in memory. Against this backdrop, spe- a slightly better price, they gravitate toward that."
cial attention is merited when an industry player deBeyond taking care when it comes to ensuring
clares it is achieving its objectives.
that pricing is not out of whack in the market, Mr.
One such positive episode has been recounted in Gamgort described a tiered approach to the comrecent days by Pinnacle Foods Group, whose port- pany's line of mixes. Duncan's classic line includes
foilo of brands includes Duncan Hines, Birds Eye, basic cake mixes, such as classic yellow and devil's
Wish-Bone and Van de Kamp's. In a presentation in food. Middle-tier Signature varieties include French
early September, a Pinnacle executive described a vanilla and fudge marble, and products in the Decatemplate for success he said was broadly applicable dent line, added several years ago, contain frosting
to the diverse categories in which the company par- and pastry bags.
ticipates. One segment in which the company said it
Attention to pricing alignment and offering differhas reversed a downward trend for the business is ent product strata is hardly unique to Pinnacle, but
the cake mix category - about as main focusing so powerfully on these arThe pricing
ture a business as any in food today.
eas the company appears to be taking
In the presentation at the Barclays intelligence is critical a page from the playbook of leading
for building sales
Back-to-School Consumer Conference
retailers. The ability of Kroger Co. to
while also protecting thrive in recent years has been credited
in Boston, Robert J. Gamgort, Pinnaprofitability.
cle's chief executive officer, described
to a significant degree to deep analytics
efforts to reinvigorate both the company's Duncan aimed at, in the words of one company executive,
Hines cake and Birds Eye vegetable businesses.
understanding at "what price points does it drive
In his presentation, Mr. Gamgort identified two the most optimal customer penetration in that catekeys to the reversal. First is taking a thoughtful and gory." Similarly, Wal-Mart in recent days broadly has
selective approach toward competitive pricing and launched a Price First private label line, a deep value
second is ensuring products are offered that appeal private label line to be paired with the company's
to a consumer base that is steadily becoming more Great Value brand.
economically diverse. The pricing intelligence is critFor Pinnacle, scanner data indeed suggest the
ical for building sales while also protecting profit- company's approach in the bakery mix category has
ability, Mr. Gamgort said.
been working. Unit sales of Pinnacle cake mix in
"It's about knowing where you have to be price the 52 weeks ended Aug. 10 were estimated to have
competitive and where you don't, and innovating to risen 9.8%, according Infoscan Reviws, I.R.I. Over
allow yourself to margin up and drive a better profit the same period the company's top competitors saw
mix across the entire business," he said.
declines of 4.8% and 6.9%. The company was someThe need to be "sharp on your price point" recog- what more aggressive on pricing than its rivals, with
nizes that brand loyalty in cake mixes is not as great unit prices down 4.4%, versus 3% and 1.6%.
as any of the branded manufacturers would like.
Established as Aurora Foods in the 1990s, Pinna"If you let your price points get out of line with cle's path has not always been easy, and it remains to
competition, people will switch, because this is the be seen whether the gains achieved will be sustained.
more commoditized segment of baking," he said. Still, the achievements to date suggest the company
"But baking is not a commoditized category, in total. merits attention from others in grain-based foods. MBN
L. JOSHUA SOSLAND, EDITOR
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