State of the Industry Exclusive

June 10, 2009
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As a part of our annual state-of-the-industry report, the editors at Snack Food & Wholesale Bakery magazine interviewed dozens of industry executives. Among those kind enough to participate was Tim Hassett, senior vice president and general manager of the fresh and frozen bakery business for the Norwalk, Conn.-based company.

The theme this year is “Superheroes For Uncertain Times.” Here’s editor Dan Malovany’s report on what’s happening at Pepperidge Farm’s bakery business.

To get the most out of life, people need Vitality, which is why Pepperidge Farm gave that name to its newest line of whole grain breads. The 24-oz. loaves provide not only a good source of calcium, have 5 g. of fiber per serving and meet the American Heart Association’s food criteria for saturated fat and cholesterol, but they also offer a lot more.

Specifically, the three unique varieties contain vital or super-ingredients that can help support specific health benefits to improve a consumer’s lifestyle. The Whole Wheat with Purple Grains bread, for instance, offers the benefits of antioxidants, while the Oats and Barley variety promotes a healthy heart, and the Multi Grain and Ancient Grains contains 320 mg. of a-linolenic acid (ALA) Omega-3. Pepperidge Farm Vitality breads are currently available in the Northeast and performing very well.

For Pepperidge Farm, the bread aisle is all about providing consumers with superpowers, especially in the area of health, notes Tim Hassett, senior vice president and general manager of the fresh and frozen bakery business for Pepperidge Farm, Norwalk, Conn.

“For us,” he says, “it’s more around superpowers as opposed to superheroes, and we think our portfolio of healthy and great tasting products is going to help people live a better and stronger life.”

To improve the nutritional profile of its products in snacks and baked goods, Pepperidge Farm borrowed from the technological strengths of its parent company, Campbell Soup, and reduced the sodium in many of its products. Most consumers, Hassett explains, don’t realize that bread can be a significant contributor of sodium to people’s diets. That perception, however, may change with the upcoming 2010 Dietary Guidelines, which are expected to encourage Americans, including aging Baby Boomers, to reduce the amount of sodium they consume.

Pepperidge Farm, Hassett notes, was one of the initial companies to cut sodium levels in its products without compromising on taste.

Along with heightening consumer awareness about the overarching health benefits of its products, Pepperidge Farm has focused on the larger price-value proposition to maintain its competitive edge in the bread aisle.

Like many premium product producers, Pepperidge Farm has seen some migration toward value. In the bread aisle, Hassett notes, that value migration is not just toward private label options but also new channels as consumers shift away from the traditional grocery-driven business toward mass merchandisers and discount outlets.

“Private label has always been about 40% of total unit volume in this category,” he notes. “Whereas there are other categories where private label has seen significant growth, the trade down to private label in bread is just an extension of a behavior that’s always been in this category.”

Historically, he adds, bread is about as base-driven a category as there is in the food industry. As a result, Pepperidge Farm has seen an uptick in trade promotion by everyone in the bread aisle to manage the gap between branded and private label.

“Consumers are tending to buy what’s on deal and discount matters,” he says. “Before, there was an emphasis around brand loyalty. It’s arguably threatening some of the brand loyalty we have seen in the past.”

Last year’s commodity crisis along with this year’s recession, he notes, have forced food manufacturers like Pepperidge Farm to become increasingly nimble, almost to the point where companies find themselves in a state of perpetual planning. At the beginning of this year, for example, Pepperidge Farm had to readjust its fresh-baked goods portfolio to respond to the new realities in the marketplace.

“Gone are the days when you can put together your annual plan and your respective innovation and just execute accordingly,” Hassett explains. “You have to have a plan to re-plan, if necessary, based on the environment. It’s forced us to stay pretty flexible and adapt to the environment. It’s also forced us to stay more in tune with the day-to-day swings that we’re seeing within the category.”

Despite the downturn in the economy and the move toward private label, Hassett predicts that branded bun producers will do quite well during the dog days of summer.

“With the increase in the home meal occasions and the stay-casions that people are doing, we think the roll season will be a successful season,” he says.

Also for the summer barbecue season, Pepperidge Farm has just rolled out its Sliders Mini Sandwich buns, which come in Classic White and Wheat varieties. Instead of the traditional 8-pack of regular-sized buns, the 15-oz. package contains 12 minis that are designed for summertime entertaining, as well as for children, for snacking or for those whose appetites don’t call for eating a monster of a sandwich.

For Pepperidge Farm, superpowers come in all sizes.

Malovany also asked Hassett about trends in the frozen baked goods category. Here is the brief report.

When the economy slows and slides into a recession, that’s typically goods news for frozen baked goods, according to Tim Hassett, senior vice president and general manager of the fresh and frozen bakery business for Pepperidge Farm, Norwalk, Conn.

Although the current recession is a particularly nasty one that many economists haven’t seen for decades, the frozen foods category – specifically frozen cakes and puff pastries – has experienced a lift in sales similar to previous downturns.

“The category winds are blowing our way in this case,” he explains. “The gravitation away from foodservice and into greater in-home meal consumption has benefitted us greatly across all the dessert segments in which we compete, and we see those trends continuing, at least for the foreseeable future.”

Pepperidge Farm’s reformulation of its cake products, coupled with an upgrade in packaging design last year, continues to drive its classic triple layer cakes. The company also added a Key Lime flavor, which is drawing attention to its portfolio.

“It did two things. It certainly brought interest into our franchise and has been highly incremental from the standpoint that the flavor has a slightly different appeal than our traditional consumer favorites,” Hassett says. “It’s been a win-win for both us and our customers.”

Pepperidge Farm plans to add more new products later this summer.

Additionally, Pepperidge Farm redesigned all its frozen products packaging to give them a unified or family look and boost the brand’s presence in the freezer case.

“Historically, we had pretty disparate packaging. If you look at our pastry business versus our toast business versus our cake business, you wouldn’t even know it came from the same company,” Hassett says. “Now, you’re seeing much more of a brand block, and that’s been pretty impactful for us as well.”

This year, the company has focused on consumer marketing efforts against its distinctive puff pastry.

“We launched an integrated marketing program using a lot of new capabilities and/or emphasis around the Internet, including celebrity sponsorships and stronger utilization of social networking vehicles,” Hassett notes. “We expanded our marketing toolkit, and it had a tremendously positive effect. You’ll see us grow that program even more next year.”

Finally, SF&WB asked Hassett about the recent acquisition of Ecce Panis. Here’s the report.

In a move that marks a big-time foray into the artisan bread segment, Camden, N.J.-based Campbell Soup Co. recently completed its acquisition of Ecce Panis, which has become part of its Pepperidge Farm bakery operations.

Founded in 1988 as a small Manhattan bakery, Ecce Panis has a premium portfolio of hand crafted, stone baked artisan breads that are sold primarily through the in-store bakeries of leading retailers and grocery chains across the country. The parbaked frozen breads and rolls are shipped to customers where the baking process is finished within their in-store bakeries.

“Part of our interest in Ecce Panis was that it stood on many of the same foundational pillars as the Pepperidge Farm brand, which are great taste and quality,” says Tim Hassett, senior vice president and general manager of the fresh and frozen bakery business for the Norwalk, Conn.-based Pepperidge Farm. “Ecce Panis products are truly extraordinary and deliver an incredible eating experience. The business had good alignment with the Pepperidge Farm trademark and also happens to be very nicely aligned with our core consumers. It allows us to compete more in the dinner/simple meal occasion.”

Hassett adds that Ecce Panis has “a pretty successful operation, and we’re thrilled to bring them into our family.”

Editor’s Note: SF&WB’s June 2009 State of the Industry report will be mailed to subscribers later this month. To purchase a copy, contact Gisele Manelli at manellig@bnpmedia.com.


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