State of the Industry 2018: Bakery snacks innovations boost sales
Bakery snacks continue to resonate with its core consumers, with bite-sized options making little indulgences even easier.
Bakery snacks like snack cakes have always been an indulgent category. And even as nutritionally improved products continue to trend-forward in other industry categories, snack cake sales don’t waver. These snacks hold nearly universal appeal with youthful demographics, and their portability, size and portion control makes them easily approachable—sometimes nostalgic—indulgences for kids of all ages.
Overview | Bread | Tortillas | Sweet Goods | Snack Cakes | Pizza | Desserts | Cookies | Buns & Rolls | Bars | Breakfast Products
Market data
By looking at data from IRI, Chicago, from the past 52 weeks ending March 25, 2018, the bakery snacks category is slightly up, with an increase of 1.81 percent in dollar sales to $3.4 billion.
McKee Foods Corp.—famous for its Little Debbie brand—holds the top slot, up 0.70 percent to $829.4 million. Private label snack cakes accounted for $705.8 million, up 2.15 percent. Hostess saw its brands rise 6.92 percent in dollar sales to $697.2 million.
Both Bimbo Bakeries USA and JTM Foods saw dollar sales growth over 10 percent. Bimbo bakery snack brands climbed 10.80 to $232.4 million, and the JTM Foods bakery snacks business, JJ’s Bakery, was up 10.55 percent in to $45.9 million.
Bon Appetit Danish Inc. saw its business grow 6.45 percent to $115.1 million.
Looking back
“Snacking occasions are on the rise and more than ever, consumers are snacking multiple times a day,” says Brian Fatula, senior vice president of R&D, Hostess Brands, Kansas City, MO. “With these increased snacking moments comes an increased desire by consumers for portability, convenience, variety-seeking, portion control and cleaner-label options.”
Hostess Brands released numerous new products over the past year, including Baseball CupCakes and Peanut Butter Ding-Dongs. In February 2018, it also released three limited-edition flavors of CupCakes, including Mint Chocolate, Strawberry and Sea Salt Caramel.
“These trends can be capitalized on through packaging innovation, product form innovation, and new flavors and formulas,” notes Fatula. “Hostess Brands’ innovation strategy and multi-year product pipeline is centered around these important trends.”
The new Hostess Bakery Petites line—mini cake and cookie bites—is performing exceptionally well because it hits on multiple macro trends at once, says Fatula. “It’s the first stand-up resealable pouch package in the sweet baked goods category that give consumers the convenience they need. The mini crème-filled cake balls, crispy thin cookies, and mini brownies are all poppable, hand to mouth snacks that can easily be eaten on the go. Bites are great for portion control, because you can satisfy your sweet tooth without having to eat a full serving at one sitting.”
Small desserts will likely become more common in the future, says Lance Aasness, executive vice president, Hinds-Bock, Bothell, WA. “Single-serve and mini desserts like brownies, muffins and snack cakes are still growing and may become the ‘norm’ in the not-so-distance future.”
This fits into the overall snacking trend, notes Greg Tompkins, senior vice president, R&D/commercialization, Otis Spunkmeyer, Los Angeles. “Consumers are shying away from the standard three meals a day and incorporating smaller meals to accommodate their on-the-go lifestyles. Snack cakes appeal to a large demographic, because they’re smaller in size and can be enjoyed anywhere. At Otis Spunkmeyer, we recognized the demand, and incorporated two varieties of loaf cakes—Iced Lemon Loaf Cake and Cinnamon Crumb Cake—into our newly launched Grab ’N’ Go portfolio.”
The new Otis Spunkmeyer’s Grab ‘N’ Go Iced Lemon Loaf Cake and Cinnamon Crumb Cake are made with “No Funky Stuff,” so they appeal to the “cleaner” eater, and perhaps adults looking for something that reminds them of their childhood, adds Tompkins.
Hostess has also relaunched its classic Dolly Madison vending brand. The brand includes Chocolate Cremes (similar to Hostess CupCakes); Coffee Cakes; Golden Crème Cakes (similar to Twinkies); and Zingers, which are iced vanilla cakes with crème filling.
Seasonal or limited-edition flavors are fairly common in bakery snacks, and can be used to entice consumers into trying a new flavor. In September 2017, Flowers Foods released its fall seasonal snacks for its Tastykake brand, including a Salted Caramel version of Kandy Kakes, with a chocolate-flavored coating and caramel-flavored filling. Its winter lineup includes a Seasonal Mocha flavor of Kandy Kakes, as well as Frosty Kakes (cakes with flavored coconut filling and dark-chocolate-flavored coating).
For Easter, Tastykake released Bunny Treats (iced yellow cakes with sprinkles), Crème Filled Snowballs (coconut and marshmallow covered chocolate cakes with crème filling), Hippity Hops (coconut filling and dark-chocolate-flavored coating), and Tasty Tweets, a snack cake filled with cream and topped with icing and sprinkles.
Snack cakes that celebrate an occasion are also popular with consumers. In April 2018, McKee Foods released Little Debbie Birthday Cakes, individually-wrapped cakes with candy confetti baked into the cake, as well as sprinkles on top.
Most bakery snacks are individually wrapped for on-the-go snack appeal. “Portability for snack cakes is key, and we see requests for depositing decorations like rosettes directly into the packaging,” says Luc Imberechts, president, Bakon USA, Torrance, CA.
Imberechts mentions that Bakon also sees requests for accurate depositing of batters driven by the need for accurate consistent weight of the finished products, as well as the need for quality cutting of individual portions.
Despite snack cakes having a reputation as being indulgent, manufacturers are still focused on making them clean label, too. “Trying to eliminate or reduce refined sugars, high-fructose syrups, artificial coloring, trans fats and refined wheats are still a top focus for this category,” says Aasness. “Great-tasting, indulgent and decadent desserts that are made with better ingredients such as whole butter, real buttercream, unrefined cane sugar, rich dark chocolate and better-for-you flours continue to rise.” He expects this trend to continue.
“Consumers are looking for healthier versions of their favorite sweets, but aren’t willing to sacrifice flavor and taste,” says Tompkins. “Therefore, brands are starting to reformulate or introduce new SKUs and portfolios that fit these criteria.”
Looking forward
Application-based equipment will continue to churn out snack cakes.
“At Hinds-Bock, our focus has always been on designing application-based equipment for the food and baking industry,” says Aasness. “Because all of our equipment is made on location, we have the ability to quickly design and build automated or semi-automated systems based on the market demand.”
The snack cakes category will also continue to release innovative products in the upcoming year.
“Customers are excited to try new things and experience new flavors and forms. They will reward meaningful innovation with their wallets,” says Fatula. He also says that packaging innovation that makes a consumer’s life easier, modernizes the brand, or creates a better shelf presence is a key area of opportunity. Also, flavor innovation that excites consumers and delivers a unique eating experience will drive trial.
“Products that deliver permissible indulgence through cleaner, more-premium ingredients, or address consumer health concerns by having protein or whole grains will create a new snacking occasion. And innovation on product forms that deliver new sizes, shapes or textures will generate interest among current and new consumers,” advises Fatula.
As much as the category encourages innovation, nostalgia is always a strong draw, says Tompkins—with a few changes. “Brands are beginning to re-introduce the foods that were once popular in decades past, appealing to consumers’ desire for something they might’ve enjoyed as a kid.”
Consumers will continue to pay attention to portion sizes, which is why they gravitate toward smaller 2- or 4-ounce loaf cakes, as they are reasonable in size and satisfy that sweet snack craving, says Tompkins. “Cake in general has performed well in the bakery market. Mintel research from 2016 showed that this category would continue to grow over a period of five years, which has proven to be the case, specifically in the 2- to 4-ounce loaf cake segment.”
Tompkins predicts that better-for-you foods will continue to drive part of the purchasing power among consumers. “But it’s important to note that consumers are still looking for an indulgence when it comes to snack cakes. Many brands have already made the switch to eliminate certain ingredients from their foods, and I expect to see this increase in the next few years.”
The variety of the snack cakes category is what continues to make it so interesting. “In a fun, indulgent category like snack cakes,” says Fatula, “the future possibilities for innovation are endless.”
Overview | Bread | Tortillas | Sweet Goods | Snack Cakes | Pizza | Desserts | Cookies | Buns & Rolls | Bars | Breakfast Products
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