by Keith Seiz
editor
It has been five years since a flurry of consolidation activity sent the two most powerful cookie brands, Nabisco and Keebler, to new parent companies. Nabisco headed to Northfield, Ill., to join other powerful brands at Kraft Foods Inc., and Keebler joined Kellogg Co. in Battle Creek, Mich.
The acquisitions strengthened each brand's future prospects due to increased marketing and research and development capabilities. Why then, five years later, are both companies losing traction in the cookie category?
The cookie category's recession is attributed to many factors: Fad diets, trans-fatty acids, lack of innovation and rising obesity concerns, to name a few. Kraft Foods, the category's market share leader, is attempting to reverse the category's decline by emphasizing healthful options.
Healthful bakery foods proved successful in many categories, including breads and food bars. But the cookie category plays by a different set of rules. Consumers generally purchase and consume cookies with one thing in mind: indulgence.
Kraft Foods' latest strategy contradicts this long-standing market trend. "We're working on ways to encourage both adults and children to eat wisely by selecting more nutritionally balanced diets," Lance Friedmann, Kraft's senior vice president of Global & Health Wellness, says.
That statement is not exactly a ringing endorsement for the company's own cookie brands, which are generally high-fat, high calorie.
Top 10 Cookie vendors
| Vendors | Dollar Sales | % Change | Dollar Share | Unit sales | % Change | Unit Share |
| Nabisco | $1,346,149,120 | -2.5% | 37.2% | 537,456,640 | -1.9% | 30.8% |
| Keebler | $408,618,912 | -9.5% | 11.3% | 167,869,312 | -12.2% | 9.6% |
| Private label | $289,220,480 | -11.8% | 8.0% | 171,384,240 | -12.6% | 9.8% |
| Pepperidge Farm | $277,467,520 | 1.7% | 7.7% | 98,330,656 | -1.6% | 5.6% |
| Little Debbie | $210,946,048 | 4.9% | 5.8% | 181,407,024 | 6.1% | 10.4% |
| Murray Biscuit Co. | $169,093,152 | -4.4% | 4.7% | 104,257,608 | -8.7% | 6.0% |
| Archway | $113,608,144 | -8.0% | 3.1% | 47,704,716 | -8.4% | 2.7% |
| Mother's/Bakery Wagon | $90,844,320 | -9.7% | 2.5% | 39,882,440 | -10.9% | 2.3% |
| Voortman | $56,346,448 | -1.8% | 1.6% | 29,391,432 | -11.1% | 1.7% |
| Frito Lay | $34,807,196 | 15.6% | 1.0% | 32,430,536 | 11.9% | 1.9% |
Source: Information Resources Inc. statistics for the 52-week period ended Jan. 23, excluding Wal-Mart
Cookie recession
For the 52-week period ended Jan. 23, cookie dollar sales fell 3.1% to $3.62 billion. Unit sales for the same period dropped 3.8% to 1.74 billion. Statistics for this story were supplied by Information Resources Inc., and measure scanner data in supermarkets, drugstores and mass merchandisers, excluding Wal-Mart.
Kraft Foods' Nabisco brand's dollar sales declined 2.5% during this period, and six of its 11 brands in the top 20 (see chart on page 20) reported declining dollar sales.
These factors caused Kraft Foods to change its approach to research and development and marketing. This approach focuses on betterforyou products and reduced advertising to children.
As a result of the company's new marketing strategy, Oreo and Chips Ahoy! cookies are no longer advertised on television, radio and print media primarily viewed by children ages 6 to 11—a major market for the cookie category.
This initiative is part of a larger plan by Kraft to address consumers' health and wellness concerns. No one can doubt the nobleness of this strategy, but many question its business sense. Since the company announced its new advertising plan, many other companies, including Kellogg and General Mills, said they have no plans to follow Kraft's lead.
Healthful cookies
At last year's Biscuit & Cracker Manufacturers' Association's technical meeting, Daryl Brewster, Kraft Foods' U.S. Snacks Sector's group vice president, stated that cookie manufacturers need to increase innovation to rejuvenate the troubled category.
Kraft Foods has taken the lead in new product introductions, launching multiple products aimed at consumers seeking healthful properties in their cookies.
The company's KidSense Fun Packs consist of three varieties of popular Nabisco snacks that have been reformulated to ease consumers' concerns about fat and sugar. Each serving of the three varieties, Teddy Grahams® Cubs, Kraft® Cheese Nips® Sports Crisps and Smilin' Ritz Bits®, contain 100 calories, three grams of whole grains, zero grams of trans fat and three grams of total fat.
The company also reformulated many of its popular cookies and packaged them in individual packages. Nabisco's 100 Calorie Packs are preportioned to contain 100 calories and zero to three grams of fat per pack, depending on the variety. Varieties include Oreo® Thin Crisps, Honey Maid® Cinnamon Thin Crisps and Chips Ahoy!® Thin Crisps.
To capitalize on the whole grain buzz, Kraft Foods launched Honey Maid™ Soft-Baked Snack Bars. These products contain six grams of whole grain, and come in three varieties: Oatmeal Raisin, Blueberry and Banana. Each variety has 150 calories, between four and five grams of fat, two grams of saturated fat, zero grams of trans fat and zero milligrams of cholesterol per bar.
The products arrived on store shelves in March and are packaged in boxes that contain eight individual bars each. A box of product retails for $3.39.
The company also is attempting to boost cookie sales by adding a new product to its SnackWell's brand of reduced fat cookies. SnackWell's Cookie Cakes taste like cake, the company says, and only contain a halfgram of fat and 50 calories per serving. The company will launch the product nationwide in January. The product comes in two varieties, Chocolate Mint and Black Forest, and have a suggested retail price of $2.59.
Top 20 Cookie brands
| Cookie Brand | $ Sales | % Change vs. Year Ago | $ Share | Unit Share |
| Nabisco Oreo | $188,777,760 | 5.3% | 5.2% | 4.3% |
| Nabisco Chips Ahoy! Original | $121,943,520 | -3.4% | 3.4% | 2.8% |
| Nabisco Oreo Double Stuf | $103,130,048 | 17.5% | 2.9% | 2.3% |
| Pepperidge Farm Distintinctive Milano | $78,888,776 | -1.1% | 2.2% | 1.8% |
| Nabisco Chips Ahoy! Chewy | $74,595,536 | 8.0% | 2.1% | 1.6% |
| Little Debbie Nutty Bar | $65,549,468 | 7.9% | 1.8% | 2.8% |
| Private label chocolate chip | $65,231,928 | -5.7% | 1.8% | 1.8% |
| Little Debbie Oatmeal Cream Pies | $64,981,516 | 3.6% | 1.8% | 3.2% |
| Nabisco Nilla | $62,541,576 | 3.7% | 1.7% | 1.2% |
| Private label sandwich cookies | $57,081,956 | -21.0% | 1.6% | 2.0% |
| Nabisco Fig Newton | $49,738,980 | -6.1% | 1.4% | 1.1% |
| Nabisco Chips Ahoy! Chunky | $42,093,296 | 1.8% | 12% | 0.9% |
| Nabisco Fat Free Fig Newton | $40,920,984 | -22.5% | 1.1% | 0.8% |
| Archway Oatmeal | $34,003,540 | -7.5% | 0.9% | 0.8% |
| Nabisco Nutter Butter | $33,830,820 | -3.7% | 0.9% | 0.8% |
| Keebler Pecan Sandies | $32,067,926 | 1.2% | 0.9% | 0.7% |
| Nabisco Teddy Grahams | $31,990,608 | -15.1% | 0.9% | 0.9% |
| Nabisco Uh Oh! Oreo | $30,572,856 | -2.7% | 0.8% | 0.7% |
| Private label fudge cookie | $29,757,794 | -5.6% | 0.8% | 1.1% |
| Keebler Fudge Shoppe Stripes | $29,575,706 | -23.2% | 0.8% | 0.8% |
Source: Information Resources Inc. statistics for the 52-week period ended Jan. 23, excluding Wal-Mart.
Follow the leader?
So far, Kraft Foods' jump into the healthful cookie segment has been met with indifference from competing companies. Several cookie manufacturers reduced or eliminated transfatty acids from their products, and launched sugar-free varieties, but for the most part, the category has not jumped on the healthful cookie bandwagon.
As a result, Kraft Foods' health-oriented cookie strategy could pay huge dividends or disappear without making a dent in the category. Regardless, the company is well positioned with 11 placements in the top 20 brands—only one of which is touted for its healthfulness.
| Fresh Bakery Products | 52 Weeks Ending Jan. 23 Dollar Sales | % Change Prior Year | 52-week Unit Sales | % Change Prior Year |
| Bread | $5,795,031,424 | 0.3% | 3,390,564,032 | -3.9% |
| Crackers | $3,166,156,544 | -0.6% | 1,446,027,008 | 1.8% |
| Rolls/Buns/Croissants | $1,778,169,216 | -0.3% | 1,199,782,528 | -2.5% |
| Cupcakes/Brownies | $802,442,688 | 0.1% | 582,620,992 | -4.1% |
| Donuts | $775,325,760 | 1.7% | 334,826,976 | -2.9% |
| Pastry/Danish/Coffeecakes | $621,849,152 | -3.5% | 308,139,744 | -4.8% |
| Cakes (excl. snack/coffeecakes) | $586,980,800 | -0.8% | 128,088,360 | -2.7% |
| Bagels/Bialys | $433,722,880 | 4.0% | 172,184,944 | 0.5% |
| English Muffins | $382,584,192 | -2.2% | 189,762,704 | -4.0% |
| Muffins | $220,266,912 | 2.2% | 86,025,784 | 3.3% |
| Pies (excl. snack pies) | $191,904,496 | 0.1% | 49,156,688 | 0.8% |
Source: Information Resources Inc.
| Frozen Bakery Products | 52 Weeks Ending Jan. 23 Dollar Sales | % Change Prior Year | 52-week Unit Sales | % Change Prior Year |
| Baked Bread/Rolls/Biscuits | $448,537,248 | 1.6% | 188,605,296 | 0.4% |
| Pies | $326,833,248 | 2.3% | 87,396,600 | 3.4% |
| Sweetgoods (excl. cheesecake) | $312,291,136 | -0.1% | 115,972,736 | 0.6% |
| Bread/Rolls/Biscuits/Pastry Dough | $122.598.184 | -8.3% | 45,817,360 | -9.1% |
| Pies/Pastry Shells | $108,134,496 | -3.5% | 54,227,596 | -5.9% |
| Cheesecakes | $82,502,472 | -4.3% | 18,222,570 | -8.4% |
| Bagels | $60,826,508 | -18.4% | 47,366,984 | -20.9% |
| Cookie Dough | $5,229,578 | -5.1% | 1,154,521 | -19.4% |
| Muffins | $4,243,262 | -16.7% | 2,030,824 | -19.0% |
| Cookies | $34,037 | -61.8% | 9,573 | -61.8% |
Source: Information Resources Inc.
| Refrigerated Bakery Products | 52 Weeks Ending Jan. 23 Dollar Sales | % Change Prior Year | 52-week Unit Sales | % Change Prior Year |
| Cookie/Brownie Dough | $420,387,168 | 5.0% | 151,985,552 | 0.5% |
| Biscuit Dough | $382,178,720 | -6.2% | 344,495,712 | -7.6% |
| Pastry/Dumpling Dough | $254,054,752 | 0.4% | 119,948,704 | -1.1% |
| Bread/Roll/Bun Dough | $233,735,872 | -2.2% | 123,041,016 | -1.8% |
| Cheesecakes | $82,502,472 | -4.3% | 18,222,570 | -8.4% |
| Bagels/Bialys | $60,208,636 | -17.7% | 44,105,080 | -16.0% |
| Cakes (excl. snack/coffeecakes) | $61,054,340 | -2.5% | 7,623,009 | -6.2% |
| English Muffins | $27,728,148 | -2.6% | 17,229,652 | -6.2% |
| Pies (excl. snack pies) | $27,477,060 | -19.1% | 5,653,356 | -25.4% |
| Bread | $5,379,576 | -7.4% | 2,622,496 | -11.3% |
| Snack Cakes/Donuts | $5,099,988 | -27.5% | 1,417,270 | -39.1% |
| Pastry/Danish/Coffeecakes | $4,461,692 | -1.9% | 1,542,927 | -14.2% |
| Croissants/Dinner Rolls | $891,209 | 10.5% | 418,896 | 10.7% |
| Muffins | $30,315 | -28.4% | 8,691 | -34.4% |
Source: Information Resources Inc.
Statistics for this chart were supplied by Information Resources Inc., a Chicago-based firm. Its scanner data covers more than 11,300 supermarkets and represents 90% of all supermarket volumes.
