Rising Again Rhode Island

The frozen bread and dough category has matured. Growth is harder to come by, shelf space is tighter and real innovation is more infrequent then before. Yet product quality has never been higher, nor variety greater.

"Most of the new products haven't really had a point of difference," says one industry expert. "They've been line extensions copying other brands, and just have not created consumer demand because the quality or support weren't there."

Retailers have reacted as retailers will, by scaling back shelf space—already in shorter supply—and making it harder to add still more products.

The category does seem to be in the midst of a turnaround, however. Total sales for the 52 weeks ending Jan. 27, 2008, were up 1.5% to $624.5 million but sales for the 12 weeks ending on the same date are up 3.5%, according to Information Resources Inc. (IRI), Chicago. Units are showing the same uptick with an increase of 2.4% through 12 weeks; a significant improvement over a rather anemic 0.3% increase for the year.

Key manufacturers give a variety of reasons for the recent sales rebound.

Ian Barrie, director of advertising and marketing communications, Cole's Quality Foods Inc., Grand Rapids, Mich., says the breadsticks segment, "continues to fuel the category growth, up 34% over the same measuring period."

Growth in the value-added breadsticks segment has been "dramatic," Barrie adds, with the most impactful production rollouts of the last year Cole's Cheesesticks and new Pizzasticks, both of which were recently promoted with Super Bowl-themed events. Cole's has also made packaging enhancements on all of its items to highlight the absence of trans fat. Consumers, Barrie says, are reacting positively to multiple price points, meal deals and occasional BOGO's.

The field in frozen bread and dough is "getting more diversified," says Dan Yost, senior vice president, Bridgford Foods Corp., Anaheim, Calif. "It's amazing how many offerings there are in bread, rolls and biscuits. But what you want to do is find convenient items that offer good value and that are unique." Like all others, this category is "always moving along," says Yost, "and what the newer generation is looking for is faster, easier and better. We're trying to stay ahead of that and give them what they want."

"Looking at our sales data, the category seems to be growing, both in terms of consumer product tastes and sales growth," says Bill Buckingham, vice president of sales and marketing, Athens Foods Inc., Cleveland. "For us, our growth in the space has a lot to do with educating the consumer on the uses and health benefits of fillo. Fillo is not a new product, but we can make it new over and over again with new recipes and new uses, especially uses that fit into a healthier lifestyle."

In October, T. Marzetti Co., Columbus, Ohio, which markets the New York, Mamma Bella and Sister Schubert's brands, started rolling out its New York Pizzeria Dip'N Sticks—bread sticks made from pizza dough. Available in Original and Cheese varieties, each 11 oz. package includes pizza sauce.

"We think this is one of the few really new concepts in the frozen garlic bread category," says Schrade Radtke, senior marketing manager. In the process of rolling out now under the Sister Schubert's banner are an 11 oz. package of Wheat Parker House Rolls and a 12 oz. pull-apart Clover Leaf Roll. Also new are buttermilk and pre-baked biscuits.

In 2007, Athens focused on strengthening sales and distribution of its existing products, including its mini fillo shells and filled mini fillo shell hors d'oeuvres, which were "a big hit, especially during the peak fourth-quarter selling season," according to Buckingham. Athens' most recent introduction was its spinach- and tomato-flavored Mini Fillo Shells.

The company heavily promoted five varieties of the filled mini fillo shell hors d'oeuvres near year's end. In advance of the promotion, management was able to add new supermarket chains, "and with the increase in sales volume we were able to offer an extremely competitive price," says Buckingham.

Using Athens' Mini Fillo Shells as an example, Buckingham and his colleagues feel that the "sweet spot" on pricing "seems to be just shy of $2, or about $1.89 per 15-count box. With our Mini Fillo Shell floor displays, we often see retailers run three-for-$5 promotions."

"A big part of 2008 for us will be adding support for several of our younger product lines, such as our tomato and spinach mini fillo shells, which still have tremendous growth opportunity," Buckingham points out. "Additionally, we're looking at consumer trends, like the growing interest in all-natural products, for example, and evaluating whether those trends carry over into the fillo category. Throughout all this, we are always working to grow distribution."

Health

What Yost calls "the other big issue right now" is health. "The one thing (consumers) look for in health is more grains. That's why we provide a honey wheat product, a frozen dough that is excellent for that demographic." About a year ago, the product was reformulated to include more wheat product.

"What drives our product is nutrition," says Tamie Wills, marketing associate, R Super Foods, Pittsburgh, which markets the $2.99 Super Donut and Super Buns lines. "We find they are a great alternative to a donut because they are not full of empty calories. There's something behind them. They are fortified with minerals, vitamins and proteins. They don't have any trans fats. They are made of all-natural ingredients, with no preservatives."

NutriDough, the company's proprietary bakery fortifier, includes protein, antioxidant Vitamins A, C, and E, B vitamins, folic acid and calcium. Each 12-oz. box contains six individually wrapped donuts or buns, which provide 14 essential nutrients, vitamins and 4 grams of protein.

The brand's target customers, "the moms who do the grocery shopping," view R Super's items "as a healthy alternative to the donut in the morning for the kids. And the buns are a little bit more of a seller because people are used to frozen cinnamon buns for breakfast, as opposed to frozen donuts." R Super Foods is the sister company of Super Bakery Inc., owned and operated by former Pittsburgh Steeler running back Franco Harris.

Wills says R Super is in the process of developing 100-calorie packs for both product lines, "similar to what you see Nabisco doing." They are not expected to be ready for rollout until 2009.

Consumers are looking for healthier options, Buckingham agrees, "but don't necessarily want to give up the richness of their favorite foods. The best products reach a balance between the two." Over the last year, the industry has seen what Buckingham calls "a burgeoning expansion into 'clean label' products as a subset of consumers' demand for more organic and all-natural options."

"Natural and organic foods are at the intersection of many important consumer trends," says Mike Smith, senior marketing manager, Alexia Foods, Long Island City, N.Y., which was recently acquired by ConAgra Foods, Omaha, Neb. "The pursuit of healthy living, sustainability, and the desire for high quality products and ingredients, are driving many consumer buying decisions."

Alexia recently introduced several new products that are all-natural with 0g of trans fat. One of the recent launches is Alexia Biscuits, which are made with buttermilk. "The bag is designed in a way that allows flexibility for retailers to merchandise on the shelf vertically or horizontally," says Smith. The biscuits can be prepared in traditional or microwave ovens.

Alexia's marketing programs "are designed to create awareness and trial for the brand," Smith notes. "We've found that consumers become strong advocates for the brand once they try (it). To support those objectives, we use a combination of web, sampling, and in-store support."

Economic Driver

Rhodes Bake N Serv's sales continue to grow, says CEO Ken Farnsworth, Jr., "and surprisingly consumers are baking more loaves of bread than in the recent past. We believe the economy is driving these sales. A quality loaf of Rhodes Bread still costs under a dollar, which is a great value." Consumers, he adds, "need to save money by baking at home."

Due largely to "escalating flour costs--more than doubling—and other increasing costs, the retail prices are higher," says Farnsworth, 'yet frozen dough is still more economical than commercial baked sliced bread." Price points, Farnsworth suggests, are changing due to escalating costs. "However, ad prices featuring two-for are working since consumers who use frozen dough use a lot of it." Rhodes continues to line price "for the convenience of grocers and consumers."

Rhodes AnyTime! Pull Aparts "were selling well" where introduced in 2007. Plans call for expanding distribution as they increase production capacity on both Garlic Butter Pull Aparts and Sticky Buns.

Rhodes' promotional efforts at the end of last year and into January included national FSI's with coupons for Thanksgiving, Christmas, and Super Bowl. The company's web site features a "My Best Rhodes Recipe" contest "because many consumers use Rhodes for any recipe that calls for bread or roll dough," Farnsworth explains. The site also features how-to recipe videos on its web site as well as YouTube and Google Video.

Bridgford's newest Monkey Bread product came about because consumers were using the company's ingredients to make it themselves. "What they do is take our yeast bread dough and dip it in butter and cinnamon sugar, put it in a bundt pan and allow it to proof and bake," says Yost. "Well, we found a way to do that for them. The people who want to put their twist on it and make a unique recipe can continue to use our dough. But if they're going toward the faster, more convenient, better value choice, we provide that. You take it from the freezer, two and a half minutes in the microwave oven, and you've got Monkey Bread."

From a larger perspective, Yost points out, "the commodities markets have not been kind over the last year. And if you look at the food sector it has been hit particularly hard, forcing prices up. That has been a real challenge, to get flour and so forth, so the price points are going up, whether we like it or not. But I also believe that the trick for us is to provide the value, and for consumers to see the quality that that price gives them."

As for the frozen aisle, says Yost, "there are so many unique opportunities with bread that we believe retailers should consider expanding the case. That's nothing new, but if they have more varieties of frozen bread and roll dough products it is going to build that category. People are going to expect to find more unique items there."