During its glory days of the mid-to-late-1990s, the bagel could be found just about everywhere. At that time, Dunkin’ Donuts Inc. was investing millions of dollars to add bagels to its menu and The Kellogg Co. paid nearly $500 million to acquire Lender’s Bagels, the leading fresh and refrigerated brand. A decade later, Dunkin’ Donuts is shifting focus toward breakfast sandwiches and Kellogg has long since exited the bagel business, having sold Lender’s shortly after acquiring it. Much of the boom is out of the bagel business, but it is anything but a bust.

The core selling points of the bagel remain: health, convenience and cost. What has proved challenging, though, is innovation. Companies always have marketed the healthfulness of bagels as a breakfast option, exemplified by the whole grain trend earlier this decade that provided a spark to sales and drew in a new consumer base. But as the whole grain trend has matured, bagel makers have been left searching for alternative ways to grow the category.

Perhaps no company has ever made as big a splash in the category as Kraft Foods Inc. did this past April when it introduced Bagel-fuls. The Northfield, Ill.-based company took the traditional concept of the bagel and wrapped it around Philadelphia cream cheese, making it the first "all-in-one" bagel.

While the initial reaction of the investment community was skepticism, sales of Bagel-fuls have been tremendous. According to Information

Resources, Inc., dollar sales of the product in the 52 weeks ended Dec. 28, 2008, exceeded $25 million, making it the best selling frozen bagel brand, surpassing Lender’s, which had sales just shy of $20 million. In the process, the product launch has positioned Kraft Foods to overtake Lender’s maker Pinnacle Foods Corp., Cherry Hill, N.J., as the No. 1 frozen bagel manufacturer.

Making Bagel-fuls impact on the market all the more impressive is the fact the product sells at a price point ($2.34 according to I.R.I.) nearly a $1 higher than the No. 2 brand (Lender’s, $1.45), and well above the $1.30 average price per unit for private label bagels.

Available in six flavors, Bagel-fuls may be heated in the toaster or microwave, or may be eaten straight out of the refrigerator.

From a health standpoint, all Bagel-fuls meet Kraft’s Sensible Solutions criteria. The bagels are a good source of calcium and seven other vitamins and minerals. In addition, they contain 200 calories or less, 5 grams of fat, 200 mg of sodium and no trans fat.

Results have not been as strong in the shelf stable and refrigerated bagel categories.

In the case of shelf stable bagels, category leaders George Weston Inc., Toronto, and Sara Lee Corp., Downers Grove, Ill., continue to rely on their healthful, whole grain options to push sales.

Along those lines, Sara Lee in January launched a new nutrition labeling program that includes its bagel products. The labeling program complements the Nutrition Facts Label currently required on all food products and includes the percentage of daily recommended folic acid per serving and percentage of daily recommended fiber per serving on all Sara Lee bagel products.

Another trend in the shelf stable bagel segment involves a number of new "mini bagel" type products. According to I.R.I., shelf stable bagels posted dollar and unit sales of $558 million and 185 million, respectively, in the 52 weeks ended Dec. 28, 2008, up 10% and 2%, respectively, from the same period a year earlier.

Refrigerated bagels, meanwhile, experienced a slowdown in unit sales during the 52 weeks ended Dec. 28, according to I.R.I. That decline, though, can mostly be attributed to a sharp falloff in unit sales at category leader Pinnacle Foods, which experienced a 12% decline in unit sales. Several other companies have in fact been on the upswing.

CCF Brands, Inc., Rogers, Ark., introduced the Olde Hearth Bagels line in February 2006 with five base line bagels: plain, blueberry, cinnamon raisin, French toast and onion. The line has grown to include honey wheat, apple cinnamon, Health Crunch, Very Berry and Lemon Poppy Seed.

Among the top 10 refrigerated bagel makers, CCF Brand’s 56% gain in dollar sales and 40% increase in unit sales standout.

Curtis Earls, vice-president of business development for CCF Brands, said the growth has been driven by new products and innovation, coupled with giving consumers the most for their dollar.

"Consumers are looking for value," Mr. Earls said. "The ‘price/value’ relationship has become an important component for consumers in their buying habits. They want to get the most with their purchasing power. Key to Olde Hearth success is innovation."

To that end, the company this year is introducing a Lemon Poppy Seed bagel, which Mr. Earls said has a flavor much like a lemon poppy seed muffin but with the texture of a kettle boiled and hearth baked bagel.

While sales fall off sharply in the frozen bagel category after Kraft and Pinnacle, smaller companies are finding successful niches. Taking a different approach on a dramatically smaller scale is Enjoy Life Natural Brands L.L.C., Schiller Park, Ill., which has enjoyed success. In the 52 weeks ended Dec. 28, Enjoy Life frozen bagel dollar sales totaled $106,670, up 155% from the same period a year earlier on a 160% gain in unit sales, according to I.R.I. At an average price of $4.47 per unit, Enjoy Life bagels are one of the more expensive frozen bagel brands on the market, but that has not slowed consumer acceptance of a product that has been around since the company was established in November 2002.

With only two varieties — classic original and cinnamon raisin — Enjoy Life relies on the strong nutritional profile of the product to attract interest. The product’s calling card is the fact it is gluten free, but the bagels also contain no trans fat or artificial flavors and are kosher. In addition, each serving contains 300 mg of omega-3 fatty acids.

Scott Mandell, founder, president and chief executive officer of Enjoy Life Foods, said the success of the bagels has been a combination of things.

"There’s a growing consumer awareness of gluten-free/allergy-friendly products," he said. "We’ve seen increased brand awareness as several new products have been introduced under the Enjoy Life Food brand. We’re also consistently gaining greater distribution and we’re seeing more and more gluten-free sets in large conventional accounts."

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