Pinnacle pinpoints baking season strategy
Nov. 15, 2013
by Monica Watrous
PARSIPPANY, N.J. — Ahead of the critical holiday baking season, Pinnacle Foods, Inc. fine-tuned its fall program with new products, promotions and pricing for its Duncan Hines brand.
“I think the first point is making sure that we’ve got the right promotional programs in place and our price points at a competitive level because the fall bake timeframe — the holiday timeframe from a retailer standpoint — is one that they see a huge gain in traffic; it’s a big profit generator for them, and they use the baking category primarily as a traffic draw to get people into their stores,” said Bob Gamgort, chief executive officer, during a Nov. 13 earnings call with analysts. “So being able to secure the right features and displays and making sure that you have the right price points is absolutely critical during this time period.”
Secondly, he said, new items drive incremental or impulse purchases, and Pinnacle’s seasonal launches this year have performed “remarkably well.” During the quarter, the company introduced a limited-edition pumpkin spice cupcake mix under Duncan Hines’ Decadent line, which at some retailers sold out well before Thanksgiving, he said.
“The Decadent line continues to do well in the market and gain share,” he said. “We also added a new limited edition Holiday Velvets seasonal cake mix, as well as two new flavors to our Frosting Creations line.”
Building on the success of previously launched red velvet cake products, the seasonal Holiday Velvets product features a combination of red and green cake mixes.
Additionally, Pinnacle has dialed up digital marketing efforts for the brand.
“We found that the highest payback in this category comes from optimized search, as well as having the right digital marketing campaign versus a more traditional campaign, and we have really focused that on all the opportunities around the holiday season,” Mr. Gamgort said.
For the quarter ended Sept. 29, the company posted net earnings of $40,685,000, equal to 35c per share on the common stock, up from $9,878,000, or 12c per share, from the same period of the previous year. Net sales for the quarter increased to $572,455,000 from $567,905,000 last year.
The Duncan Hines Grocery segment posted a 4% increase in net sales to $224.2 million from $215.6 million last year, reflecting higher sales of Vlasic pickles, Mrs. Butterworth’s and Log Cabin syrups, Duncan Hines baking mixes and frostings, Comstock and Wilderness pie and pastry fruit fillings and the company’s Canadian business.
“As we discussed with you last quarter, we increased our support behind our Duncan Hines business,” Mr. Gamgort told analysts. “While we still have work to do, we have begun to see sequential improvement in our overall share heading into the holiday season and are confident in our programs for the fourth quarter.”