BOSTON — Last July, Irene Chang Britt, president of Pepperidge Farm Inc., said the company had managed to capture a surprisingly large share of the bread business that opened up with the November 2012 bankruptcy of Hostess Brands, Inc. In comments this week, Ms. Britt expressed confidence Pepperidge would keep those share gains, even as Wonder and other Hostess brands have returned to the market.
Ms. Britt offered several comments about the bread business as part of a panel discussion of executives of Pepperidge parent Campbell Soup Co. March 12, participating in the RBC Retail Conference. Ms. Britt also is senior vice-president of global snacking and baking at Campbell.
In the July 2013 comments, Ms. Britt said Pepperidge, based on its size, could have been had expected to gain about half a percentage point of bread market share from the 7% share held by Hostess at the time of the bankruptcy. Instead, the company gained more than a full percentage point. In her comments this week, Ms. Britt put Pepperidge’s gains into a broader perspective, suggesting that an ailing Hostess in 2010-12 may have been holding back the entire bread category.
“In the past year and a bit since they came out of the market, since those brands came out, the category actually grew more than it had in the most recent three years before that, which is very interesting,” she said. “Underlying that was a bifurcation. Consumers in the face of choice actually traded up to premium, us particularly, and some of the other premium products on the market, and down to private label. And the knock-on effect from that is that the retailers benefited from additional margin.”
It is because retailers benefited, Ms. Britt said Pepperidge has cause to be optimistic it will sustain its share gains.
“As we cycled that and went back out to talk to the retailers about maintaining the shelf space as the (Hostess) brands are coming back in, the retailers have primarily agreed with us about the benefit that they got from the premium bread,” she said. “Velocities were so great that they actually are standing behind that decision to increase the shelf space for premium bread, and we are very, obviously, happy about that decision.”
Citing scanner data, Ms. Britt said Pepperidge sales are up 4% from a year earlier, a percentage point better than the category average.
“(This performance) is fairly indicative of not only cycling the Hostess benefit for us, but also the Hostess brand is now coming back onto the market,” she said.
Another cause for optimism at Pepperidge is progress the company has made in what Ms. Britt described as a particularly attractive demographic: Parents with young children. Inroads among this segment were attributed largely to the success of the company’s Swirl bread lined aimed at the breakfast market.
“This past year we have gained 3 household points of penetration in bread, which is very hard to do, on the basis of Swirl,” she said. “And that was young families, young forming families, actually coming into the franchise because of the innovation that has been brought there.”
Beyond the battle for market share in the wake of the Hostess bankruptcy, Ms. Britt discussed the important role of fresh bread as an “anchor” more broadly for Pepperidge.
Offering fresh bread creates “quite a wholesome halo across” the company’s entire product portfolio, she said.
“So from a health and wellness standpoint we are focusing on things that are better for you,” she said. “For instance, Goldfish Puffs that came out. It is a delicious healthy snack that is also gluten-free. And so we are emphasizing things like that.”
Because snacks have overtaken meals as episodes of eating, the focus on this sector remains critically important for the company, she said.