Crackers on fire
July 22, 2014
by Eric Schroeder
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|Growth spurred forward by flavor innovation, health-focused offerings.
Consumers can’t get enough crackers. In the 52 weeks ended June 15, dollar sales in the crackers category totaled $6,825,230,652, up nearly 3% from the same period a year ago, according to Information Resources, Inc., a Chicago-based market research firm. The gain came on top of 4.5% year-over-year growth in the 52 weeks ended June 16, 2013.
The upswing in the market actually dates back more than a couple years. According to Mintel Group Ltd., U.S. cracker sales grew 19% from 2008-13, and are expected to increase by 19% through 2018.
“Similar to cookies, the strong performance of crackers can be attributed to an expansion of health-focused offerings that allow for lower guilt snacking,” Mintel said. “Flavor innovation can also be seen in the category, which increases opportunity for eating products on their own as a convenient, no-fuss snack.”
Mintel said more than three quarters of U.S. households eat crackers, with the standard cracker segment significantly more popular than premium or health-focused varieties.
“High income earning households are significantly more likely than lower earners to purchase crackers,” Mintel said. “This is especially apparent in the premium and health-focused segments. While price isn’t keeping low-income earners completely out of the market, it appears to limit participation and impact product choice. Expanding affordable cracker options, including private label varieties and smaller packs will be important to engaging the greatest percentage of consumers.”
In the 52 weeks ended June 15, I.R.I. said dollar sales of private label crackers totaled $237,594,825, up 3.4% from the same period a year ago.
Companies call on innovation
Innovation helped drive a nearly 5% dollar sales gain and 7% unit sales increase at Kellogg Co. in the 52 weeks ended June 15, according to I.R.I.
“The cracker business posted consumption growth of 2.7% in Q1, and we gained over a point of share,” said John Bryant, chief executive officer of Battle Creek, Mich.-based Kellogg, during a May 1 conference call with analysts. “Innovation drove the Cheez-It brand as the white cheddar variety and Cheez-It Zingz and Grooves all contributed. In addition, original Cheez-It posted mid-single digit gains in consumption in the quarter. The Town House brand also continued to do well as both the core original variety and new Town House Pita posted growth in consumption.”
Mr. Bryant said Kellogg’s intent going forward is to “play our game,” which he described as innovation driven, in-store execution driven, while investing back in the sales organization.
“We have gained share in crackers for just about every year for the last 10 or 12 years, except for the last one or two years,” he said. “And to see ourselves back in cracker share growth, to see the Keebler business growing low single digits, the Pringles business driving double-digit growth on top of double digit-growth. There’s a lot of reasons here to see the business start to turn.”
Kellogg trails only Mondelēz International, Inc. in cracker sales. Mondelēz, with dollar sales of $1,612,694,481, experienced a 2% increase in dollar sales and 3.4% gain in unit sales during the 52 weeks ended June 15. The company’s Nabisco Ritz, Nabisco Wheat Thins and Nabisco Triscuit brands decreased 11%, 3% and 4%, respectively, during the period, but Nabisco Ritz Fresh Stacks, Nabisco Ritz Toasted Chips and Nabisco Honey Maid were among the company’s stronger performers during the period.
Mondelēz, through the Nabisco brand, recently launched Ritz Bacon flavored crackers, which combine the classic taste of Ritz with black pepper seasoning and bacon flavor. The launch comes just a few months after Mondelēz packed onion, poppy seeds, garlic and sea salt into a cracker with the new Everything variety of its Nabisco Ritz Fresh Stacks Crackers.
Reformulations at Pepperidge
Over at Camden, N.J.-based Campbell Soup Co., parent of Pepperidge Farm, Inc., Goldfish crackers helped the company achieve “modest” sales growth of 2% during the third quarter of fiscal 2013, said Denise Morrison, president and c.e.o. of Campbell Soup Co.
“Goldfish Crackers grew sales on the back of increased promotions in a very competitive environment, and gained momentum as the quarter progressed,” Ms. Morrison said during a May 19 conference call with analysts. “However, we saw a significant slowdown in the overall cracker category and a decline in our adult savory crackers, which impacted our overall snacks results. We have reformulated and relaunched our adult savory crackers as Pepperidge Farm cracker chips and expect better performance going forward.”
Ms. Morrison said Goldfish Puffs “have done really well and are meeting our expectations.”
“Not so well were the Pepperidge Farm cracker chips and Jingos!, which is one of the things that we’re cycling in that business this year,” she explained. “But we have reformulated the cracker chips and have better expectations for those going forward.”