Infographic: Americans seek 'snackable' indulgences, says Mintel
July 2, 2014
by Eric Schroeder
CHICAGO — It appears you can have your cake and eat it, too. New research from Mintel shows that total retail sales of prepared cakes and pies grew 24% from 2009-14 to reach $11.2 billion. But that’s only the tip of the iceberg, as the market research firm projects the category to grow an additional 18% from 2014-19, reaching $13.2 billion in sales.
Mintel said growth will depend on new product development that is focused on better-for-you attributes, flavor innovation and controlled portion size.
According to Mintel, 41% of consumers claim to eat prepared cakes and pies as a snack between meals, a higher percentage than many other occasions, including for a special occasion dessert (18%).
The research firm pointed to in-store baked cakes and pies as a driving force behind category growth, with sales representing more than half of the overall category (52%), followed by shelf-stable cupcakes and brownies at 23%. Nearly half of consumers who eat prepared cakes and pies (46%) view them as an indulgence, and 42% said they are open to trying new flavors of these items, Mintel said. About 61% agree gourmet or premium products are worth paying more for, including 72% of those aged 25-34.
“The snacking mindset has permeated the dessert segment, as people are mindful of what they eat, but at the same time, want to indulge and treat themselves as well,” said Amanda Topper, a food analyst at Mintel. “Much as we’ve seen with the high-end cupcake and donut trends, consumers are willing to pay a little bit extra for a small indulgence made with quality ingredients. Since almost two-thirds value taste over nutrition and more than two-thirds would like to see more flavor variety, this presents an opportunity to offer more unique, high-quality offerings, especially to younger consumers who are more brand loyal and willing to pay the price premium.”
Private brands dominate
Delving deeper into category specifics, Mintel found that private label represents the largest category market share at 38%, a larger share than the market share of all five brand leaders combined. The brand leader, McKee Foods Corp., manufacturer of Little Debbie shelf stable cakes and pies, had sales of $654.2 million in the 52 weeks ended Feb. 23, up nearly 16% from the same period a year earlier, according to Information Resources, Inc. Sales for Flowers Foods L.L.C. also advanced, climbing 21% to $201.6 million during the period. Sales for Hostess Brands, though, fell 41% to $191.8 million.
Supermarkets, men a source for sales
The majority of sales within the prepared cakes and pies category are in supermarkets, which make up 65.8% of the market, Mintel said.
Men are significantly more likely than women to eat prepared cakes and pies as part of, or in place of, a meal. Mintel said about 24% of men eat prepared cakes and pies as part of breakfast, and 25% eat them as part of lunch, while 13% use them as a meal replacement altogether. Meanwhile, women are significantly more likely than men to eat prepared cakes and pies as a dessert (75%, compared to 66% of men).
“Over two-third of consumers have eaten some type of R.-T.-E. cake or pie within the past six months, and the majority are open to experimenting with flavors,” Ms. Topper said. “To that end, they can stay interested with hybrid flavors, such as sweet and salty options, or seasonal and limited-edition varieties. Natural ingredients, without additives or preservatives, are also important to consumers who buy prepared cakes and pies, so manufacturers should focus on promoting the quality of their ingredients, and promote them via easy-to-read ingredient lists. At the end of the day, people are willing to indulge, but they just want to make sure the calories are worth it.”
Demand dips for frozen, refrigerated
While interest in prepared cakes and pies is on the upswing, demand for frozen and refrigerated cakes and pies has slipped, according to Mintel. During the 2009-14 period sales of frozen and refrigerated cakes fell 2.4% to $945 million.
Mintel said the segment has struggled to grow in recent years after two years of minimal growth in 2010 and 2011.
“To help improve segment sales, brands can focus on new product development related to health, quality and taste,” Mintel said. “Frozen and refrigerated products can also be positioned as more gourmet alternatives to shelf stable offerings with the addition of ingredients such as whole fruit pieces or natural whipped cream.”
Mintel does expect a rebound in the category, though, as sales in the frozen and refrigerated cakes and pies segment are expected to increase 7% from 2014 to 2019.