Ready for a revival

by Eric Schroeder
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Thirty years ago, the idea of a cracker most often conjured images of a saltine. Today, mention crackers and the image that forms may just as likely bring to mind a smiling goldfish or crisp chip marketed as a cracker. After all, saltine sales only account for about 10% of the nearly $4 billion cracker category, according to Information Resources, Inc., Chicago.

The blurring of categories that has occurred has presented many opportunities for cracker makers to differentiate, but in the process has led to products more indulgent in nature. As the economy has weakened, consumers have exercised greater discretion in most grain-based foods categories, and crackers have been no exception. To say the past year — which included a recall linked to peanut butter — has been a challenging one for the cracker category would be an understatement.

In the 52 weeks ended June 14, total cracker dollar sales were $3,992,308,000, up nearly 4% from the same period a year earlier, according to I.R.I. Unit sales, meanwhile, fell 4% to 1,559,382,000.

Like many grain-based foods categories, the private label sector has fared well. Private label cracker dollar sales soared 19% in the 52 weeks ended June 14, while unit sales jumped 9%. The trend toward private label products is not expected to change anytime soon, according to "Store Brands and the Recession," a consumer research report issued earlier this month by the Private Label Manufacturers Association.

The survey found more than 30% of consumers are buying more store brands than they did a year ago, with over 77% agreeing that the store brands they buy "are as good as, if not better than, national brand products."

The growth of private label has not been particularly good news for the leading branded company. Kraft Foods Inc., Northfield, Ill., suffered a 0.77% drop in dollar sales and 8% decline in unit sales during the period ended June 14. Unit sales of the company’s top three brands — Nabisco Ritz, Nabisco Wheat Thins and Nabisco Triscuit — fell 3%, 17% and 8%, respectively.

Returns have been a bit better at the No. 2 player, The Keebler Co., Elmhurst, Ill. The company, which is a division of The Kellogg Co., Battle Creek, Mich., managed to generate 7% year-over-year dollar sales growth despite a narrow 0.46% drop in unit sales during the period, according to I.R.I. The company experienced strong growth in its Sunshine Cheez-It brand during the period. Part of that growth may be attributed to keeping the brand fresh, such as the January launch of Cheez-It Scrabble Junior. The crackers consist of regular Cheez-Its with different letters stamped into them.

"We tested the concept of Scrabble Jr. licensed property in the form of our Cheez-It crackers with moms," said Michael Morrissey, Kellogg spokesperson. "They responded very well to it. They liked that it’s a fun cheese snack that their kids could enjoy, and that it encourages parent-child interaction. The product has done well and is now available nationally."

Parent company Kellogg Co., although a relatively small player in the category, has gradually extended its reach in the cracker market as well, introducing Special K Crackers, the brand’s first savory snack, in December 2008. Available in two flavors — Italian Tomato & Herb and Multi-Grain — the crackers contain 90 calories and 8 grams of whole grains per 17 crackers.

The third-largest cracker company, Pepperidge Farm, Inc., Norwalk, Conn., posted 7% dollar sales growth on a 0.12% uptick in unit sales. The company continued to benefit from the strength of its staple Goldfish brand, which turned in $227,847,000 in sales during the 52 weeks ended June 14. In late March, Pepperidge Farm launched Goldfish Grahams. The product is available in three flavors — honey, chocolate and cinnamon — and has generated nearly $6.8 million in sales since its debut, according to I.R.I.

A challenge for all the top cracker companies was the early January recall of peanut butter produced by Lynchburg, Va.-based Peanut Corporation of America due to a Salmonella outbreak. Dollar sales for the filled-cracker category were down 7% in the 52 weeks ended June 14 on a 15% decline in unit sales, according to I.R.I. For both Kraft Foods and Charlotte, N.C.-based Lance, Inc., the filled-cracker category generates approximately $100 million in sales, according to I.R.I. data. While neither companies cracker products were linked to the recall, sales took a hit during the first few months of 2009 and are only now beginning to recover. Lance, with unit sales down 2% year-over-year, has rebounded quicker than most.

"We have seen a very meaningful rebound in sales since February and we currently anticipate pretty well normal volume levels for the remainder of the year," David Singer, president and chief executive officer of Lance, said in late April.

This article can also be found in the digital edition of Milling and Baking News, July 28, 2009, starting on Page 25. Click
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