KANSAS CITY — With an unprecedented surge in demand, bakers and other consumer packaged foods companies have sought to maximize production, in part by narrowing the number of items they produce. Numerous companies have described decisions to reduce the number of stock-keeping units over the last two months to diminish the number of time-consuming changeovers necessary on production lines.
While certainly a logical decision during the initial rush of consumer pantry loading in March, a downside to the reduced SKUs ought to be kept in mind. Grain-based foods executives discussing first-quarter financial results said the stay-at-home orders have helped bring new consumers to their products in sometimes remarkable numbers. Beyond the company’s gaudy sales growth in March (including 45% for frozen waffles from a year earlier), Kellogg Co. saw meaningful increases in household penetration, with a gain of three percentage points — millions of consumers — in March versus February for ready-to-eat cereal. Mondelez International, Inc.’s chairman and chief executive officer described “more experimentation going on” in households. He called 15% to 20% of Ritz and Oreo consumers in March “new to the brand.” Much higher numbers were scored for Fig Newtons and Nutter Butter sandwich cookies.
With a recession at hand, now is not the time for a “hunkering down mentality,” warned Steven A. Cahillane, chairman, president and CEO of Kellogg. Even in depressed economic times, consumers want to experiment, albeit in an affordable way. It’s an opportunity the baking industry should take care not to miss.