There’s simply nothing like a cake celebration. Sure, there are the candy holidays. And pies and other treats are always popular. But what do people turn to for birthdays, graduations and weddings? Cake.
Like many indulgent treats, cake sales have been doing well over the past 18 months whether they are snack cakes sold in the center of the store, fresh cakes from an in-store bakery or desserts bought in the freezer section. Year-over-year perimeter cake sales were up 13% in July and up 18% from July 2019, said Eric Richard, industry relations coordinator for International Dairy Deli Bakery Association (IDDBA).
“I think the picture it has really painted is that people are getting together again and celebrating,” he said. “The holiday season plays a big role in that. We saw on Memorial Day and July Fourth sales were up in all our departments that we monitor and especially the bakery departments. We expect that to continue for the fall holidays and winter holidays as well.”
Graduation celebrations that were largely absent in 2020 also played a role this year as more people could get together for those events, Mr. Richard said.
“The fact that bakery is driven so heavily by holidays, celebrations and get-togethers, that’s reflected in the numbers that we’re now seeing,” he added, “especially within the cake category.”
Whether they are celebrating at a party, grabbing a snack as they head out the door or craving a late-night nosh, consumers have sought out a variety of indulgent treats, including pre-made snack cakes.
“There’s this huge uptick that we started to see on snack cakes in 2020, and it has continued,” said Sally Lyons Wyatt, IRI executive vice president and practice leader, client insights. “And it is that versatility of snack cakes across the day but also across occasions. They are a less expensive option versus the bakery.”
Hostess Brands Inc., Lenexa, Kan., raised its outlook for the fiscal year, in part based on increased consumer mobility and the fact that people are continuing to snack more at home. In August the company said its adjusted net revenue growth is expected to be 7.5% to 9%, up from a previously announced level of 3% to 4.5%.
“What we’re seeing is increased mobility, improving our on-the-go and immediate consumption sales,” Andrew P. Callahan, president and chief executive officer of Hostess, said in a conference call with analysts. “Even with the return of that mobility, we’re still seeing an elevated level of consumers in the home. When consumers are in their home more, they’re snacking more.”
And Daniel Servitje, chairman and CEO of Grupo Bimbo SAB de CV, Mexico City, which reported record profits in the second quarter, cited sweet baked goods as one of the drivers of sales in North America.
In its “Prepared Cakes, Pies and Pastries” 2021 Executive Summary report released in August, Mintel reported an expectation that consumers would begin renewing their health goals. The research firm advised companies to identify those times and places that provide the most opportunity for consumers to permissibly indulge.
Ms. Lyons Wyatt said late nights are big times for snacking, not only because people are not going out to dinner and the movie theaters these days, but for family reasons too.
“On my team I’ve got young individuals with kids, and it’s hard for them when the kids are home to get the work done in the traditional workday,” she said. “So they’re working more late at night. And what do we do? We munch.”
She also urged companies to get creative when marketing their products, especially during down times and between holidays. For instance, she said the candy industry decided to make June the confections month and were able to drive growth when they wouldn’t have traditionally.
“Seasonal is great, but you are competing with everyone,” Ms. Lyons Wyatt explained. “There are ways to look at other occasions throughout the year. There’s Aunt Day, Sibling Day, Grandmother Day. There’s a day for celebrations across the year. You typically get a big bump on holidays. So having limited-time offers (LTOs) during other times of the year helps you drive incrementality.”
This article is an excerpt from the October 2021 issue of Baking & Snack. To read the entire feature on Cake & Snack Cakes, click here.