KANSAS CITY — Since Mondelez International, Inc. acquired Tate’s Bake Shop for $528 million in 2018, each company has benefited from the other’s dominant traits. Tate’s Bake Shop, a high-end retail cookie company, has captured a niche market of cookie consumers who care about quality and a homemade feeling, but seek the convenience of retail availability. Mondelez, one of the world’s largest baked foods companies, has access to invaluable data sets and retail opportunities. Put them together and you get the future of Tate’s: a nationally recognized brand that maintains its original small-town, premium feel.
Esi Seng, chief executive officer of Tate’s, began her tenure with the company just one year ago. In an interview with Milling & Baking News, Ms. Seng shared her experience as CEO and how the company’s relationship with Mondelez has proven to be symbiotic.
“Our penetration as a brand is less than 10%, so the biggest opportunity that we see really is getting more people to know us,” Ms. Seng explained. She continued, saying that “distribution is a big part of the growth plan, but also getting people to understand what Tate’s is.”
Founder Kathleen King initially launched the concept for Tate’s as a young girl, selling chocolate chip cookies out of her parents’ Southampton, NY, farmstead. What started out as a humble roadside cookie stand has in the past two decades turned into an East Coast cookie phenomenon. Most consumers from Maine to Maryland can recognize the iconic green and white Tate’s packaging, but Ms. Seng believes national recognition is within close reach.
Ms. Seng said the acquisition (which occurred four years before she joined the company) has been effective for Tate’s growth and expansion while still allowing the brand to evolve organically.
“(They) give us the best of the best while keeping us the best of the small,” she said. “I think they do a really great job of knowing that the reason they wanted to bring Tate’s into their portfolio was not to make it another Chips Ahoy! or Oreo. We have something special, and so they do a very good job of letting us be very independent.”
Since the 2018 acquisition of Tate’s, Mondelez has been working to pivot and focus the company more strongly on the chocolate and biscuits market, which earned a combined 79% of the company’s sales in 2021, up from 59% a decade ago. Tate’s annual sales have more than doubled since the acquisition, climbing to $70 million per year.
“Tate’s was our first acquisition under our (organic) strategy and is a great example of making a formidable franchise even better,” said Luca Zaramella, executive vice president and chief financial officer of Mondelez International, Inc. during a Consumer Analyst Group of New York (CAGNY) virtual conference Feb. 21. “Tate’s provided an entry into the premium cookie segment with authentic craft cookies that have strong consumer loyalty. In the four years since the close, Tate’s has more than doubled revenues. We have also doubled distribution, extended retail coverage by more than 40% and increased premium cookie share by 4 points by leveraging the strength of our DSD system.”
In 2022, Tate’s Bake Shop sales jumped 31% to $170 million in the 52 weeks ended Aug. 7, according to IRI (now known as Circana following IRI’s merger with The NPD Group last fast) , a Chicago-based market research company. This growth matched an overall industry trend noted by IRI, which at the same date saw the cookie category top $10 billion in annual sales.
“(Mondelez has) tremendous market share, tremendous power and tremendous ability to work with our customer groups, meaning they know how to sell to the Walmarts of the world, to the Targets of the world,” Ms. Seng said. “So they’ve helped us gain distribution in ways that we couldn’t have. We take care of the DNA and they help make sure that the DNA is distributed… We could not see the growth that we’ve seen in the last couple of years without the power of the distribution network that Mondelez has.”
In recent years, Tate’s has innovated with both form and flavor. Cookies targeted toward specific dietary needs, including a line of vegan cookies and a lemon cookie addition to the company’s gluten-free line, have broadened Tate’s reach into different snacking lifestyles. Other limited-edition innovations, such as a pumpkin spice cookie and salted caramel chocolate chip cookie, have helped insert the brand into short-term flavor trends. Perhaps most significantly, Tate’s launch of cookie bark at the beginning of this year suggests a willingness to experiment with products outside of a strictly cookie form.
“That ability to take the core and the essence of what Tate’s is and apply it to different lifestyles and different dietary needs is also a great way for us to be able to make sure that we’re reaching out and talking and making sure that we’re servicing different people in the population,” Ms. Seng said.
Before joining Tate’s Bake Shop in 2022, Ms. Seng had not previously worked in the baking industry, but her experience in the consumer packaged goods world was extensive. Her most recent appointment was as general manager/CEO for Tom’s of Maine, which she joined after an over 12-year stint at Colgate-Palmolive in various leadership roles.
Ms. Seng described her pivot to Tate’s as being partly driven to work for a company that to her felt “real” in its messaging, history and product. In fact, she emphasized that at its core, Tate’s is about three things: a homemade feeling, being “extra ordinary” and bringing “the power of real” to the cookie shelf. Her adherence to authenticity is not just a marketing play, but at the core of Ms. Seng’s personal belief system.
“At the top of the pyramid for me, the way I describe myself is ‘immigrant,’” she said. “Who I was at eight years old, and that ability to see my parents come to the United States with a clear view that there was a future for them here that they couldn’t get anywhere else, is what grounds me.”
When Ms. Seng and her parents — who are of Chinese and Nicaraguan descent — immigrated to the United States, Ms. Seng’s role in her family as the best English-speaker became essential for their ability to navigate life in a new country. As a young girl, she saw the world as boundless, but as she grew up, Ms. Seng increasingly noticed that people around her seemed set on labeling her, which she often saw as limiting.
“Everywhere people were telling me who I was and who I was not, and then I said, ‘You know what, everybody? Time out... You can’t tell me who I am or not. I am an immigrant, that’s who I am,’” she explained. “It’s exhausting to be anybody else but yourself, and I feel like I say that to everybody … being your authentic self, I think, is probably the biggest gift you can give to yourself and to your team.”
As CEO of Tate’s, Ms. Seng sees authenticity as one of Tate’s biggest assets. Brand expansion and awareness are at the top of her list for the company’s 2023 goals, and she emphasized that Mondelez is enabling that without diminishing Tate’s authenticity as a premium cookie brand.“This cookie is made with real, simple, home-found ingredients, it’s made with real people and it’s made with real passion,” Ms. Seng said. “It’s that authenticity that I really believe in is really at the heart of Tate’s, and I think that’s why the collaboration (with Mondelez) works so well.”