CHARLOTTE, NC. — The donut category, in various ways, keeps growing globally. The sweet treats are showing up in new countries, more retail outlets and increasingly at quick-service restaurants, including McDonald’s.
Krispy Kreme, Inc., Charlotte, NC, is leading the charge. The company has a goal of achieving 75,000 points of access and introducing Krispy Kreme in three to five countries a year, said Josh Charlesworth, then incoming chief executive officer, on Dec. 5, 2023, at the Morgan Stanley Global Consumer & Retail Conference in New York. Global points of access were nearing 14,000 after the fiscal year’s third quarter ended Oct. 1, 2023. Krispy Kreme has seen “very little cannibalization” when donuts are added to different channels like drug stores, quick-service restaurants and subway stations, Charlesworth said on Dec. 5.
McDonald’s began selling Krispy Kreme donuts at nine locations in October 2022. The partnership expanded to 160 McDonald’s in February 2023.
“We think we can support 6,000 incremental points of access with the existing capacity, but that would leave certain parts of the country completely not served yet and still some underserved, even if we didn’t have a McDonald’s expansion,” Charlesworth said.
Quick-service restaurants will remain a target.
“If it doesn’t work out in the discussions with McDonald’s, the QSR channel is, in our eyes, proven as a great growth driver,” said Charlesworth, who became CEO earlier this month. “Whether that’s in the US or around the world, we think that will be really interesting. I hope it’s McDonald’s.”
Internationally, Krispy Kreme plans to expand in France.
Randy’s Donuts, Inglewood, Calif., has international plans, too. The company in July 2023 announced that over the next two years it expects to expand in Hungary, India, Indonesia, Japan, Mexico, Morocco, Spain and the United Kingdom. At the time Randy’s operated 12 stores in California and 3 in Las Vegas as well as locations in the Philippines, Saudi Arabia and South Korea. Movies such as “Iron Man 2” and TV shows such as “Jimmy Kimmel Live!” have featured the donut shop.
The donut category at retail in 2023 experienced a situation familiar to many food categories with sales up but volume down. In US retail, sales of center-store, full-size donuts increased 4.3% to $1.03 billion in the 52-week period ended Dec. 3, 2023, according to Chicago-based market research firm Circana. Unit sales fell 6% to 321 million. In private label, sales slipped 0.2% to $35 million and unit sales plunged 27% to under 9 million.
Hostess Brands, Inc., Kansas City, had dollar sales of $292 million, up 4.9%, in the category, but unit sales dipped 2.8% to 112 million. The J.M. Smucker Co., Orrville, Ohio, completed the acquisition of Hostess Brands in November 2023 and set up Sweet Baked Snacks, which includes Hostess Donettes, as a new reporting segment.
“Consumers’ increasing reliance on snacking to fit lifestyle needs and convenience choices has expanded the occasions where the category can deliver, and the sweet baked goods category is one of the largest and fastest growing in the industry,” said Mark Smucker, president and chief executive officer of J.M. Smucker. “With the Hostess acquisition, we have a strong position in this highly attractive segment with popular brands that consumers love.”
Several new products entered the market. In January 2023, Bimbo Bakeries USA, a subsidiary of Grupo Bimbo SAB de CV, introduced baked donut cakes under the Entenmann’s brand available in two flavors: cinnamon and sugar and double chocolate chip. McKee Foods, Collegedale, Tenn., in August announced plans to launch Pumpkin Spice Mini Donuts as part of the company’s Little Debbie brand. The donuts are topped with a cinnamon-sugar coating to complement a soft center.