Snack Cake Sector Driven By Indulgence


Shopper demand for indulgent products isn’t slowing, as evidenced by the more than 75 percent household penetration rate for snack cakes, according to Ellen Copaken, vice-president of marketing for Hostess Brands, LLC.

While 45 percent of U.S. consumers claim nutritional value is the most important factor when it comes to food, the same percent report eating snack cakes during the past year, according to researcher Packaged Facts.

888109110109-520752_300Further, traditional versions of the items are preferred by 40 percent of shoppers, while a very small portion of consumers favor sugarfree and low- and non-fat variations.

“While clean label is definitely a motivator for some shoppers, research consistently finds that when it comes to indulgence, consumers seem to be more willing to splurge,” confirms Brent Bradshaw, vice-president of cake marketing for Flower Foods Inc.

And splurge they will, as sector sales are estimated to grow around 3 percent, compounded annually, through 2019, according to Packaged Facts. Total sales are expected to reach $23 billion in the coming three years.

Copaken reinforces this, explaining: “Overall we haven’t seen health trends make a dent in the segment. For the past 52 weeks, sales were up 5 percent, and Hostess grew more than that.”

“Carrying a strong rotation of fresh and seasonally appropriate items can drive interest and incremental sales.” – Brent Bradshaw, Flower Foods Inc.

However, she notes the company does take a lot of cues from what’s going on in the world of bakeries and donut shops.

“There is ton of innovation in this sector from foodservice,” Copaken admits. “The assumption is they are freshly baked items using ingredients consumers are familiar with.”

While there haven’t been too many examples of this on the market yet, it will play a more impactful role going forward, she tells Candy & Snack TODAY.

Finding Opportunity In Turbulent Markets

“The market is mature with growth challenged by health and diet concerns, changing snacking choices and an increased desire for fresh rather than packaged foods,” says David Sprinkle, Packaged Facts research director. However, he does admit there are growth opportunities for items leveraging grab-and-go packs and reformulations that reduce calorie counts without impacting flavor profiles or indulgence factors.  

HST_DING-DONGS_SS-9-14_HR_300“Hostess takes advantage of that trend by clearing up labels where it makes sense,” Copaken says, giving as an example the reformulated line of mini muffins, that use “real ingredients and have eight grams of whole grains per serving.”

Where the sector has the most potential to reach health-focused shoppers is with offerings geared for morning snacking occasions, she says, again pointing to the revamped mini muffin line.

Packaged Facts points to this as a major growth opportunity for c-stores, which currently hold a 13 percent dollar sale share in the sector, as consumers often visit the channel for morning coffee and mid-afternoon snacks.

If snack cakes appear to be bucking health and wellness trends, even if only for the time being, then who are the sector’s primary purchasers?

“Snack cakes fit every possible demographic and life stage profile,” Copaken tells Candy & Snack TODAY, noting the heaviest volume comes from families.

MSF Peanut Butter Cupcakes_300Confirming this, Bradshaw says 18- to -45-year-old males are the main consumer group buying snack cakes at c-stores, while female heads of households make up the bulk of buys from grocery outlets.

Breaking down sweet snack sales by channel, grocery leads all outlets with a 47 percent dollar sales share, followed by mass and c-stores.

“It’s estimated there are more than 150,000 c-stores in the U.S., and many of them are high-volume sellers of single-serve snack cakes,” Bradshaw says, adding vending also delivers strong results.

As can be expected, grocery and mass make up the lion’s share of multipack sales, however single-serve offerings do perform well in those channels when off-shelf displays are leveraged, particularly near checkout, Bradshaw maintains.

Noting Hostess has similar results in those retail outlets, Copaken says there is a big opportunity for the brand in club, dollar and drug. She explains that prior to the temporary shutdown of Hostess, the products had very little presence in those channels.

The Next Wave Of Indulgence

Also presenting a major opportunity to drive sales further is the new slew of products leveraging on-trend flavors from across categories, from salty and sweet to more traditional dessert profiles.

Mini Koffee Kake Cupcakes Package_300“The salted caramel trend has definitely penetrated the snack cake segment,” Bradshaw says. “The salty and sweet combination seems to be very appealing to consumers.”

Copaken notes more contemporary flavors such as Red Velvet and Birthday Cake are adding excitement to sets.

“There are more premium flavors than what we’ve seen in sweet baked goods before,” she says. “We’re very active when looking at what’s going on in the market and take a lot of inspiration not just from other baked goods, but other snack categories and foodservice as well.”

And then, of course, there is pumpkin spice. Although the flavor profile has been declining some for confections, it has remained a popular seasonal offering for sweet baked goods.

Yet, it isn’t the only season to see special editions roll out. For example, Flower Foods releases strawberry and blueberry varieties during spring and Key lime and orange cakes for summer months.

“More consumers are seekinTastykake Peanut Butter Kandy Kake_300g variety, including seasonally relevant flavors. Carrying a strong rotation of fresh and seasonally appropriate items can drive interest and incremental sales,” Bradshaw explains to Candy & Snack TODAY.

Noting these offerings play a “huge role” and have strong performance, Copaken says Hostess deploys a similar strategy of offering year-round rotations of seasonal products.

“We were very successful during Valentine’s Day with a line of dark chocolate raspberry cupcakes, as well as with our heart-shaped

Ding Dongs,” she says. “Seasonal plays an important role for Hostess and the whole segment, but it also plays an important role in bringing in new consumers to the sector by driving trial of a product they might not normally pick up.” CST