Low-fat and no-fat items have carved themselves a hefty piece of the commercial baked goods category in supermarkets.
The segment burst on the scene in 1990, attracting dramatic sales gains for several years by tapping into consumers' desires for hints of guilt-free snacking.
Retailers contacted by SN said the category is still growing, though not at the clip it was initially. Instead, the low-fat and no-fat items' strong, steady sales have earned them a permanent place in baked goods aisles or on endcaps.
Retailers also noted that a steady influx of new and improved products is keeping consumer interest
high. Scan data from Information Resources Inc., Chicago, shows dollar sales for pies and cakes were up 7% ($426.6 million) during calendar year 1993 from the previous year, and pastry and doughnut sales were up 4.3% ($1.2 billion). While IRI does not break out low-fat items, industry sources said the segment played an important role in that overall category growth.
A source at Entenmann's -- the company that practically gave birth to the subcategory some five years ago -- reported that nationally, fat-free products make up one-third of its items, and 30% of sales. In 1993, sales volume for the fat-free segment was up 30% over the year before.
Retailers also continue to be enthusiastic, though most reported that growth is settling down to steady levels, compared with earlier leaps.
"Sales of low-fat/no-fat bakery items are doing very well right now," said Mark Roeder, public affairs supervisor for Giant Food, Landover, Md. "We're still seeing a big effort on the part of the industry, and a lot of interest from consumers, on low-fat/no-fat."
Daryl Block, bakery general manager for Eagle Food Centers, Milan, Ill., said, "Sales are definitely strong in that subcategory because the products are still very popular with customers."
A source at Scarborough, Maine-based Hannaford Bros. said the health-oriented snack cakes and other items make up 15% of all commercial baked goods sales at the chain.
"It's a lively category," the Hannaford executive added. "It had its biggest growth period a couple of years ago, and now it's very steady."
"There's a lot of fat-free products out there now; there's a lot for the consumer to choose from," said Rod Boni, grocery merchandiser for Pay Less Supermarkets, Anderson, Ind. "The sales are still there, but it's not the big surge on fat-free products that we had initially," he added.
Boni said he thought the drastic sales gains generated by the products when they first were introduced occurred because they were new to the market and offered such a clear difference from others.
Category sales at Waukesha, Wis.-based Sentry Markets also range in the 30% area, according to buyer Jim Katrichis. "The items are still popular; the interest is certainly there," he said. A number of other retailers estimated the segment had about the same percentage of business in their stores. A few said it performed even better than that.
Richard Malousek, vice president and director of operations for B&R Stores, a seven-store operator based in Lincoln, Neb., said he devotes about 24 feet to its commercial baked goods, with 8 feet, or about 30% of space, going to low-and no-fat items. The subcategory also garners about a third of total sales.
At Food Circus Supermarkets, Middletown, N.J., the low-fat and no-fat segment has better turns than other baked goods.
"I guess the low-fat/no-fat items come to about 30% of our commercial baked goods [inventory] right now," said Lou Scaduto Jr., dairy and frozen food buyer for Food Circus. "But as far as the overall sales go, it may be close to a 50-50 situation. They tell me our company is above average with sales."
The retailers contacted by SN said the category has more than held its own as the novelty has worn off, primarily because the products have improved in taste. They added that it's proof that substantial segment of consumers are really serious when they say the want to eat healthier.
"It's the health factor; everybody wants the no-fat," said Food Circus' Scaduto. "Consumers continue to be very receptive to low-fat baked goods," said B&R's Malousek. "Sometimes they'll fool you by expressing interest in eating healthier items, and then buying the exact opposite. But this time they seem to be buying the products as well as talking about them."
"The feedback I'm getting at retail from customers is that they're buying these products to lower their overall fat intake," said Sentry's Katrichis, "but they still want the snacks and cakes."
In another facet of this still evolving consumer trend, retailers also noted that low-fat entries are making a larger dent in the snacking business, with items such as healthier potato and tortilla chips and cookies.
"Consumers are looking for that type of product," said John Caperton, director-buyer for direct store delivery at Minyard Food Stores, Coppell, Texas. "And even in the [in-store] bakery department, consumers have been requesting more of the fat-free items."
Glen Hatler, vice president and DSD coordinator for Houchens, Bowling Green, Ky., said the "amazing" staying power of the segment in baked goods is due at least in part to the fact that "over the last few years the number of low-fat items available has doubled."
Improving the taste is an ongoing effort, according to Giant Food's Roeder. "A lot of effort is still being put into fat substitutes with the pear and apple purees. There still is an effort being made on those fronts to make a real good fat substitute," he said.
Another aid to the low-fat and no-fat category is the new labeling laws, said Roeder. "For instance, some things that now say they are fat-free may not be able to claim that in the future. And maybe it's going to open some people's eyes and push industry efforts for the real low-fat/no-fat offerings."
Generally, retailers work the various low-fat and no-fat products right in with their fatty counterparts, rather than separating them on an endcap. However, bringing them off-shelf can bolster sales, they said.