The low-carb craze is a distant memory, and bakery departments had a great year in 2006 as shoppers shed their aversion to sweet treats and continued buying up fresh artisan breads. But the cravings may be a little different this time around. Like the party-goer who always asks for “just a little slice” of cake, industry observers say that consumers want their snacks and desserts to be more indulgent than ever, but expect retailers to help them control their portion sizes.
“People are looking to indulge when they can, but one of the differences now is that smaller portions are becoming a bigger deal to people,” said Alan Hiebert, education information specialist for the Madison, Wis.-based International Dairy-Deli-Bakery Association, noting that products like 100-calorie snack packs have helped educate consumers about healthier portion sizes.
According to data from Chicago-based Information Resources Inc., dollar sales of fresh-baked cookies were up 3.1% in the supermarket channel in 2006, cupcakes and brownies were up 3.5%, cakes were up almost 9%, muffins were up 11% and pies were up 4%. However, while cakes and muffins also showed unit sales gains of 6.4% and 5.5%, respectively, unit sales were flat or slightly down for cookies, cupcakes and brownies.
This may be because as shoppers return to the bakery counter for desserts and small treats, they're willing to pay a premium for more decadent items as well.
“People are trading down in size and trading up in quality,” said Carl Richardson, a consultant and former bakery director based in Rochester, Mich. Noting the recent growth and success of other premium dessert options, such as Cold Stone Creamery ice cream shops, Richardson added that “desserts are still in, but people are eating less of them. When [consumers] are looking for a dessert, they're looking for quality, as well as something unique and different.”
Gabrielle Wesley, in-store bakery marketing manager, General Mills Bakeries & Foodservice, said the trend has been evident in the company's consumer research as well. “The consumer trend that is driving higher dollar sales is the idea of ‘mini-indulgence,’” she said. “Consumers are now more willing to indulge in desserts, but want the calories to be worth the sacrifice. This has sparked the growth of smaller, decadent desserts priced at a premium. These mini-desserts allow people to enjoy all of the flavor and experience of the ‘real thing’ in a small bite, allowing them to enjoy the sweets they crave, but in moderation.”
At Lamb's Thriftway, an upscale independent based in Wilsonville, Ore., shoppers' renewed willingness to indulge has boosted sales of muffins and cakes, as well as gourmet candy. Growth of these categories hasn't surprised Tanney Staffenson, a partner at Lamb's.
“There aren't many customers that do healthy and all-natural wall-to-wall,” he said. “You may see someone with a shopping cart, and all of their produce and dairy products are organic, and they've got all-natural beef, but they've also got a cheesecake from the bakery or a carton of Häagen-Dazs ice cream. Those items don't really fit in with that health and wellness trend, but it's what they want. People think, ‘I'm eating healthier than I was before, so it's OK if I have this.’”
The perceived demand for small-dose decadence could be behind a recent wave of cupcake specialty shops, which suddenly began popping up in cities throughout the country a little more than a year ago. Cupcake Royale and Trophy Cupcakes have opened in Seattle; Kara's Cupcakes in San Francisco; the Vanilla Bake Shop in Santa Monica, Calif.; Mini's in Salt Lake City; Bakies Bake Shop, with locations in East Brewton and Pensacola, Fla.; Coco's Cupcake Café and Dozen Cupcakes in Pittsburgh; and Charm City Cupcakes and the Baltimore Cupcake Co. in Baltimore.
One specialty cupcake shop, Beverly Hills, Calif.-based Sprinkles, plans to open new locations in Dallas-Fort Worth and Scottsdale, Ariz., this year. In Scottsdale, the newcomer will compete with Lulu's Cupcakes, open since 2006.
These upstarts have yet to prove their staying power. And it is somewhat telling that, in interviews with local press, many of the entrepreneurs launching these concepts have cited Magnolia Bakery — a tiny New York City spot that became an overnight institution through cameos on “Sex in the City” and, more recently, “Saturday Night Live” — as part of their business inspiration.
But as a low-cost, high-margin item ideally positioned between these portion-watching and indulgence trends, the potential for profit, as well as low-risk experimentation, is certainly there for supermarket bakeries.
At Mini's in Salt Lake City, for example, cupcake specialties range from margarita lime and pistachio nut flavors to dark chocolate with organic peanut butter. At Lulu's in Scottsdale, the tag line is “100% Natural, 100% Naughty,” emphasizing that the indulgent cupcakes — at $36 per dozen — are free of any artificial flavorings or colorings.
Wesley also noted that her team at General Mills is seeing new flavors become more mainstream in baked goods, such as pomegranate, cranberry, green tea, dark chocolate, coffee and espresso, and even chipotle-lime and cilantro.
“There has been an upsurge in cupcake bakeries, and I'm not sure why that's been,” said Richardson. “I think part of it, at least, is that you don't have to go to a lot of trouble to produce them, and it's easy to put them out, merchandise them and talk about them.”