BAGELS ARE ON A ROLL

JONNA CRISPENS

Bagel sales are booming.

That's the word from supermarket bakery executives contacted by SN, who say the category is gaining momentum as it moves into mainstream America.

While some retailers say they've supported the category's growth through product promotions, most agreed it's simply moving on its own -- and into its own.

"Bagels are becoming as much of a mainstay item as chocolate chip cookies," said Abby Fox, bakery manager at West Point Market, Akron, Ohio.

"Everybody expects to see fresh bagels in the supermarket bakeries in our area. They're no longer a specialty item. They're now a staple."

O'Malia Food Markets, Carmel, Ind., has seen category sales increase by more than 40,000 bagels a month after introducing a lighter, fluffier line about 18 months ago, according to Ron Williams, director of bakery operations.

"We discovered that there are two types of bagel customers -- those that like the traditional, heavier type of bagel and those that like a light, fluffier bagel," he said. "While the sales of the traditional bagel have held strong, the new product has grown tremendously from the start and is still growing."

Bagels are "selling themselves" at Pay Less Supermarkets, Anderson, Ind., according to Tim Kean, the company's deli, seafood, bakery merchandiser.

"While sales have always been strong in our stores located in more ethnic areas, we've noticed that they're now selling well in other, more rural, blue-collar areas," he said.

The growth has been so strong that the retailer is re-examining its bagel operation to make sure it's positioned to best handle future category growth, he said.

At Save Mart Supermarkets, Modesto, Calif., sales are up 21% over the past year, according to Rick Piccinini, the chain's bakery and deli director.

"I think people are becoming more aware of bagels and making them more a part of their diets," he said. "We've been running price promotions on the category about once a month, and every time we do, the category grows."

The growing popularity of bagels among mainstream America will probably cause Foodarama Supermarkets, Freehold, N.J., to introduce a lighter, fluffier bagel line, according to Don Meyer, commissary manager.

"We've been real purists in the sense that we've stuck with the traditional, boiled bagel that's fairly dense and chewy," he said. "Mainstream America tends to favor the lighter bagels, and since we try to satisfy customer tastes and demands, we'll probably introduce an oven-baked line in time."

Here's what retailers had to say:

We've noticed a definite increase in bagel sales in the past year -- and especially in the past six months.

While sales have always been strong in our stores located in more ethnic areas, we've noticed that they're now selling well in other, more rural, blue-collar areas.

In fact, sales have increased to the point where we're taking a closer look at our operation to make sure we're positioned to handle the growth in the most efficient and profitable manner.

Although we've been making our bagels at store level from par-baked dough, we're now considering other bagel programs and the feasibility of making them at our central plant.

We carry 10 varieties of 3-ounce bagels, which we sell in five-count plastic bags for $1.19 and merchandise on self-service displays.

The category growth is very exciting because the bagels are selling themselves. Although we promote them periodically, it's nothing out of the ordinary and it wouldn't account for the growth we're seeing.

We've been seeing a renewed interest in customer concern over fat and sugar content on our customer comment cards in the past six months, and I wonder if this interest isn't fueling sales.

Five years ago, bagels were something you carried to round out your category. Today, they're moving up in the category to a more commanding position.

Ron Williams

bakery operations director O'Malia Food Markets Carmel, Ind.

We made an important discovery about 18 months ago, and as a result we're selling more than 40,000 additional bagels a month.

We discovered that there are two types of bagel customers -- those that like the traditional, heavier type of bagel and those that like a light, fluffier bagel.

Although we had always offered the traditional type of bagel, we didn't know the type of sales we were missing until we introduced a lighter, fluffier bagel about 18 months ago.

While the sales of the traditional bagel have held strong, the new product has grown tremendously from the start and is still growing.

Because it comes in a frozen dough format, it also generates a much higher gross profit margin than our traditional bagel, which comes in a brown-and-serve format.

It generates approximately a 70% gross profit margin -- compared to about 50% for the traditional bagels.

We supported the product introduction with a number of promotions during its first two months. For example, we offered 50-cent-off coupons, raffled off manufacturer-supplied prizes like aprons, hot mitts and cutting boards, and offered a free bag with every purchase.

We're offering the product in 13 varieties, which we're selling in four-count packages for $1.69.

We're continuing to sell the traditional bagels in bulk bins for 25 cents to 29 cents apiece, depending on the store location.

We're not promoting the nutritional aspect of bagels at this point, because there's just too many gray areas in the new labeling laws -- and product claims will only attract FDA scrutiny.

Bagels are definitely moving into the mainstream, and it's important for retailers to identify their customers and the type of bagels they want.

Abby Fox

bakery manager West Point Market Akron, Ohio

Bagel sales have remained strong over the past year, and if anything they've increased slightly.

The category is definitely moving into the mainstream. There are more and more bagel shops opening in our area, which is helping increase customer awareness and product demand.

I've also noticed that customers are a little more interested in the fat content and nutritional value of bagels.

We haven't promoted bagels from a nutritional standpoint, and maybe that's been a downfall on our part. I think there's definitely a potential for increased sales by doing so.

Bagels are becoming as much of a mainstay item as chocolate chip cookies. Everybody expects to see fresh bagels in the supermarket bakeries in our area. They're no longer a specialty item. They're now a staple.

Although they don't account for a huge part of our bakery sales, they are a necessary and profitable category. They have the same gross profit margin as most of our other bread products.

We carry nine varieties of bagels, which are delivered every morning by a local bagel shop.

We price the bagels at 30 cents apiece and sell them in two- and three-count bags on a self-service display.

A retailer that's introducing a bagel program should sample the varieties and cross-merchandise them with other store items to generate customer interest.

It's also important for customers to see the products as an established category that's always available.

Don Meyer

manager of commissary Foodarama Supermarkets Freehold, N.J.

Bagels are definitely moving more and more into the mainstream. We're seeing a lot of bagel shops opening up all around our area.

Fortunately, they're not impacting our sales. The category plays an important role in our in-store bakeries, accounting for 6% to 10% of our in-store sales. And those figures are kind of misleading, because we offer so many products.

We carry 12 bagel varieties, which we make at our central commissary. So far, we've been real purists in the sense that we've stuck with the traditional, boiled bagel that's fairly dense and chewy.

We realize, however, that although it appeals to most of the longtime bagel eaters, it's not as popular among the growing number of people that are starting to discover bagels.

Mainstream America tends to favor the lighter bagels, and since we try to satisfy customer tastes and demands, we'll probably introduce an oven-baked line in time.

The lighter bagels are also better suited for use as sandwich bread -- which is how a lot of people use them.

We promote the category about once a quarter. So far, we haven't tied nutrition into any of the promotions, and I don't think we will until we see how customers are reacting to the nutritional labeling laws.

Beth Pittman

VP, retail bakery operations Brookshire Grocery Co. Tyler, Texas

Bagels are definitely becoming a part of the shopping experience in the Southern states. Our sales have been increasing 8% to 10% a year for the past several years, and they're still moving upward.

I think a lot of people are simply becoming aware of the product.

We carry a chewier, denser type of a bagel, which is what our customers seem to prefer. We switched to a lighter, more breadier bagel three or four years ago, but the customer outcry was so great that we switched back within months.

We carry five varieties of bagels, which we purchase in a thaw-and-bake format and package in 12-count bags bearing our store label.

We sell the bulk of our bagels in a frozen state out of a freezer we keep in our in-store bakery department. They fill up about 4 to 6 feet of space.

In addition, we periodically bake them in-store and promote them at a discounted price off of display tables in the same packaging.

All in all we offer a discounted price on either the frozen or the ready-to-eat bagels at least once every couple of months.

We occasionally mention the low-fat content of bagels in our newspaper advertisements and in-store signage. I don't think it's built sales in the past, but I think the new labeling regulations will increase customer awareness and impact sales.

The bagel category has really grown in the past year. March sales alone are 21% higher than they were a year ago -- and that's typical of the year as a whole.

I think people are becoming more aware of bagels and making them a more common part of their diets.

We've also been running price promotions on the category about once a month -- and each time we do so, the category grows.

We purchase our bagels ready-to-sell from a local manufacturer, then repackage them in six-count bags, which we merchandise on self-service displays.

We haven't been promoting their nutritional value, but it's something we'll probably do in the future.