BETTER FIGURES FROM MUFFINS

ROSEANNE HARPER

Muffin sales are on the rise again, thanks to improved no-fat formulations, new flavors and aggressive marketing.

It represents a comeback from hard times, in-store bakery executives told SN. The category's traditionally healthy image took a beating after mandatory nutrition labeling called attention to the fat content of many muffins.

Now, sales of many muffins that had taken a significant dip due to Nutrition Labeling and Education Act requirements are springing back. The supermarket bakery sources interviewed by SN also said they see a sweet sales future for the category.

In-store bakeries have been whipping up volume with savvy marketing strategies and category makeovers with the addition of top-quality no-fat muffins in interesting flavors.

Retailers said sustained sales successes will be dependent on something that's often left out of the muffin recipe -- a good measure of marketing excitement.

Some retailers are adding that crucial ingredient by introducing exotic flavors, adding no-fat muffins, upping the varieties offered daily, increasing self-service displays and cross-merchandising the products in other departments.

What's the pay-off? For some operators, it is double-digit sales increases in the last year. "There's no doubt that muffins are making a comeback," said an official at a large Northeast chain who asked not to be named. "It's a great category because there are so many varieties in flavors and sizes, and there are top-quality, no-fat muffins available now. Each of those represents a separate market."

The retailer said his company has seen a 12% hike in total muffin sales in the last year. He attributes most of the boost to good in-store signs, a good-tasting no-fat muffin and to new bake-in packaging that "looks great."

Variety is the spice that has boosted sales at King Kullen Grocery Co., Westbury, N.Y., according to Anthony Mondello, director of bakery at the 45-unit chain. "There are so many out-of-this-world flavors available these days, like cappuccino and blueberry crumb. You can keep customers interested with them," Mondello said. The chain offers at least 10 varieties daily.

A large, 5-ounce, no-fat yogurt muffin is the newest type on the scene at King Kullen. It's the entire low-fat and no-fat subcategories that will keep muffin sales climbing, Mondello said. At King Kullen, some muffins are made in-store and some low-fat and no-fat varieties are sourced prebaked from outside.

King Kullen's total muffin sales are up from last year, Mondello said, but he declined to be more specific.

Doubling self-service displays and boosting the frequency of advertising by half has produced a 20% sales jump for muffins at Steele's Markets, Fort Collins, Colo.

With the advent of NLEA labeling changes a year and a half ago, muffin sales at Steele's had gone downhill, but not permanently, said Barb Harner, bakery director for the four-unit independent.

"I believe if you market them right, you can sell them. We've also expanded our varieties to 12 and have added a large, 5-ounce in apple cinnamon. Having a big variety helps," Harner said.

The company this year bought 6-foot, European-style tables to provide dedicated displays of a large variety of muffins daily for grab-and-go.

One new flavor in particular -- ginseng -- has energized the category at O'Malia Food Markets and O'Malia Bakery, both in Carmel, Ind.

"We got a lot of local publicity when we introduced ginseng muffins this year. That gave sales a real shot in the arm, and since then we've added blueberry-ginseng," said Ron Williams, bakery director at O'Malia, which has nine supermarkets and supplies 400 others as a wholesaler.

The addition of two other exotic flavors this year -- tropical fruit and key lime cream cheese -- also helped keep the category up, he added.

At its own retail stores, muffin sales have improved 18% to 20% from last year. Including the wholesale side of the business, muffin sales have zoomed 50% over last year, Williams said.

And the company intends to push sales up even further next year, with muffins made from a no-fat formulation that the company is in the process of developing.

"We'll introduce the no-fat in several varieties probably toward the end of January, when people have had their fill of dieting after the holidays. They'll be ready to come to the bakery department again," Williams said.

Boosting muffin volume is getting top priority at O'Malia, because the products, made from scratch at its central facility, are such good money-makers for the company.

"Muffins are our single most profitable item," Williams said.

Harner at Steele's also talked about the margin to be made on muffins.

"It's a good, profitable category, and this year we've increased our profits on muffins by almost 50%. That's because we purchased equipment that allows us to produce three times the number in the same amount of time. It automatically scales; it has an automatic depositor," Harner said. "If we produce them and make room to display them, we can sell them," she said.

Adding flavors, both in regular and no-fat varieties, will be a priority in 1996 for Harp's Food Stores, Springdale, Ark., said Dan Kallesen, the 38-store chain's bakery director.

"We want to get into some exotic flavors," Kallesen said. He added, however, that the muffin push has been delayed because the chain has just added a signature bread.

"Muffins are on our priority list. We tend to take a category and run with it as we did with cookies this fall. As soon as we get our new bread rolling, we'll turn our attention to muffins. It's a category with good growth potential," Kallesen said.

The official at the large Northeast chain said his company is looking for ways to make customers think beyond breakfast when they think of muffins.

"For example, we're cross-merchandising four-packs of corn muffins at our rotisserie chicken displays," he said, adding that people have gotten the idea of eating corn bread with chicken at home meal replacement establishments such as Boston Market. His company also promotes mini-muffins as nutritious snacks for children -- an alternative to cookies or candy bars.

"It's a matter of marketing them, doing some creative merchandising," he said. The company uses point-of-sale signs at mini-muffin displays with such messages as "Great for kids' parties" and "We travel well." All of that must be working because mini-muffins are the best-selling size at that chain, making up nearly 50% of total muffin sales, he added.

Mini-muffins spur sales of other sizes, too, the chain official said. "I think they're terrific samplers at $1.99 for a 12-count pack. It gets the customer into the muffin category without choking him on a mega-muffin," he added.

While various muffin sizes have been proliferating for several years, the traditional size -- 3.5 to 4 ounces -- emerges as the nation's favorite, according to Ed Weller, president of Weller Co., a North Hollywood, Calif., consulting firm that works with supermarkets and does its own research on sales of bakery items.

Some retailers said they have recently eliminated the larger and smaller sizes altogether.

"We used to have minis and 2.5-ounce muffins, but we've just made the decision to stick with the 4-ounce in a four-pack. That's the one that's really best accepted by our customers," Williams at O'Malia said.

Tradition seems to be a strong factor in flavors as well. The top-selling flavors for most of the retailers interviewed by SN are blueberry, corn and bran, though not necessarily in that order.

O'Malia, however, is an exception. In view of that retailer's eclectic muffin menu, it's not surprising that tropical banana and poppy almond join blueberry at the top of its best-seller list. Decidedly nontraditional fat-free muffins are still making up a small percentage of muffin sales at most retailers, but are important for their role in helping buoy the category.

The bakery executive at the Northeast chain said his stores are integrating fat-free products with their regular muf-

fin counterparts, deliberately avoiding displays in a separate "healthy" section. He uses shelf-talkers to designate the fat-free products among the display.

But other merchandisers contend that a separate "healthy" section is a necessity.

Most King Kullen units now have display tables dedicated to no-fat, low-fat and no-sugar-added items, said Mondello. He added that he's aiming to have "healthy" tables designated clearly with signs in all units in the next month or two. The tables are positioned across the aisle from the service bakery counter.

Skip Rice, bakery manager at a unit operated by Bales Thriftway, Portland, Ore., is another retailer that supports a distinct section for health-oriented muffins. At Bales Thriftway's two units, signs points to a separate fat-free section, he said.

"Customers want to know where to find those products quickly," Rice said. They must be finding them; fat-free items are hot right now at Bales, he added.

"I think the best thing that has happened for the muffin category this year is that we've been able to get fat-free mixes that make a really good-tasting, high-quality product," he added. "No-fat muffins make up a small percentage of muffin sales at this point, but sales are definitely growing."

Getting customers to realize the taste is there in no-fat muffins presents yet another challenge, said Renee Kahl, director of bakery operations at 24-unit Consumers Markets, Springfield, Mo.

"Taste wasn't always there. No-fat and low-fat products just didn't make it. A lot of them tasted like sawdust. People tried them then and didn't like them. We have to let them know things have changed," she said.

"It's going to take time to get people to know these products really taste good, and sampling is the only way to do that."

Packaging is also proving to be an important factor in making the most of the muffin category, retailers told SN.

A Montana unit of Tidyman's, a 10-unit independent based in Greenacres, Wash., tried cutting costs this year by going from clamshell packs to overwrapping muffins on trays. Sales dropped almost immediately, but they recovered just as quickly when the unit went back using to clamshells, said Debbie Greene, assistant bakery manager there.