IN THE CHIPS

RICHARD TURCSIK

Retailers find stocking premium-quality cookies -- baked with tons of rich, creamy butter; mounds of pure chocolate chips; piles of snow-white cane sugar and dozens of farm fresh eggs -- is a sure-fire way to ignite sales in the cookie aisle.

Add to that mixture some snazzy,

mouth-watering packaging and a pinch of creative merchandising and even the strongest-willed fitness freak can be enticed to fall off the wagon and gobble up a bag or two.

Retailers, wholesalers and manufacturers told SN the premium, upscale cookie section is still growing. Much of the growth has centered around private-label chocolate chip cookies, which have become the cornerstone of almost every upscale private-label program. But retailers find other varieties are also well received by consumers.

It seems that everyone, from industry behemoths like Safeway and A&P to the local IGA, is stocking upscale cookies.

"Today's lifestyles and behaviors point to eating better and exercising. While eating cookies of any kind seems to conflict with the benefits of exercising, many consumers actually view premium snacks as a reward for their hard efforts," said Robb Kraft, premium brand manager at Fleming Cos., Oklahoma City.

Fleming markets the Marquee Premium line of cookies in the Finest Chocolate Chip, Oatmeal Raisin and Chocolate Chip Pecan varieties. Fleming also will be launching six new cookie items over the next six months.

"By adding variety to our cookie offering, we have increased the opportunity to maximize sales in the entire category. The extra excitement has restimulated interest in the cookie category as a whole," Kraft said.

"The main attraction of the upscale cookies is the quality of the product, and their main objective is to capture market share from the national brands," said Jim Hamill, manager of corporate brands at Acme Markets, Malvern, Pa.

"Our upscale cookies are selling about the same as last year, and we expect the premium cookie category to continue to grow, but at a lower rate," he added.

Acme, a division of American Stores, Salt Lake City, carries 15 stockkeeping units of President's Choice cookies and crackers. They are stocked in a 4-foot section in the cookie aisle, and merchandised with price-point ads, long-term price cuts and displays.

Peter Dudis, director of grocery operations at Big Y Foods, Springfield, Mass., said, "Our premium cookie sales continue to show growth. The attraction to these premium cookies is the great taste due to the use of fine ingredients, though they are generally higher in fat.

"We find they have only affected sales of comparable mainstream items. We expect the upscale, premium cookie segment will continue to grow slightly, but growth will really pick up once they come out with premium, upscale cookies with reduced fat," he added.

"Our sales of upscale cookies have been experiencing a steady climb," said Mike O'Donnell, grocery buyer at Hughes Family Markets, Irwindale, Calif.

"The consumer is looking for a better-tasting, more-homemade type of cookie and the consumer views these cookies as a better-tasting, higher-quality cookie for themselves and their family," O'Donnell explained.

"The private label is what is happening on taste tests, and Consumer Reports is convincing people that they can pay a lot less for products that are as good or better than a national brand. This is especially true with the upscale cookies," said William Vitulli, vice president of government and community relations at A&P, Montvale, N.J.

A&P has been having success with its Master Choice line of premium cookies -- part of an extensive line of grocery products. "We plan to expand the cookies in our line and keep up the quality at a reasonable price," he said.

"The whole philosophy behind Master Choice is quality control. Our quality control department tells the manufacturer what we want and we might even ask for it to be better than what the company is making for its own products. In addition to private-label manufacturers, a lot of national-brand manufacturers make private label during their downtime," Vitulli explained.

According to Chicago-based Information Resources Inc., America's love affair with the cookie continues unabated. For the 52-week period ended March 26, supermarket sales of cookies reached $3.7 billion, an increase of 2.9%. The private-label sector, which includes, but is not limited to, such popular upscale lines as President's Choice, Western Family's Excellent and Topco Associates' World Classics, had sales of $388 million for the same period, an increase of 4.9%.

Figures from Nielsen Scantrack for the 52-weeks ended Dec. 10, 1994, show private label to be the largest single component in the supermarket cookie category, with a market share of 9.3%. Nielsen shows that volume of Chunky Chips Ahoy!, Nabisco's answer to the premium private-label chocolate chips, skyrocketed 117%, and Chunky Chips Ahoy! now commands a 1.7% share of the cookie market.

"Store brands have certainly been upscaled over the last couple of years, and they have increased their quality," said Joe Crowley, a spokesman for Interbake Foods, Richmond, Va. Interbake primarily manufactures mainstream private-label cookies, although it has had success with several upscale fudge-enrobed products.

Larchmont, N.Y.-based D'Agostino Supermarkets thinks highly of its President's Choice line. The Decadent chocolate chip cookie is even featured on the chain's plastic grocery sacks.

"The President's Choice Decadent Chocolate Chip cookie is still our best-seller. The other President's Choice items do very well within the category, but they don't lead the category because product lines like Pepperidge Farm have so many more SKUs," said Mary Moore, director of public affairs at D'Agostino.

The 13 President's Choice cookie items stocked by D'Agostino range from $1.99 for butter cookies imported from Holland to $12.99 for the 35-ounce tin of the Luxury Biscuit Assortment.

D'Agostino also carries Brent & Sam's premium cookies from Little Rock, Ark., that retail for $2.99 an 8-ounce bag; Bahlsem cookies from Germany; Pepperidge Farm; Peek Freans, and Lu cookies, which are imported from Europe by M.C. Cookie Co., Oakland, Calif.

"We occasionally advertise President's Choice through price reductions that are listed in our weekly circular," she said. "President's Choice Luxury Biscuit Assortment tin is a very good holiday item. It is a wonderful value and many shoppers buy them to give as gifts."

O'Donnell said Hughes increases the number of upscale cookies it carries around Christmas.

"We find sales of upscale cookies do increase during the holidays as many manufacturers will make a much more appealing package for Thanksgiving, Christmas and other holidays. As a result, we capture extra sales as they are used for gift items," he said.

Acme Markets' Hamill also finds some seasonality to the upscale cookies.

"Sales do increase as people are willing to upgrade at Christmastime, and they probably do use some as gifts," he said.

While upscale cookies are not exactly price-driven, O'Donnell said the price points "must stay competitive and in line with the marketplace."

"Price points that work for upscale brands vary, depending upon size and item. But there does not seem to be a threshold as long as value and, most importantly, quality are there," said Acme's Hamill.

In New England, Big Y carries the World Classics brand that it sources from Topco Associates, the Skokie, Ill.-based buying cooperative of 47 retailers.

"We carry 4 feet of World Classics cookies in most stores. Hot price points are not necessary for the upscale brands, but a price reduction does help sales, so we promote them slightly by reducing the retail and putting them on display and in our weekly ads," Dudis explained.

Bruce Hamilton, director of World Brands, the Topco subsidiary that sources World Classics, said World Brands currently has 10 premium cookies in its lineup and will be adding an additional two varieties this year.

"The World Classics cookies are one of our strongest categories, to say the least. For all of these upscale programs, soda and cookies are the dominant forces that drive them. And the cookies in particular have such a demonstrable quality image over most brands.

"The cookies are easy to demo," he continued. "They sell well and repeat sales are good. They are a good product and a good value. We try to use a promotional strategy so they are competitively priced, but they are a much better product than a soy-based product, or something with less or lower-quality chips," Hamilton said.

On the Western front, Tigard, Ore.-based Western Family Foods sells its Excellent label premium-quality chocolate chip cookies in more than 2,000 stores, primarily west of the Mississippi. "The chocolate chip cookie is a cornerstone in our upscale program," said Jan Tiel, Western Family product manager. "It commands a lot of attention and a lot of desire from our retailers and customers. It is part of our portfolio when we are soliciting new business, and we are currently testing another two or three SKUs," he said. Western Family has about a dozen different grocery products under the Excellent name, Tiel added.

Chicago-based IGA is in the process of introducing a line of premium cookies under its new Independent's Choice/IGA label. Packaged in 12-ounce bags, the cookies are manufactured for IGA by Bake-Line Products, Des Plaines, Ill., and are available in chocolate chip, chocolate chip with pecans and oatmeal raisin varieties. They are scheduled to reach store shelves by late summer.

"If sales of these cookies go well, we'll expand the line to include other grocery products. We will not be following with a line of Independent's Choice soft drinks, however," said Cathleen Novak, assistant product manager at IGA.

The success of the premium cookies has caught the attention of some mainstream manufacturers.

Campbell Soup Co., Camden, N.J., through its Pepperidge Farm subsidiary based in Norwalk, Conn., continues to add to its lineup of upscale classic cookies.

And while industry leader Nabisco, Parsippany, N.J., is predominantly a mainstream manufacturer, it has been placing a greater emphasis on the upscale segment. In recent years it has acquired Peek Freans and Stella D'Oro, and now has a product manager dedicated to building sales of some of its other more obscure upscale brands.