KRISPY KREME DOUGHNUTS DEBUT AT DIERBERGS

ROSEANNE HARPER

CHESTERFIELD, Mo. -- Dierbergs Markets has added Krispy Kreme doughnuts in its bakeries and expects the popular brand to sweeten its image and sharpen its edge in the marketplace.

The brand-name doughnuts, which replace Dierbergs' own, got a send-off at the opening of a new, 70,000-square-foot Dierbergs unit last week and will be rolled out to all the chain's stores after the first of the year.

"We believe Krispy Kreme has become a very big symbol of quality in the St. Louis area and in other parts of the United States. It has name and brand recognition that ties in well with our reputation," said Andrew Pauk, senior vice president at the 19-unit, privately held company.

Not only that, but the increasingly popular brand is expected to bring new customers into Dierbergs' stores, Pauk added. Krispy Kreme was introduced to the area more than three years ago, so consumers are acquainted with the products' quality, but they haven't had the opportunity to buy them in a grocery store.

"Right now there are only five Krispy Kreme locations in St. Louis; so by bringing them into our bakery operation, we hope it will be a destination for a product that has great brand recognition."

The five stand-alone Krispy Kreme locations owned by franchisees are scattered far apart in the St. Louis area. The nearest location to Dierbergs' new store is 16 miles away.

At the newly constructed Dierbergs unit, the doughnuts, in 15 varieties, are spotlighted under a 10-foot, green-and-white awning that frames 8 feet of glass-doored, self-service case. A freestanding rack in front of the case holds 12-count, prepacked boxes of Tasty Kreme's signature glazed doughnuts.

Overhead and perpendicular to the awning, a 10-foot-long, illuminated Krispy Kreme logo faces customers as they approach the bakery. Outside the store, a huge, green-and-white banner announces Krispy Kreme's arrival.

A grand opening wraparound on the ad circular at the new store features a 5- by 6-inch Krispy Kreme ad, and Dierbergs' in-house demo associates were set to offer customers samples of the products right in front of the self-service case.

Dierbergs is retailing the products for the same price Krispy Kreme's stores in St. Louis offer them.

The brand's signature glazed doughnuts are sold prepacked for $4.99 a dozen. A customer can also assemble his own selection, mixing varieties. The retail price for all varieties is 65 cents each or $5.49 a dozen.

By comparison, Dierbergs' own doughnuts were 42 cents each. But Dierbergs' were not offered at a special, per-dozen price, so a dozen would have cost $5.04.

Pauk emphasized that the introduction of Krispy Kreme at the new store is not a test, but instead, it's the heralding of what's to come chainwide.

"We've already decided to roll them out to all our stores, but with the holiday season and the fact that Krispy Kreme has to gear up to serve all our stores, we decided to wait until January to put them in the next store. We do expect to have them in all 19 [units] by March," Pauk said.

The only part that's experimental is getting the inventory level right and making sure the display and merchandising of the product is optimally effective, he added. It hasn't been decided which store will be the next to get Krispy Kreme.

"It may depend on routing efficiency. We may add them in clusters. For example, we might do all the stores to the south," Pauk said.

Dierbergs' arrangement is with a regional Krispy Kreme franchisee, Sweet Traditions, which has a central production facility. The company will make deliveries each morning to Dierbergs' stores. In the beginning, however, it has agreed to replenish the supply several times a day until the inventory level is right at each location.

Pauk said the chain's arrangement is similar to those it has with two other companies that supply it with branded bakery items:Tippin's Pies and Companion Bread Co.

The Winston-Salem, N.C.-based Krispy Kreme has had an almost cult-like following for its products in the Southeast for a long time, but in recent years, the brand's availability and popularity have spread. Supermarket chains as far-flung as Rice Epicurean Markets, Houston, and Acme Markets, Malvern, Pa., have had sweet success with Krispy Kreme in their bakeries.

Others, such as Stop & Shop, Quincy, Mass., have struck up a relationship with another quality-image doughnut maker, Dunkin Donuts, Randolph, Mass.