SNACK CAKES ADD CHUNK TO SALES, STORES FIND

PAT NATSCHKE LENIUS Additional reporting: ROSEANNE HARPER

The growing popularity of snack cakes is giving the already healthy cake category another shot in the arm, said retailers interviewed by SN.

The smaller-sized cakes are part of a large trend in product downsizing that also includes single-layers, and pieces of cake, said in-store bakery executives.

But snack cakes in particular appear to be hot. At O'Malia Food Markets, Carmel, Ind., for example, sales of 8-inch square snack cakes grew 20% in just the last year.

"That's a good segment to see such growth in, too, because the margin is excellent," said Ron Williams, director of bakery operations, for O'Malia Food Markets and O'Malia Bakery, the company's wholesale operation.

Williams told SN that snack cakes don't require a lot of decorating. "They're just less labor-intensive all around, and you don't have to have experienced decorators on hand," Williams said.

"Probably 40% of what we do at this bakery is for our wholesale business. Of that 40% for wholesale, 25% is snack cakes," he added.

Commenting on the sales growth of the segment, Williams said consumers are looking for such a smaller cake because they have smaller families than in the past, or because they are not eating as much cake at one time as they used to.

Such shifts in cake-eating habits seem to be boosting snack cake sales just about everywhere, according to retailers.

At O'Malia, however, the segment is doing particularly well because of the unique flavors the chain offers and because the packaging it uses for snack cakes preserves the integrity of the cake and presents it well, Williams said.

Like many other retailers, O'Malia bakes its snack cakes in a square aluminum pan and leaves them in the pan. Often retailers then add a dome or use shrink wrap; but at O'Malia, the cake in its aluminum pan is placed in a specially designed clam shell container that has a tapered lid. "You could turn the container upside down and the cake would not fall against the lid, globbing up its icing, because the tapered edge holds it back," Williams said. He added that the packaging is relatively expensive, but O'Malia charges enough for the cakes to recover the extra cost. O'Malia's snack cakes typically retail for $3.49 to $3.89 and $3.99 for those that have a cream-cheese-based icing. One of those with cream cheese icing -- carrot cake -- is O'Malia's runaway best-seller, making up a full 25% of snack cake sales in its supermarkets.

Another retailer pointed out that downsized cakes such as snack cakes and single-layers provide an opportunity to experiment with different flavors.

Dierbergs Markets, Chesterfield, Mo., has tested varieties such as pineapple and tropical fruit and some different icings on its 8-inch single-layer cake, which is its fastest-growing cake size, said Pete DeRum, bakery director for the 15-unit chain. The single-layer cakes sell for $4.99 to $7.99. Pay Less Supermarkets, Anderson, Ind., also has focused its attention on single-layer rounds. The eight-unit retailer has been carrying 8-inch square snack cakes about three or four years, but its best-selling cake size in units and dollars is probably the 8-inch single-layer cake, said Tim Kean, deli-bakery-seafood merchandiser. "We have seen a shift in movement from the 8-inch double-layer to the 8-inch single-layer and the 8-inch square," he said, adding that customers have not requested half-cakes or individual cake slices. "We have to consider if we want a decorator tied up doing smaller units that will bring us a smaller retail for almost the same amount of time she would spend on a higher ring item," Kean said. Sales for the smaller cakes are based on a lower retail price, yielding a smaller number of cents of profit, he said. The bakery director of a Midwest chain, who asked not to be named, said he introduced an 8-inch square snack cake about a year ago and it has not caught on as well as the traditional round cake. "We advertised them in the newspaper and promoted them with special displays. I don't know why they are not selling better," the bakery director said. He has had better luck with a 7-inch product, however. "The 7-inch has pretty much taken over. We give it a lower price and call it a dinner cake."