SWEET RELIEF

SARAH MULHOLLAND

The demand for quality gourmet fare continues to grow, and cookies and crackers are no exception. Consumers continue to indulge in the sweet opulence of shortbread and biscotti, while looking for a water cracker of distinction to serve their guests.

Despite economic tremors, retailers SN spoke with have not seen any hint of recession in the specialty food business. Indeed, some feel slack economic conditions can be a boon to specialty foods, particularly in the realm of cookies and crackers.

According to Joe Shannon, executive vice president at Kehe Food Distributors, Romeoville, Ill., high-end cookies and crackers have never been subject to financial vagaries as consumers opt to indulge in life's simpler pleasures in lieu of more extravagant purchases.

"People will allow themselves a small treat. They indulge in those affordable luxuries," said Shannon.

Scott Silverman, vice president of specialty food and wine for the Houston-based Rice Epicurean Market, noted that an economic downturn may further boost sales in the cracker category as people tend to do more entertaining at home.

At Andronico's Markets, Albany, Calif., specialty cookies and crackers show no signs of slowing down, according to Jessica Willett, a grocery merchandiser for the chain. However, Willett said it can be difficult to distinguish between the growth of individual products and the growth of overall categories with the influx of new products, particularly in the cookie segment. Crackers are generally more stable, Willett said, with a solid base of consistent performers, leaving less room for experimentation. In addition, cookies have the potential to reach a broader consumer base as the difference in price between brands of specialty cookies can be as much as $4. The standard range on a box of water crackers is 40 cents, she said.

"I get presented with a new cookie, or a new item in a line of cookies, at least once a week," said Willett.

It takes a discriminating palate to contend with so many choices, and Willett, who samples them all herself, said taste is the ultimate factor.

"With specialty foods, we can't always look at profit on an item," she said. "We have to look at what drives customers to the store."

Yet manufacturers must provide adequate support on pricing and demos, she added. Demos are particularly successful for cookies, while crackers are more dependent upon display.

"If a table water cracker can get a display up next to the right cheese, that brand is going to get the extra volume," Willett said.

Kehe's Shannon agreed, saying that complementary tie-ins and brand loyalty really build the cracker category.

"If you pay $6.95 for the cheese, you want to make sure that cracker is a good deliverable," said Shannon.

Ray Antolik, a category buyer for Kehe Foods, expressed mild consternation over the numbers for the cracker category, saying the first six months of this year have been relatively flat in comparison with previous years. Antolik is working with manufacturers to figure out the problem.

However, cookies are certainly on the increase, Antolik said, with brands like Walker's, Bahlsen and Lu performing extremely well. He too has seen an abundant crop of new products in the cookie category, and held up Pim's soft biscuit with pear filling as a notable new entry. The pear is an extension of a line that already included raspberry and orange.

According to Shannon, line extensions often do well in the cookie category as specialty consumers trust those benchmark brands and are willing to try new products with that name.

Shannon also noted a new line called Kathleen's Bake Shop that offers a holiday sampler in a gallon paint can, which he believes will be a great seasonal item.

As at Andronico's, sampling in the cookie category is key for Shannon and Antolik.

"Trial is the big thing in this environment," said Shannon. "When you do demos, you really develop trial and that's the way to sell these products."

Another effective means used by some manufacturers to develop trial is sending out coupons to the high-rent districts, Antolik said.

At Minyard Food Stores, Coppell, Texas, the specialty sets are growing faster than the stores, according to Nita Tucker, director of specialty foods and floral for the chain.

"We are constantly changing our gourmet sets, trying to accommodate all the new items," she said.

Tucker mentioned the increasingly competitive atmosphere surrounding specialty and gourmet products as large national players begin to respond to consumer demand. While retailers SN spoke with said mainstream sprawl has not yet had a significant impact on the cookie and cracker segments, it may be something to watch for.

Andronico's Willett told SN that Keebler recently launched something being billed as an entertainment cracker, but she does not see it having much of an effect on the specialty offerings.

"Our customers are looking for that uniqueness, they are really adventurous and the products we carry from our specialty vendors are competitively priced with the national brands," she said.

While new products come and go at a rapid clip, reliable standards -- such as Lazaroni and Walker's cookies and Dare and Carr's crackers -- tend to carry the categories at Tucker's stores.

Although consumers don't need an excuse to treat themselves, the holidays are a good inducement. At Minyard's, Tucker picks up additional items for the winter season, and increases the distribution on some items generally found only in affluent areas.

Rice Epicurean's Silverman also picks up additional cracker and cookie items for the holidays, although he stressed the cracker segment for entertainment purposes.

"You wouldn't necessarily serve gourmet cookies at a party, but you would definitely serve gourmet crackers," he said.

Sales tend to drop off during the summer months at Silverman's stores as consumers forego heavy cheeses and pates for more casual outdoor appetizers such as chips and guacamole.

Andronico's Willett reserves the summer for snack crackers from the national brands. Yet during the fourth quarter, Willett picks up 25 additional stockkeeping units in the gourmet cookie and cracker segment. Typically, theses items will be merchandised on a display with other seasonal products.The chain does not do much in the way of food and nonfood, and often displays will incorporate something along the lines of confectionaries or baking supplies.

"We like to get creative with holiday colors. The cookies are not necessarily packaged in green and red for Christmas, so we get other items out there to call attention to the holiday, whether it's Christmas or Hanukkah or a general fall theme," explained Willett.

The holidays may afford retailers additional dress-up opportunities in the specialty segment, yet many take advantage of a category's impulsive allure on a daily basis, particularly when it comes to cookies.

"The cookies are the real impulse buy here," said Kehe's Shannon. "Crackers are used in a more occasional environment to accentuate the brie or the camembert."

At Minyard's, Tucker uses multiple locations throughout the store to make the most of the category's spontaneous nature. Shippers may be displayed by the bulk coffee center or next to the deli, or perhaps cross merchandised in the ice cream aisle, said Tucker.

"Toward the front of the store, near the registers, that's always a great place for sweets," said Willett.

Adjacent to the bakery department is another lucrative position, she added.

In targeting the impulse buyer, manufacturers often look to the immediate gratification and convenience of the single serving. Small gourmet companies may be at a disadvantage along these lines, although there are possibilities. Indeed, Walker's currently offers a two-pack of their signature shortbread cookies.

"The Walker's are a little pricier than what we generally consider to be single serve," said Willett. "It's got to be merchandised in such a way that it's completely impulse-driven, by the checkstands or the grab-and-go delis."

A lack of promotional funds is an obstacle faced by many specialty companies, Willet said, but the small size of many of Andronico's distributors and manufacturers can also work to the retailer's benefit.

"We have really strong relationships with these companies. We have gone to a number of our chip manufacturers and asked for single servings, and they have produced them."

Shannon and Antolik have not seen much in the way of single-serve specialty cookies come through Kehe. While Shannon believes the Walker's entry to be a successful proposition, he feels it is better suited to bookstores and specialty shops, or maybe in a grocery store with a cafe.

"They don't work in the grocery aisle," said Antolik.