UPPER CRUST 2002

BARBARA MURRAY

Almost like hanging the stockings by the chimney with care, food retailers expand their frozen baked goods sections to add more pie shells and whipped toppings in preparation for the holidays.

As a total category, frozen baked goods is a strong one for supermarkets, with sales in the food channel growing by 8% to $1.5 billion for the 52 weeks ended Aug. 10, 2002, following a 7.2% growth for the year before, according to ACNielsen, Schaumburg, Ill.

This year's notably strong segments included frozen biscuits and rolls, up 61.3%, and an 83% growth in the sales of frozen cookie dough, which is most likely attributable to the national rollout of Mrs. Fields. Some manufacturers and retailers dealing with this category cite the post-9/11 trend toward comfort food as helpful; yet, it was a growing category even prior to that date last year.

"The customer has never been more fickle as since 9/11," said David Bloomquist, frozen food buyer for limited assortment chain Save-A-Lot, Earth City, Mo. "We're trying to figure out what they want."

As a predominately private-label retailer, Save-A-Lot does intermittent TNT (Temporary and Terrific) branded offerings, but with frozens, it blends brands with private label at all times.

Save-A-Lot's demographic is the customer from the household earning $35,000 and under, and it offers frozen desserts at the beginning of the month, when its shoppers who are on entitlement programs get their checks. It has to avoid being known, though, as "a store for poor people," Bloomquist said. "We shop there ourselves, and we buy only top quality," he told SN.

For the three-month holiday period, Save-A-Lot adds a deep dish private-label Gold Leaf pie shell, and it runs a special $1.99 Sara Lee fruit pie program. Bloomquist said his company is Sara Lee's eighth-largest customer, and said the two were able to work out a good program. He also uses the Treasure Hunt approach to frozen desserts, "so they're always finding something different. We'll do a cobbler, or a chocolate cake or a cheesecake, always at $1.99." Save-A-Lot currently has 1,050 stores, recently adding Chicago to its list of locations, which are now in 36 states.

Price is becoming an issue for more and more people as the recession goes on. The Census Bureau recently reported that the proportion of Americans living in poverty rose significantly last year, increasing for the first time in eight years. At the same time, the bureau said that the income of middle class households fell for the first time since the last recession ended, in 1991.

And, the Wal-Mart effect continues. A Midwestern wholesaler told SN that he now has to buy some new brands, such as MaryB's Biscuits, Sister Schubert's pan rolls and Edward's pies, because Wal-Mart carries them.

"As their stores open up here, we have to bring them in. You don't want anyone saying, 'I can only get that at Wal-Mart,"' the source, who wished to remain anonymous, said.

Hence, another reason suppliers want to be in Wal-Mart -- not only do they get the chance to do big-volume sales in the 1,200 Wal-Mart Supercenters, but now the supermarkets that compete with the Bentonville, Ark., behemoth also try to offer the same products, to keep Wal-Mart from being too unique. Howard Burris, chairman of the board of Home-Ade Food, Baghdad, Fla., which makes MaryB's Biscuits, is aware of this phenomenon. "We're in a good position," he said, adding that his brand is the No. 1 selling biscuit at retail in the U.S. He's in all the Wal-Mart Supercenters.

Not doing as well as biscuits are frozen bagels, which are down in sales nationally by 9% -- dropping faster than frozen orange juice concentrate, as one retailer put it -- but are doing well in the Mad Butcher stores in Pine Bluff, Ark., because there are not any fresh bagel shops there at all, according to Jerry Ward, executive vice president and chief operating officer. "Lender's bagels are the big one and they've got new packaging," he said.

"Biscuits, rolls and dumplings are doing extremely well, especially the Pillsbury line," Ward continued. He attributed Pillsbury's success to its television advertising. Pillsbury also supplies spot freezer cases, and that helps, too, he said. Breakfast cakes and sweet rolls seem to be doing well, he said, but the big demand comes at Thanksgiving and Christmas time. That segment is up by 3.8%, according to ACNielsen.

Dessert cakes are stagnant because in-store bakeries have captured the business, he and other retailers told SN, yet frozen pies are up 8% this year, even though in-store bakers make pies, too. "The frozen pies sell when we have an allowance or a temporary price reduction," Ward said. Frozen doughnuts are down, and in fact Rich Seapack just quit making them after 30 years. Thawed doughnuts do a better job, sold in the bakery or grocery department, Ward said, and fruit cobblers seem to be doing well, he added.

The Midwestern wholesaler said the booming business in the biscuits/rolls/ muffins segment is due to unique items, and high-quality products such as the par-baked, frozen in a bag, dinner roll, from Pillsbury/ General Mills, which has been rolling out its food-service products on a retail basis.

"I expect this year will be much bigger than last for biscuits because the quality is much better than what you see in refrigerated. It's about $2.89 retail for a dozen biscuits, so they are better to sell," he said. "It's a whole new business. We carry nine items just in Pillsbury; they are now getting most of a door. It needs to come together with the garlic breads and the French toast and we think it should be adjacent to dough, all those Rhodes items."

Nobody understands why cheesecake is dying, he said. ACNielsen's figures show frozen cheesecake down by 14% this year and by 15.5% the year before.

Pies, however, remain a large piece of the category, the wholesaler said. "Cobblers have always been big in our part of the country, particularly as you go south. It's a very substantial business. The pie business is growing, year over year. We've been doing well. I don't know why; it kind of surprised me. I don't know where that is coming from except that people now consider cooking a frozen pie baking. A cold one from the bakery is not real traditional for Thanksgiving," he told SN.

Tom Wolfiss, the frozens buyer for D&W Food Centers, Grand Rapids, Mich., is a dissenter on the cheesecake front. "It amazes me how strong cheesecake has been for us," he said. His best seller is President's Choice, a smaller, 6- or 7-inch cake. "That's where most of our business is, probably because [the size of the cake] is not too much."

In pies, he said D&W is stronger in Sara Lee than Mrs. Smith's. Growth is coming in the superpremium lines, like Marie Callender's fruit cobblers, he said. But D&W's own bakery makes pies that are doing better than the frozen ones, and this is by design. Apple and pumpkin are biggest for the season. Consumers seem to want a warm dessert that's right out of the oven, he said.

According to the NPD Group, a Port Washington, N.Y.-based research company, desserts are declining at home, but there is hope ahead. "If you are under 25, then 5% of your suppers are likely to include a dessert," said Harry Balzer, vice president of NPD and author of the annual Eating Patterns in America report. If you are over 65, the percentage rises to 33%.

A reasonable conclusion, Balzer said, is as this country ages, expect to see more desserts on the table.

"Every age group is serving desserts less than the generation they replace, but, as you age, desserts creep into your supper. The dessert doesn't have to be a sweet, starchy cake; it could be cantaloupe. The way the survey was taken, if you consider it dessert, it's dessert."

Fruit, in fact, was the most popular dessert. It was followed by ice cream, cookies, cake, pie, candy, pudding and gelatin.

Jim O'Sullivan, vice president and general manager of Mrs. Smith's Bakeries, Suwanee, Ga., and Gene Lewis, director of retail marketing for the company, said they are very pleased at the way things are going now in the frozen baked goods field. "For the last 12 weeks, the category is up 4.5% in dollars and 3% in units," O'Sullivan said on Sept. 20.

"The news we are trying to get out to the retailer is, if you really want to increase your profit, move your consumer up from 2 for $7 to a deep dish pie, more in the $4.99 to $5.99 range."