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Issue Date: Vol. 48, No. 12, December 2008, Posted On: 12/30/2008


Premium Baked Goods Drive Demand As Pastry Season Kicks Into High Gear


Emily Jed
Emily@vendingtimes.net

ST. LOUIS — Pastry season is in full swing as consumers turn to hot beverages as their drink of choice during the cold weather months, and baked goods serve as an appealing accompaniment. Manufacturers exhibiting at the recent National Automatic Merchandising Association National Expo here concurred that just as vending patrons have raised their expectations of coffee and are willing to pay more for gourmet quality, demand for premium packaged pastries is accelerating. And new products debuting at the vending show reflected the trend.

Cloverhill’s Rusty Jackson emphasized that the economic pinch many vending patrons are feeling does not appear to have impacted pastry sales, and more customers are willing to pay a premium for the satisfaction of a higher quality product. “If they’re going to eat it, it better be very good because they’re not choosing it as a health food; it’s all about it being a satisfying indulgence,” he commented. Jackson added that sales are up substantially for Cloverhill this year, despite the current state of economy.

During the NAMA Expo, the company previewed its latest premium pastry, the 4-oz. white iced raspberry jelly-filled Long John, which will be available in January and vend for $1 or more.

“Operators can’t lose sight of the value they provide consumers in all products they sell. With pastry, they need to understand the value to ask the right price of the consumer,” Jackson stressed. “If you walk into a c-store, you pay 99¢ or $1.20. Vending operators are still trying to get 60¢ and up when they should charge $1 and up.”

He added that ingredient costs for manufacturers have risen 15% and higher over the past year, while wholesale costs to the operator are up 8% to 10% over last year. Appropriate pricing along the supply chain is necessary, from the manufacturer down to the consumer, he emphasized.


PHOTO: From left, broker Doug Chase, Chase Sales Co. (Westmont, NJ), and Gary Haas of Haas Baking Co. discuss growing prominence of premium pastries in vending with Automated Merchandising Systems’s Veronica Arellano, Lionel Carrasco and Alejandro Alvarez during NAMA National Expo.

“The average buyer thinks commodity prices are down, so their costs should be down,” said Jackson. But he explained that manufacturers’ pricing is reactive, so many are still working to get their margins in line with current and future commodities costs.

Consumers are well aware of the rising cost of food prices at supermarkets and other retail channels, he added, so operators should not hesitate to price products accordingly as their own cost of goods rises.

John Nielson of Daisy’s Bakery (Clifton, NJ) said his company has managed to offset commodity price increases by raising its wholesale prices in penny increments. It also reduced its 3-oz. cake line to 2.75 ozs. to help operators maintain selling prices.

“We are trying to hold ground with pricing and make it up with volume. Gourmet-quality pastry is all we sell, it’s in high demand and we’re selling lots of it,” he told VT.

He added that operators should take advantage of the heightened demand for pastry in the winter months by stocking their machines accordingly. “The colder the weather, the better for baked goods,” said Nielsen. “People drink more coffee in the winter and it goes hand in hand with buying pastry. In the summer, when they’re drinking water and soda, they’re a whole lot less likely to buy a piece of cake or a muffin to go with it.”

During the St. Louis vending show, Daisy’s introduced its 4.25-oz. single-serve crème-filled mini Bundt cakes in chocolate, lemon and orange varieties, with a recommended $1.25 vend price. Other Daisy’s baked goods include 2.5-oz. single-serve cake slices in a dozen varieties, jumbo black and white cookies, 5.75-oz. muffins and a range of 4-oz. Danishes.

Otis Spunkmeyer extended its popular 4-oz. muffin line with the addition of lemon poppy and orange cranberry varieties, which were in the spotlight and available for sampling at the NAMA National Expo.

“We target autumn to introduce product because consumption peaks over the fall and winter months, and variety always keeps consumers interested and coming back,” the firm’s Glenn Seawell told VT. He noted that 77% of muffin consumers purchase them in the morning with their coffee.

“The muffin market continues to be very strong year round, and especially this time of year. We’ve had a huge increase in volume and dollars over last year, and the momentum is continuing,” he said. “We’ve had to pass along price increases in line with rising commodities, but operators have in turn been able to pass them along to their customers and it doesn’t appear to have impacted demand from the volume we’re seeing.”

Seawell credits his company’s success to its top-quality ingredients, and its ability to keep variety interesting and cater to the desires of a wide-ranging customer base.

“We keep putting out new muffin flavors. We have traypacks of muffins for OCS that many employers are embracing as a new employee perk. We have muffins that are formulated to meet school nutrition guidelines, and our latest panque con guayaba (guava) muffins are the first to cater to Hispanics. We offers something for everyone,” he pointed out. The company has also produced a new three-page brochure to help operators effectively present its extensive muffin range to locations.

Haas Baking Co. (St. Louis) is readying its first entry into the premium pastry category with its Double Chocolate Bar Danish with chocolate filling and chocolate icing. The company showcased and sampled a 4-oz. prototype of the new package at the NAMA show.

“With commodity costs and the cost of business rising for operators, vending prices have to go up. We’re looking at products we can offer that help operators justify the $1 and higher price point,” said Gary Haas. “There is certainly a large base of consumers that wants the conventional pastries they’ve always loved for a lower price, but we are seeing more vending customers willing to pay more if they see the value in a more premium option.”

Flowers Foods highlighted its rapidly expanding premium Broad Street Bakery pastry line at NAMA, with the addition of 3.8-oz. Banana Pudding Cakes natural banana-flavored crème-filled cupcakes, scheduled to roll out in January. Other pastries in the upscale line include chocolate-frosted crème cakes, crème-filled carrot stick cakes, apple turnovers and gourmet cinnamon rolls.

While larger, more upscale offerings are certainly gaining traction, Interstate Brands’ Tim Garner told VT that consumer loyalty continues to drive sales of its top-selling Dolly Madison-branded Zingers crème-filled snack cakes, and that its traditional packaged pastries maintain their widespread appeal.


Topic: Vending Features

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