The Sweet Goes On

THE MARKET

Key Points

• With inflation, FDMx sales (food, drug and mass merchandisers, excluding Walmart) of prepared cakes and pies grew by 7 percent from 2005 to 2010. By 2015, Mintel expects the market to grow to $3.1 billion.
• All segments grew between 2008 and 2010, with overall dollar growth of 9 percent in this period. Cupcakes/brownies and cheesecakes were the only segments to lose some market share, while refrigerated cakes and pies grew 31 percent. Shelf-stable cakes showed the most growth in private label, which accounted for 39.6 percent of FDMx sales in 2010.
• The nation’s obesity epidemic and resulting focus on health and nutrition present challenges for the indulgent category. Additionally, smaller families and fewer-person homes are driving smaller portion sizes, which also meet consumers’ desire to treat themselves without overspending.
• Market drivers include the stand-alone cupcake shop phenomenon, which has put pressure on in-store bakeries and FDMx prepared baked goods, and TV shows such as Ace of Cakes and Cake Boss, which have encouraged increased spending on unique and extravagant creations.
• New product introductions dropped by 39 percent during 2008–2009. Chocolate remained the most prevalent flavor among new products during 2007–2010, and gluten- and allergen-free products continued to be introduced, despite low demand (less than 10 percent) in the category. Several new products added fiber and/or whole grains to RTE baked goods, catering to a desire for healthier eating without giving up sweets.

THE CONSUMER

Key Points

• As RTE baked goods are viewed as an affordable luxury, consumers opted to buy cheaper rather than fewer during the recession. According to Mintel’s consumer survey, shoppers bought RTE sweet baked goods using coupons or when on sale. Only 21 percent of respondents indicated baking at home more often than the previous year due to the recession.
• Age and income influence point of purchase: Survey respondents age 35 and younger are slightly more likely to purchase RTE baked goods from the packaged foods section of grocery stores, while those age 65+ are much less likely. Respondents with household incomes of $50K+ buy from a wider variety of retail locations, and those in the $100K+ segment are less likely to purchase from the packaged-foods aisle of the grocery store.
• One quarter of consumers look for low-sugar and single-serving options when buying RTE baked goods for their children, indicating an effort to control both sugar and portion as a response to the obesity epidemic.
• The highest incidence of snack-cake consumption is among 35- to 44-year-olds, which is also the group most likely to have children and teens at home. These results suggest that, while parents may be purchasing snack cakes for kids’ lunches and snacks, parents themselves may be just as likely to eat them.
• Pie retains its image as a dessert for older people, as consumption peaks among 44- to 64-year-old respondents and is the lowest among 18- to 34-year-olds. Using locally sourced berries and dairy products could help drive sales of prepared cakes and pies among younger adults due to the locavore movement. Exotic fruit pies and decadent cream pies could appeal to adventurous younger adults as well. 

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