Where the Hot Spots Are as Eating Moves Back Home

Baking, Coffee Make a Comeback; Frozen Pizza Still Going Strong

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NEW YORK (AdAge.com) -- It turns out there's no recession in eating, though consumers keep looking for more bang for their buck by attempting to produce restaurant-quality results at home.

BRIGHT SPOTS
Opportunities for the marketing and media industries in an otherwise bleak year
As a result, several long-languishing categories -- such as baking and grocery coffee -- have begun to rebuild share, and marketers are rushing to keep that going with new products, introducing items such as gluten-free cake and whole-grain muffin mixes. Left-for-dead brands such as Maxwell House and Folgers have also begun to gain share, thanks to new marketing and more-cautious consumers.

Other premium grocery sectors have remained unfazed by consumer trade-down. One is specialty frozen pizza, an area where some scrimping might be expected, but which continues to boom. Here's a look at some at-home hot spots.

baking
Even as moms become more time-starved, experts say they're still looking to connect with their kids through fresh-baked treats -- and the down economy seems to be boosting the craving for comfort food. "Mostly when mom bakes, it's partly for herself and partly for her kids," said Duncan Hines VP-Marketing Lora Van Velsor, adding that mothers get a real kick out of giving their kids warm, homemade snacks.

She said that not only are more people starting to bake, but those who baked before are baking more. The baking category has grown 15% in the past year, and household penetration for overall baking products, which has been stagnant at 81% for three years, is up 1% for the year and up 5% since June. Ms. Van Velsor pointed to the economy as the reason for growth. "It's a better value to bake at home than buy bakery-priced goods," she said. Besides, "during tough economic times, people want to connect." And baking at home ties into an emotional need.

Moreover, it's not just mixes benefiting from the boom. This baking surge appears to be spurring the woebegone from-scratch baking category as well. General Mills reported sales of its Bisquick and Gold Medal flours up 20% during fiscal-year 2009.


baking
Thanks to belt-tightening, once-forgotten, pre-ground, grocery coffee is on the upswing. According to Information Resources Inc., total ground-coffee sales at grocery (excluding Walmart and club stores) are up 6% in the past 52 weeks to $2.1 billion. According to the data, Folgers sales are up a stunning 55%, to $563 million.

Procter & Gamble sold its Folger's coffee brand to J.M. Smucker last summer, and under new management, co-CEO Timothy Smucker said, the iconic brand experienced "significant sales growth" in March and April. He added that the category as a whole grew double digits in April.

Though double-digit gains in such a mature category may be hard to replicate, he said, "this quarter's result in coffee solidifies our belief in the transaction and provides evidence that our ownership of Folgers will provide significant opportunities."

Two years ago, when Kraft CEO Irene Rosenfeld was beginning her turnaround plan, analysts and shareholders were clamoring for a Maxwell House divestiture. But Ms. Rosenfeld held firm, and promised that a reformulation, restaging and repackaging would do the trick. Looks like she was right: During last week's second-quarter earnings call, she said "solid performance in response to our quality improvements" had resulted in double-digit sales growth for the "Good to the last drop" brand. IRI shows Maxwell House sales up 3% to $346 million.


baking
Kraft's prescient DiGiornonmics campaign just about said it all. The ads compare time and money spent waiting for delivery pizza when a consumer could throw a DiGiorno in the oven for a fraction of the price. As package-food companies have improved frozen pizza technology, it's gotten harder for delivery chains to sell the more-expensive pies. Industry giants Domino's and Pizza Hut have struggled with price points and same-store sales in the tough economy, while the freezer aisle has stayed white hot.

Kraft also holds licensing rights to California Pizza Kitchen pizzas, and Ms. Rosenfeld noted in last week's earnings call that the company's frozen-pizza division is riding seven consecutive quarters of double-digit sales gains. DiGiorno alone grew 20% in the last quarter.

According to IRI, frozen-pizza sales are up 5%. IRI showed DiGiorno and CPK sales up 12% and 10%, respectively, though, once again, the data exclude Walmart and club stores.

Sarah Grover, chief marketing officer at California Pizza Kitchen, said in an interview that sales and traffic have been problematic for the chain's 200 stores during the recession. And CPK generally fares better than its casual-dining peers. At times like these, she said, her company is particularly glad to partner with Kraft. "People are cooking at home and buying frozen products," she said. Fortunately, she added, "we have products at the grocery store."

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