Minor indulgence keeps cookies from tanking

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The ongoing explanation from leading players Kraft Foods' Nabisco and Kellogg Snacks Division that the nearly $4 billion cookie category is declining due to concerns over obesity, health and wellness may explain the general market but not the one segment where there is growth-the indulgent entries from smaller brands.

Sales of Campbell Soup Co.'s Pepperidge Farm unit rose 16% to $130 million for its premium Distinctive Cookies and McKee Foods' Little Debbie Fudge Covered cookies rose almost 5% during the 52 weeks ended May 16, a time period in which the overall category declined 4% and almost all of the big Nabisco and Kellogg-owned Keebler brands fell sharply, according to Information Resources.

"What we're finding even in the midst of low-carb mania is that people still have a need for indulgence," says Maureen Linder, VP-adult snacks for Pepperidge Farm. Ms. Linder points to the unit's launch of more convenient mini versions of its Distinctive Cookies as a big success driver. "Minis," she says, "offer a small indulgence anytime, anywhere."

Pepperidge Farm has been aided by a new umbrella campaign it launched last year featuring a new animated spokescharacter referred to internally as O. Howie Bakem. That campaign, from WPP Group's Young & Rubicam, New York, seeks "to make sure Pepperidge Farm is a special product [consu-mers feel] they can have every day," she says.

Like Pepperidge Farm, Mars Inc.'s Masterfoods USA is counting on consumers' continued interest in indulgence to grow its still-small entry in the category, Cookies &, cookie bars that features popular Masterfoods confections such as M&M's and Snickers.

Margaret Asselin-Woods, senior brand manager for cookies at Masterfoods, cites lack of innovation in the cookie category as the reason it hasn't been as strong as in years past. Sales figures show double-digit declines and a mere $35 million in sales during the period ended May 16 for Cookies &, which debuted in August 2002. Still, Ms. Asselin-Woods is counting on a new ad campaign playing up the "naughtiness" of the cookie/candy combo and new tray packs (versus individually-wrapped bars) to pick up the pace. The new campaign for Cookies &, which kicked off in early June from Grey Global Group's Grey Worldwide, New York, humorously shows the lengths to which cookie lovers will go for treats that are, as the new tagline asserts, "a little cookie, a little candy, a little naughty ... and a little naughty is fun."

Naughtiness is certainly not what the leading players are touting. The biggest news that Kraft is playing up for its $1 billion-plus portfolio of Nabisco cookies seems to be on the healthy front, efforts its CEO Roger Deromedi recently pointed out in a company statement are "part of a broader societal response to growing health and wellness concerns, including obesity."

Oreo, its leading trademark, saw sales drop 9% to $453 million for the year ended May 16, according to IRI, and Kraft is banking on new Reduced Fat Oreos and trans-fat-free Oreo Thin Crisps, which it will offer in pre-portioned 100 Calorie Packs, to turn the tide. Kraft is also pushing a new line of low-carb CarbWell cookies as well as a new low-fat Newton bar.

Kellogg is likewise focusing on better-for-you as it tries to lift lagging sales of its Keebler cookies. Its biggest trademark, Chips Deluxe, which were down almost 15% to $115 million in the period ended May 16, recently was extended with a line of low-carb Carb Sensible cookies.

And while Ms. Linder wouldn't totally rule out a low-carb offering from Pepperidge Farm, she says, "we have to make sure we deliver a product that meets people's expectations." After all, it is a cookie.

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