The Products
Market Definition
Seven Product Categories
Shelf-Stable, Frozen, and Refrigerated Forms

The Market
Market Size and Growth
Factors Affecting Market Growth
Market to Approach $9.8 Billion by 2003
Table 1-1: The U.S. Market for Sweet Baked Goods: Estimated Retail Sales by Product Category, 1994-2003 (dollars): Cookies, Pastries, Snack Cakes, Cakes, Doughnuts, Pies, Muffins
Market Composition by Product Category
Figure 1-1: The U.S. Market for Sweet Baked Goods: Sales by Product Category, 1998 (percent): Cookies, Pastries, Snack Cakes, Cakes, Doughnuts, Pies, Muffins
Majority of Products Shelf-Stable

The Marketers
Hundreds of Marketers
Major Marketers
The Competitive Situation
Industry Trends
Marketers Spend $137 Million on Advertising

Distribution and Retail
At the Distribution Level
Supermarkets Dominate Sales

Consumer
The Consumer
Kids Drive Heavy Use of Cookies
Pastries Enjoyed in Almost Half of All Homes
Snack Cakes in 55% of Homes
Frozen Cakes Purchased by Older Consumers
61% of Homes Enjoy Doughnuts
One Out of Four Homes Uses Frozen Pies
Muffins Have Less Distinctive Profile
Sweets Are High-Impulse Purchases

Scope and Methodology
Scope of Market
In-Store and Freestanding Bakery Sales Excluded
Report Methodology

II. The Products

The Products
Scope of Market
In-Store and Freestanding Bakery Sales Excluded
Products Fully Prepared
Seven Product Categories
Cookies
Pastries
Snack Cakes
Cakes
Doughnuts
Pies
Muffins
Fat-Free, Low-Fat, Low-Cholesterol, Sugar-Free Baked Goods
Holiday Products
Shelf-Stable, Frozen, and Refrigerated Forms
Unit of Sale

III. The Market
Figure 3-1: The U.S. Market for Sweet Baked Goods: Retail Sales of Overall Market 1994-1998 (dollars)

Market Size and Growth
Methodology for Estimates
Retail Sales Near $8.8 Billion in 1998
Table 3-1: The U.S. Market for Sweet Baked Goods: Estimated Retail Sales of Overall Market, 1994-1998 (dollars)
Cookies Approach $4.8 Billion
Table 3-1a: The U.S. Market for Sweet Baked Goods: Estimated Retail Sales of Cookies, 1994-1998 (dollars)
Pastries Flat at $1.25 Billion
Table 3-1b: The U.S. Market for Sweet Baked Goods: Estimated Retail Sales of Pastries, 1994-1998 (dollars)
Snack Cakes Decline to $937 Million
Table 3-1c: The U.S. Market for Sweet Baked Goods: Estimated Retail Sales of Snack Cakes, 1994-1998 (dollars)
Cakes Advance to $677 Million
Table 3-1d: The U.S. Market for Sweet Baked Goods: Estimated Retail Sales of Cakes, 1994-1998 (dollars)
Doughnuts Decline Slightly to $498 Million
Table 3-1e: The U.S. Market for Sweet Baked Goods: Estimated Retail Sales of Doughnuts, 1994-1998 (dollars)
Pies Grow to $432 Million
Table 3-1f: The U.S. Market for Sweet Baked Goods: Estimated Retail Sales of Pies, 1994-1998 (dollars)
Muffins Recover to $181 Million
Table 3-1g: The U.S. Market for Sweet Baked Goods: Estimated Retail Sales of Muffins, 1994-1998 (dollars)
Manufacturer Shipments
Table 3-2: Value of Baked Goods Shipments by All Producers, 1994-1996 (dollars)

Market Composition
Cookies Account for 55% of Dollar Sales
Figure 3-2: The U.S. Market for Sweet Baked Goods: Sales by Product Category, 1998 (percent): 7 Categories
Majority of Products Shelf-Stable
Sandwich and Chocolate Chip the Most Popular Cookies
Low-Fat, Fat-Free Cookies Less Than 15% of Sales
Toaster Pastries Account for Almost Half of Pastries
Most Popular Cakes are Shelf-Stable, Followed by Frozen
Frozen Is Most Popular Form for Pies
Sweet Baked Goods Sold in Wide Range of Channels
Supermarkets Dominate Sales
Table 3-3: Share of U.S. Dollar Sales of Sweet Baked Goods by Distribution Channel and Product Category, 1996 (percent): 6 Channels
Regional Differences
Sales by Season

Factors to Market Growth
Consumer Expenditures
Table 3-4: Average Annual U.S. Consumer Household Expenditures on Baked Goods by Product Category, 1996 (dollars): 9 Product Categories
Per Capita Consumption of Cookies Stable
Table 3-5: Annual Per Capita Consumption of Cookies in the United States, 1988-1995 (pounds)
Eating Anytime, Anyplace
Intracategory Competition
Competition from Other Food Categories
Competition from In-Store Bakeries
Cakes a Strong Category for In-Store Bakeries
Table 3-6: Share of In-Store Bakery Product Sales by Product Category, 1997 (percent): 12 Product Categories
Sweet Baked Goods Have "Kid Appeal"
Fat Concerns Fading as Consumers Turn Toward Indulgence Marketers Offering Restaurant Favorites
Frozen SBG Marketers Seek to Heat Up Sales
Aggressive Marketing
Convenience Leading to New Marketing Opportunities
Tapping Niche Markets
Channel Surfing
Figure 3-3: The U.S. Market for Sweet Baked Goods: Projected Retail Sales of Overall Market, 1998-2003 (dollars)

Projected Market Growth
Retail Sales to Near $9.8 Billion in 2003
Table 3-7: The U.S. Market for Sweet Baked Goods: Projected Retail Sales of Overall Market, 1998-2003 (dollars)
Cookies to Approach $5.3 Billion
Table 3-7a: The U.S. Market for Sweet Baked Goods: Projected Retail Sales of Cookies, 1998-2003 (dollars)
Pastries Will Crawl to $1.3 Billion
Table 3-7b: The U.S. Market for Sweet Baked Goods: Projected Retail Sales of Pastries, 1998-2003 (dollars)
Snack Cakes to Near $1.1 Billion
Table 3-7c: The U.S. Market for Sweet Baked Goods: Projected Retail Sales of Snack Cakes, 1998-2003 (dollars)
Cakes Will Lead Growth to $859 Million
Table 3-7d: The U.S. Market for Sweet Baked Goods: Projected Retail Sales of Cakes, 1998-2003 (dollars)
Doughnut Sales to Increase to $550 Million
Table 3-7e: The U.S. Market for Sweet Baked Goods: Projected Retail Sales of Doughnuts, 1998-2003 (dollars)
Pies Grow to $513 Million
Table 3-7f: The U.S. Market for Sweet Baked Goods: Projected Retail Sales of Pies, 1998-2003 (dollars)
Muffins in Modest Climb to $201 Million
Table 3-7g: The U.S. Market for Sweet Baked Goods: Projected Retail Sales of Muffins, 1998-2003 (dollars)

The Marketers
Hundreds of Marketers in Field
Market Dominated by Food Giants
Some Top Companies Have Largely Regional Distribution
Most Major Marketers Publicly Owned
Major Privately Owned Marketers
Most Compete in Only a Few Product Categories
Many Marketers Offer Multiple Brands
Most Products Domestic
Recent Mergers and Acquisitions
Table 4-1: Leading Sweet Baked Goods Marketers and Their Brands by Product Category

Marketer and Brand Shares
Note on Share Data
Nabisco the Dominant Marketer
Keebler, McKee Foods, Interstate Bakeries Account for Almost One-Quarter of Sales
Nine Other Marketers Claim Share of 1% or More
Table 4-2: Share of U.S. Sweet Baked Goods Market by Marketer and Brand, 1997 vs. 1998 (percent): 15 Marketers and 34 Brands Nabisco Dominates Cookies Category
Table 4-3: Share of U.S. Cookies Market by Marketer and Brand, 1997 vs. 1998 (percent): 7 Marketers and 25 Brands
Kellogg Leads Pastries with Pop-Tarts
Table 4-4: Share of U.S. Pastries Market by Marketer and Brand, 1997 vs. 1998 (percent): 9 Marketers and 11 Brands
Interstate Bakeries Moves into First Place in Snack Cakes
Table 4-5: Share of U.S. Snack Cakes Market by Marketer and Brand, 1997 vs. 1998 (percent): 7 Marketers and 21 Brands
Sara Lee Leads Cakes
Table 4-6: Share of U.S. Cakes Market by Marketer and Brand, 1997 vs. 1998 (percent): 5 Marketers and 7 Brands
Interstate Heads Doughnuts List
Table 4-7: Share of U.S. Doughnuts Market by Marketer and Brand, 1997 vs. 1998 (percent): 5 Marketers and 9 Brands
Mrs. Smith's Has Largest Share of Pies
Table 4-8: Share of U.S. Pies Market by Marketer and Brand, 1997 vs. 1998 (percent): 6 Marketers and 10 Brands
Otis Spunkmeyer Leads Fragmented Muffins Category
Table 4-9: Share of U.S. Muffins Market by Marketer and Brand, 1997 vs. 1998 (percent): 4 Marketers and 5 Brands

Competitive Overview
Major Companies Have Edge, But Smaller Marketers Compete Successfully in Niches
Positioning to Adults, Kids, or Families
Strong Private-Label Penetration for Some Categories

Company Profile: Bestfoods/Entenmann's
Background
Acquired by CPC, Now Bestfoods
Entenmann's Sweet Baked Goods
Entenmann's Pioneers Fat-Free Sweet Baked Goods Rebuilding, Expanding the Brand
Advertising

Company Profile: Campbell Soup Co./Pepperidge Farm, Inc.
Campbell Soup
Background of Pepperidge Farm
The Leader in Premium Cookies
Third-Largest in Cakes
Ad Campaign Repositions Milano
Corporate Cookie Breaks
Greenfield Healthy Foods

Company Profile: Delicious Brands, Inc.
A Healthy Beginning as R.W. Frookies
Growing Bigger, Yet in the Red
Product Lines and Distribution
Co-Branding
Turnaround Strategies
Delicious Brands IPO

Company Profile: Flowers Industries, Inc./Mrs. Smith's Bakeries, Inc
Flowers Industries
Shelf-Stable Product Lines
Flowers in Frozen Baked Goods Through Mrs. Smith's Subsidiary Flowers Also in Cookies and Crackers Through Keebler Growth through Acquisitions
Extensive DSD Distribution
Stable Management
Background of Mrs. Smith's
Mrs. Smith's Production Lines Also Used for Fresh Baked Goods Operation 365
Advertising

Company Profile: Grupo Industrial Bimbo
Mexico's Largest Baker Buys Regional U.S. Bakery

Company Profile: Interstate Bakeries Corp.
Overview
Distribution
Hostess Snack Cakes and Doughnuts New Products Expand Brand Equity Interstate Acquires Drake Bakeries

Company Profile: Keebler Foods Co.
Nation's Second-Largest Cookie Marketer
Background
Recent History
Keebler and Sunshine Brands Keebler Elves
Facilities
Sunshine Biscuits Acquisition Keebler Adds to Strengths with President
Baking DSD a Keebler Strength
Private-Label Production
Advertising
Keebler Pioneers Cookies in a Can

Company Profile: Kellogg Co
Overview
The Leader in Toaster Pastries Pop-Tarts Celebrate 35th Anniversary
New Pop-Tarts Products
Kellogg to Launch Line of "Functional Foods"

Company Profile: McKee Foods Corp
Background
Low-Pricing Strategy
Warehouse Distribution Saves DSD Costs Advertising
McKee Launches Low-Fat Line

Company Profile: Nabisco Holdings Corp./Nabisco Biscuit Co
Corporate Background
Nabisco Biscuit Co
Manufacturing Facilities
Top-Selling Cookie Brands The Rise and Fall of SnackWell's
Nabisco Restructures
Restoring Effectiveness of DSD
New Strategy Focuses on Leveraging Top
Brands Nabisco Reformulates, Relaunches SnackWell's
Quietly Reformulates Oreos Cookie-Cracker
Hybrid Advertising and Promotions

Company Profile: Otis Spunkmeyer, Inc.
Most Sales Not Tracked by Supermarket Scanners
Expansion Plans
Promotion Flying High

Company Profile: Sara Lee Corp
Background
Sara Lee Frozen Sweet Baked Goods
Sara Lee Focuses on Indulgent Products Moves into Fresh-Baked Category
Joint Venture with Frito-Lay
New Twists in Cheesecake
Targeting Kids with Looney Tunes

Competitive Profile: Specialty Foods Corp
Formed Through Leveraged Buyout
Specialty Foods Becomes Third-Largest Cookie
Marketer Archway Cookies, Inc Archway
Introduces Sugar-Free Line Mother's Cake & Cookie Co.

Company Profile: Tasty Baking Co.
A Leading Snack Cake Producer
Product Lines
Expanding Geographically with Distribution Agreements
Both DSD and Warehouse Distribution Spurring Impulse Purchases with Holiday Novelties
Recent Product Developments
Targeting the Hispanic Market
Tasty Also Expanding Yeast-Raised Products, Foodservice

Marketing Trends
Marketers Increasingly Target Non-Supermarket Channels
Co-Branding
Distribution Partnerships More Attention to Ethnic Consumers Riding the Information Superhighway

New Product Trends
Number of New Products Down in 1997
The Three I's
A Return to Rich and Indulgent
Single-Serve Items Proliferating
Seasonal and Limited Editions
Better-For-You Still a Marketing Handle
Targeting the Diabetic Market
Table 4-10: Selected Sweet Baked Goods New Product Introductions, 1997-1998

Consumer Advertising Expenditures
1997 Ad Expenditures Top $137 Million
Nabisco the Leading Advertiser
Kellogg, Keebler, Pepperidge Farm, Pillsbury Form Second Tier McKee Foods, Interstate Bakeries in Third Tier
Three Other Major Advertisers
Television Is Medium of Choice

Consumer Advertising Positioning
SnackWell's Feeds Self-Esteem
Hostess and Dolly Madison Use Humor
Pepperidge Farm Milano Cookies an Adult Indulgence Other Marketers Target Kids
Photos Larger Than Life
Birth Certificate
Examples of Consumer Advertising

Consumer Promotions
Coupons
Eye-Catching Displays
Sampling
Merchandise Promotions
Joint Promotions
Contests and Sweepstakes
Celebrity Endorsements and Media Exposure
Publicity Stunts
Examples of Consumer Promotions

Trade Advertising and Promotion
Trade Advertising
Trade Promotions

At the Distribution Level
Two Main Methods of Distribution
Direct Store Delivery
DSD Offers Advantages for Both Sides
Warehouse Delivery
Warehouse Delivery Used by Some Leading Snack Cake Manufacturers

Retail
A Wide Range of Retail Outlets
Supermarkets Move Biggest Volume
Mass Merchandisers
Drugstores Carry Limited Assortment
Warehouse Clubs Growing in Clout
Convenience Stores
Vended Sales
Bakery Thrift Stores

At the Retail Level
Merchandising and Display
Freezer, Refrigerator Space at a Premium
Slotting Fees
Category Management
Retail Margins
Private Label

VI. The Consumer

The Consumer
Notes on Simmons Market Research Bureau Data
Consistent Factors in Sweet Baked Goods Use
Eight out of 10 Adults Buy Cookies
Demographics of Little Consequence
Heavy Users of Cookies
Table 6-1: Demographic Characteristics Favoring Use of Cookies: All Users vs. Heavy Users, 1998 (Adult Buyers)
Sandwich Cookies the Single Most Popular Type
Table 6-2: Favorite Types of Cookies: By Adult Buyers, 1998 (number and percent): 8 Types
Cookie Types Split by User Profiles
Table 6-3a: Demographic Characteristics Favoring Purchase of Cookies by Type, 1998 (All Adults): Sandwich, Regular Chocolate Chip, Soft Chocolate Chip
Table 6-3b: Demographic Characteristics Favoring Purchase of Cookies by Type, 1998 (All Adults): Fruit-Filled, Vanilla, Fudge-Covered Nearly Half of All Adults Buy Nabisco Cookies
Table 6-4: Favorite Brands of Cookies: By Adult Buyers, 1998 (number and percent): 7 Brands
Brand Profiles of Cookie Purchasers
Table 6-5a: Demographic Characteristics Favoring Use of Cookies by Brand, 1998 (All Adults): Nabisco, Keebler, Little Debbie
Table 6-5b: Demographic Characteristics Favoring Use of Cookies by Brand, 1998 (All Adults): Sunshine, Archway, Pepperidge Farm Pastries Enjoyed by Almost Half of U.S. Adults
Table 6-6: Demographic Characteristics Favoring Use of Pastries: Toaster Pastries vs. Breakfast Pastries, 1998 (Adult Buyers)
Kellogg's Pop-Tarts Used by One Out of Three Families
Table 6-7: Demographic Characteristics Favoring Use of Toaster Pastries by Brand: Kellogg's Pop-Tarts vs. Pillsbury Toaster Strudel, 1998 (Adult Buyers)
Breakfast Pastries by Type
Table 6-8a: Demographic Characteristics Favoring Purchase of Breakfast Pastries by Type, 1998 (All Adults): Cinnamon Rolls, Sweet Rolls, Coffee Cake
Table 6-8b: Demographic Characteristics Favoring Purchase of Breakfast Pastries by Type, 1998 (All Adults): Danish, Honey Buns, Turnovers
Brand Profiles of Breakfast Pastry Users
Table 6-9: Demographic Characteristics Favoring Purchase of Breakfast Pastries by Brand, 1998 (All Adults): Entenmann's, Little Debbie, Hostess
Snack Cakes in 55% of Homes
One Out of Four Households are Heavy Users of Snack Cakes
Table 6-10: Demographic Characteristics Favoring Use of Snack Cakes: All Users vs. Heavy Users, 1998 (Adult Buyers)
Brand Profiles of Snack Cake Users
Table 6-11a: Demographic Characteristics Favoring Use of Snack Cakes by Brand, 1998 (All Adults): Little Debbie, Hostess, Entenmann's Table 6-11b: Demographic Characteristics Favoring Use of Snack Cakes by Brand, 1998 (All Adults): Dolly Madison, Tastykake, Sara Lee Frozen Cakes Purchased by Older Consumers
Sara Lee, Pepperidge Farm Cakes Purchasers
Table 6-12: Demographic Characteristics Favoring Purchase of Frozen Cakes by Brand, 1998 (All Adults): All, Sara Lee, Pepperidge Farm
61% of Adults Buy Doughnuts
Table 6-13: Demographic Characteristics Favoring Use of Doughnuts, 1998 (All Adults)
Brand Profiles of Doughnut Users
Table 6-14a: Demographic Characteristics Favoring Use of Doughnuts by Brand: Hostess vs. Little Debbie 1998 (Adult Buyers) Table 6-14b: Demographic Characteristics Favoring Use of Doughnuts by Brand: Entenmann's vs. Dolly Madison, 1998 (Adult Buyers) One Out of Four Homes Uses Frozen Pies
Table 6-15: Demographic Characteristics Favoring Use of Frozen Pies: All vs. Mrs. Smith's, 1998 (Adult Buyers)
Mrs. Smith's Purchasers
Muffins Have Less Distinctive Profile
Table 6-16: Demographic Characteristics Favoring Use of Muffins by Type: Packaged vs. Frozen, 1998 (Adult Buyers)
Brand Profiles of Muffin Users
Table 6-17: Demographic Characteristics Favoring Purchase of Packaged Muffins by Brand, 1998 (All Adults): Hostess, Entenmann's, Sara Lee

In-Store Bakery Survey
Purchasing Behavior
Sweets Are High-Impulse Purchases

Appendix I: Examples Of Consumer Advertising And Promotions
Appendix II: Addresses Of Selected Marketers