Cakes: Brands need to get back to a basic recipe

Snacking is seen as an important source of growth for the cake market - but the trend has also contributed to its decline this year.

In January, Premier Foods announced it was investing £20m in a new production line for its Mr Kipling Snack Pack slices. They had enjoyed “fantastic growth” since launching in 2011, said Premier at the time - although this hasn’t been enough to prevent a 2.5% drop in sales of the brand this year.

And Soreen, acquired this year by Samworth Brothers, puts its success down to snack-sized Lunchbox Loaves that also tap into consumer trends such as portion control and on-the-go convenience.

Yet across the market, overall sales of branded products have fallen by 4.5% - a decline some blame on promotions around impulse purchases.

“Branded is heavily focused on snacking,” says Lawrence Trist, commercial director at Finsbury Foods, which this year doubled in size with the acquisition of morning goods and specialist bread supplier Fletchers Group. “Snacking is the most heavily promoted sector, and subject to pressure to reach the £1 price point.”

“Consumers continue to look for great value for money from ambient cake,” he says, adding this has benefited lower-priced brands such as Brompton House, as well as the discounters and own label - up slightly in value despite volumes falling.

The category has seen a “deluge” of promotional activity,” says Nisa trading controller Graham Holbrook. “Promotional activity is so prevalent that as a consumer I find myself becoming somewhat apathetic to what should be an impulse-driven experience.” As for getting the category back on track in 2015, Holbrook advices a good balance of EDLP and deep-cut promotions on the right products.

Promotional intensity has been blamed for much of the decline in sales of the Fabulous Bakin’ Boys, which was acquired by Dutch baker Daelmans Group earlier this year. At the time of the sale, Daelmans said plans included refreshing the brand and repositioning it to “make it more fun.”

But if brands do wean themselves off promotions, the results won’t necessarily be pretty. Premier Foods’ licensed Cadbury cakes fell 8.5% by value this year, on volumes down 11%, primarily as a result of a reduction in promotional activity, according to Premier cake marketing director Phil Ellis.

Premier’s market-leading Mr Kipling has also dipped, though Ellis says its performance has turned around in recent months in response to the £10m Life Is Better With Cake campaign, which kicked off in August.

He says Premier is hoping to grow Mr Kipling by broadening its audience to include younger families through NPD in 2015.