Cakes: brands turn to snacks as cake crumbles

Brits have munched their way through 10.6 million fewer packs of shop-bought cake in the past year. That’s a volume decline of 1.4%. But value sales are up 1.5% (16.8%) thanks to the familiar story of rising prices, premiumisation and shrinking pack sizes.

The longer view reveals fundamental changes in how Britain takes its cakes. Eight years ago, the supers were selling just shy of 850 million units annually [52 w/e 3 October 2009]; in the past year they’ve sold 726.1 million. That’s a 14.3% drop. Why the decline?

The health trend is a factor, but its impact shouldn’t be over-egged. People still want to indulge and you don’t get much more indulgent than cake. A greater factor is that fewer people are sitting around taking tea and cake (whole cake is down); on the go is on the rise.

Those that can hit both trends are on to a winner. See Graze, the sector’s fastest grower, up 97.8%, or £3.3m. Its cakes aren’t health products (the range includes lemon drizzle flapjacks and chocolate cherry tarts) but they are marketed on their portion control and sold at key impulse locations in c-stores.

NPD is crucial. “Our innovation team are constantly working on the next big thing, and our direct-to-consumer business offers the ability to ‘test and learn’ with new products,” says UK retail MD David Irwin.

On the go NPD such as Trio and Penguin Cake Bars have also been crucial to McVitie’s £2.9m growth. “McVitie’s has driven volume growth by attracting younger consumers into the category with its range of more contemporary cake recipes in portable and shareable formats,” says head of category Jez Horton.

Meanwhile, Mr Kipling is struggling, down 2% on volumes down 5.6%, or 7.9 million units. Clearly, stiffening competition has affected the market leader, in spite of its new Tiger Slices product hitting sales of £3.1m in its first year on shelf. Brand owner Premier Foods has responded with the launch of new indulgent tarts, slice flavours, and an entry into gluten free, which it says will bring the brand back “on track to return to growth”.

So long as consumers feel they’re getting value for money. And with cost rises being passed on, that is a growing challenge. “To make sure we continue to provide the best value, we’ve also had to make some changes to our pack formats, principally by reducing the number of cakes in a pack,” says Premier’s brand director of sweet treats Jo Agnew.

The challenge is even greater in light of own label’s growth of 6.2% (£35.2m). Volumes have grown 2.2%. Own-label cakes are the fourth most successful own-label sector this year. “Own label has increased distribution (+5%) and promotional distribution (+6%); branded has declined in both,” says Nielsen senior client manager Hollie Kernohan. Brands will need to address this in 2018.

TOP LAUNCH

Cadbury Choc Tarts by Premier Foods

On the go isn’t the only occasion Britain’s biggest cake makers are looking to cash in on. With more and more Brits slobbing out on the sofa of an evening and sharing treats with friends and family, they’re also going after the so-called ‘big night in’. Launched in February to capitalise on the run up to Easter, the launch (in Crunchie, Caramel, Flake and Mini Egg variants) has helped drive value and volume growth in the tarts sector by attracting younger consumers.