Sweet innovation

Total Center Store

Cakes Sales

The sweet goods category — which includes pastries, Danish, coffee cakes, strudels, turnovers, crumb cakes, sweet rolls and croissants — represents an abundance of choice for consumers and retailers alike. But the range also poses an important question of why some retailers do well within the category while others do not. Jonna Parker, team lead for fresh foods at Circana, summed it up by saying, “It’s all about the mix.”

From a numbers perspective, sweet goods should sit at a position of strength as the category brings in more buyers while consumers choose at-home dining over foodservice. Additionally, the indulgent treats are notoriously work-intensive, making them easier to buy than make. But a dip in retail sales suggests many still don’t have the right mix of pastries in-store .

“Despite knowing that younger consumers are engaging with pastries that have different flavors, many retailers continue to offer varieties that would be recognizable to the parents or grandparents of those younger generations,” Parker said.

In contrast, sweet goods created by foodservice and coffee shops are showing strength, a sign that consumers might prefer these venues for sweet goods because of the variety of flavors and sizes.

Considering the category’s versatility, sweet goods can meet the needs of a range of consumers. This is particularly true as eating occasions evolve.

The Hartman Group found that these changes are influenced by inflation concerns, supply chain issues, shifting health and wellness priorities and a heightened sense of sustainability. These scenarios are culminating in a rising number of “eating alone” instances, which represent 44% of all eating occasions, according to the consumer research firm.

Diverse consumer groups are also contemplating different reasons for purchasing sweet goods. Those looking to save money might purchase sweet goods in-store instead of buying at a local coffee shop. The purchase could be part of a strategy to combat the soaring price of eggs by eating sweet goods for breakfast instead of eggbased dishes, or it could simply be a purchase with permissible indulgence in mind. Value is also considered through the lens of the experiential and environmental, according to Mintel’s US Executive Summary In-Store Bakery 2022 report.

While the trending of sweet goods as “older” is nothing new, Parker suggested now is an excellent time for modernization to attract new consumers. Case in point: Foodservice and coffee shops attract a younger consumer base by offering innovative flavors, smaller sizes and sustainable packaging.

That modernization doesn’t mean eliminating the nostalgia that has long been an attribute of the category; however, younger generations expect something new. For example, Gen Z is looking for sweet goods that offer a combination of indulgence, nostalgia and unique flavors.

The IFT 2023 Flavor Trend of nostalgia can easily morph into “newstalgia” as younger generations seek out flavors that possess familiarity with a twist. This includes an ongoing desire for diverse, unusual flavors and ingredients such as those from Asian and Latin American cuisines.

The trend of pairing familiar flavors with unusual, innovative ones was also highlighted in Mintel’s Trending Flavors and Ingredients in Desserts and Confections 2022 report.

In center store, Hispanic pastries represent $78.26 million in current dollar sales, a 21.7% change vs. a year ago. In contrast, Hispanic pastries in the perimeter has shown a dip in sales at $68 million in current dollar sales and a -26.5% change vs. a year ago.

Traditional sweet goods find favor with a range of consumers. In fact, within the perimeter, pastry/Danish/ coffee cakes showed strong current dollar sales of $1.75 billion, an 8.2% increase from a year ago. The rise was even higher in center store with a 12.7% increase vs. a year ago and $1.32 billion in current dollar sales.

Center store sweet rolls registered $700.92 million in current dollar sales, a 20.2% change vs. a year ago, and sweet rolls in the perimeter saw slightly lower growth with $444.84 million in current dollar sales and a 9.8% change vs. a year ago.

The humble toaster pastry is another example where center store is outpacing perimeter in terms of innovation. This includes an ongoing premiumization of the pastry in foodservice and some innovative in-store bakeries.

For example, Parker highlighted the dichotomy of a more traditional brown sugar and cinnamon toaster pastry with that of a toaster pastry featuring the

Source: Circana on-trend heat of a sriracha topping. Both varieties fall within the Sweet Plus flavor trend reported by IFT, which pairs chili varietals with sweet ingredients. Mintel reported a 138% increase in spicy flavors on bakery menus in 2022.

Innovation in this category must be cultivated. Consumers are used to seeing it in center store, but the perimeter bakery remains disconnected. Consumers don’t look for innovation in the perimeter the same way they look for it in center store. It’s not that perimeter isn’t ripe for innovation; it just needs a different approach.

Parker recommended introducing innovative products in the perimeter through digital media. When combined with social media promotion, sweet goods can get people talking. This can be particularly effective as consumers expand where they shop. This is the time to surprise existing customers and build interest among new ones.

One trend worth “borrowing” is the use of popular flavors or formats from other countries/cultures, according to Marcia Mogelensky, director of insight at Mintel Food & Drink.

“We’ve already seen churros and stroopwafel influences become popular in mainstream bakery goods,” Mogelensky said. “We are also seeing more formats, flavors and styles from other countries and cultures becoming more common, including paczki (filled donuts) and pain au chocolat.”

The consumer who shops the bakery might not be the one a retailer expects. There’s typically an overlap. For instance, a consumer looking for clean labels might also be in search of permissible indulgence in the right moment.

“If you’re putting out a product, you need to know who it is for,” Parker said.

When courting new consumers, especially younger generations, Parker emphasized looking for elements designed to speak to them. For instance, clamshells have long been used to display and protect products, but younger consumers with a focus on sustainability may bypass a new product housed in a clamshell because it doesn’t fit their idea of sustainability. Instead, bakeries can look for ways to use packaging to convey transparency and recyclability to a younger audience.

The demographics of the American household are also changing, making 2or 3-pack sizes a better option. Smaller

Center Store Pastries By Dollar Share

pack sizes can speak to a range of concerns, from food waste and ongoing inflationary pressures to a way to lower prices. Plus, consumers increasingly want to purchase only what they can eat over the next day or two.

Just as dough requires the right conditions to rise, so do the elements of success in the sweet goods category. An organizational pivot could be the boost needed to help consumers find additional relevance within the category.

“This can be accomplished by recognizing sweet goods dough to be an important carrier for a wide variety of flavors and sizes,” Parker concluded. “You won’t lose the consumer who has always been there; but by pivoting, you can welcome new consumers.” CB

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