Kellogg deal sweetens cookie market
USA Today
Fruit Loops wafers. Rice Krispies creams. All-Bran snaps.
Wait a minute. Are these cookies or cereals? The answer soon may be both.
These cookie brands don't exist — yet. But with Kellogg's near-$4.5 billion purchase of Keebler completed on Monday, it's crunch time in Cookie Land.
"These are brands we can take to the cookie aisle," boasts Carlos Gutierrez, chief executive officer of Kellogg, "and add some of the wholesome halo Kellogg's is known for."
Who might be afraid of the Keebler Elves now that they are backed by giant Kellogg?
For one, Nabisco. And Mrs. Field's. And the Girl Scouts. And even actor Paul Newman's daughter Nell, who's making organic versions of everything from Fig Newtons (ahem, Fig Newmans ) to Oreos (double ahem, Newman-Os ).
That's because there is already a frenzy in the cookie aisle. The $4.5 billion industry is in a tizzy over consolidation, including Kellogg's bid to be the Big Kahuna of cookies. Not only that, but rivals from other sectors are encroaching: candy bars, nutrition bars and even pastries from Starbucks.
"America's sweet tooth is alive and well," says Gutierrez, a Famous Amos cookie fan. But that sweet tooth increasingly is being satisfied outside the cereal aisle. With the purchase of Keebler, nearly 40 percent of Kellogg's domestic sales will be non-cereal items.
Keebler is selling mini-versions of top brands — Chips Deluxe, Vienna Cremes and Sandies — in resealable packs like tiny Pringles cans.
They're not sold at the supermarket but at drugstores and convenience stores, so that consumers can gobble cookies "in a car, bike or kayak," says Bruce Flowers, a new product development manager at Keebler.
At the same time, Keebler, like others, recently began to plop a number of its brands into resealable bags. Keebler also has extended its new Sesame Street cookie line to some 17 different products. And the packages now stand straight up — no sagging cookie bags.
One thing is clear: The heyday of fat-free, calorie-reduced cookies is over. Nabisco's Snackwell sales were down about 16 percent last year, says Information Resources.
Here's what else is going on in the cookie aisle:
• Nabisco tweaks. Its top-selling Chips Ahoy brand soon will come dotted with peanut butter chips and candy pieces. Same cookie. New stuff inside. And just in time for spring training, Nabisco plans to temporarily market baseball-like Oreos with the imprint "Play Ball" on them. The cookie's the same, but it suddenly seems different.
• Packaged Mrs. Field's? Last year, Mrs. Fields did the unthinkable. The company best known for mall stands with hot, fresh cookies licensed a supermarket cookie-aisle version.
After some years of financial headaches, that license helped push the privately owned company's total sales above $150 million in 2000.
• Girl Scout ice cream? For the second year, Dreyer's Grand (Edy's on the East Coast) is selling Girl Scout Cookie Ice Cream. There's Thin Mint, Samoa and Tagalong.
This is the only cookie license the Girl Scouts have ever done.
• Paul Newman's cookies. Back in 1995, actor Paul Newman made a humble call to the CEO of Nabisco. He asked if it was OK for his company to borrow on the equity of the Fig Newton name so he could create an organic cookie named Fig Newman.
Today, Fig Newman is the top-selling organic cookie.
