Healthy biscuits, which took a back seat last year, have risen to the top of the barrel in 2010. But when it comes to cakes, own-label NPD is putting indulgence first, reports Sue Scott

Comfort eating is one thing, loading up on the calories quite another, it seems. The nation that gave the world the Victoria sponge and the chocolate digestive hasn't lost its appetite for sweet treats but these days, it wants them to be healthy, too.

The healthier products sub-category has put in by far the strongest performance in biscuits over the past year, with value sales rising 10.2%. The overall biscuits market, on the other hand, has risen just 3.4% by value and much of this growth is attributable to price inflation [Kantar Worldpanel 52w/e 8 August]. The cake market has been similarly subdued, with overall sales up 2.1% by value, although shoppers have shown enthusiasm for cake slices, sales of which rose 6.5% to £114.6m.

So does lighter work as the category's new leitmotif? If so, will it be enough to add value to a sector that has become so competitive and price sensitive that players have had to increase their levels of promotional and advertising activity just to stand still?

The cakes and biscuits category has worked hard to improve its health credentials through reformulation, lower-calorie NPD or portion-controlled formats. "Reducing satfat levels which we have successfully done twice now in two years has paid off in sales," says Mark Sugden, director of market strategy and planning at United Biscuits.

And sales of its calorie-counting Go Ahead! brand have risen 36.2% to £19m year-on-year and are set to be boosted further following the launch of Fruit Wafers last month. Brands perceived to be relatively healthy have also fared well, with sales of McVitie's Rich Tea biscuits rising 9.2%, compared with a 5.8% slump for Digestives and a 1.7% slip for the overall everyday biscuits market.

United Biscuits, whose everyday biscuit sales have risen a not-to-be-sniffed-at 4%, has also been taking the healthy route with its cakes, in April cutting the satfat content of flapjacks by 35%. And it trimmed the fat from another category classic, the Penguin bar, from 133 calories to 106. This takes it just under Nestlé's 107-calorie two-finger Kit Kat, which lost 3.6% in value last year [SymphonyIRI].

While Sugden and his co-workers ponder whether to start lessons in Mandarin the recently marketed UB is being courted by buyers including Shanghai-based Bright Food the company's development programme will continue, he promises.

As will the trend towards healthy treats, believes David Guest, marketing and commercial manager at Walkers Shortbread, which claims sales of the biscuits it produces under the WeightWatchers brand have grown 130% over the past three years.

There are plans to add a fruit crumble biscuit, he says, stressing the importance of NPD to future category growth and the link between lighter products and increased consumption. "The latest figures show that in an average two-week period, WeightWatchers biscuit eaters consume 60% more than the average biscuit eater."

Everyday biscuits and cakes (think Swiss roll, fruit pies and fruit loaf) appear to have lost ground to their healthier counterparts. Unimaginative new product development hasn't helped, which is perhaps why recent launches have been bolder and, if not health-oriented, at least natural ingredient-oriented.

Premier Foods' Mr Kipling brand is set to announce "significant" changes to ingredients and formulation but Versha Patel, head of the sweet category, stresses it has no intention of moving into calorie-counting.

"People do not eat cake for health reasons, they want them to be delicious," she says. "But when you press them, they want to know what goes into products, so our concern is about what we put into the brand the wholesomeness of it as opposed to being overly healthy."

The brand targeted younger consumers with three new slice variants this summer based on ice creams and will launch three Mr Kipling lines based on the theme of Great British Puds this winter.

Activity such as this alongside Cadbury Mini Mini Rolls (launched last month), a seasonal version of Mr Kipling's Big French Fancy, and Bettys & Taylors of Harrogate reducing the size and price of its Yorkshire Tea Cakes by 25% in May to make them more suitable for its core elderly consumers are all examples of the kind of extended product development UB's Sugden expects to see more of next year. He argues many launches have been line extensions rather than "true NPD", which in biscuits has been worth less than 3% of the total value market in the past two year, he claims.

Burton's Foods would no doubt put its Cadbury Crunchie, Caramel and Turkish Delight biscuits (launched in March) in the "true NPD" camp. Boasting at the time that Cadbury would become "as big in biscuits as it is in confectionery", it threw £2.5m behind the launch and will invest £1.7m this autumn. The range clocked up sales of £10.6m in its first four months [Nielsen w/e 10 September] and Burton's category controller Jon Sandy promises "ambitious plans for the Cadbury portfolio".

Taking confectionery brands into biscuits and cakes continues to be a big trend in NPD, as does bringing out bite-sized or portion-controlled versions of existing lines. Both have been driven by convenience and the lunchbox market, with Northern Foods, for example, launching bags of Fox's Mini Party Rings later this year (see box-out) and Premier unveiling Oatibakes cake bars in May this year.

Own label
Despite such NPD activity, some retailers clearly believe there's some wriggle room particularly in the cakes market, which has seen far less branded NPD activity than the biscuit category. Sainsbury's and Asda have included premium cake and biscuit lines in the relaunched Taste the Difference and new Chosen By You ranges respectively.

"Customers want more adventurous flavours and varieties but the bigger cake brands haven't responded to this trend," says Asda cake buying manager Sue Thompson. "The real growth and innovation for us is with in-store cakes and smaller suppliers who can produce the cakes customers want to buy."

Asda's new range includes mega-muffins, "handcrafted" cupcakes and whoopies the sponge and buttercream sandwich tipped to be the successor to the cupcake. "We have seen a decline in pre-packed cakes and slices, so this new range is ideal for shoppers who want something new and exciting," adds Thompson.

Retailers have also upped their game when it comes to promotional activity, with the number of deals offered on own-label cakes and biscuits increasing 17% between September 2009 and October 2010 [Assosia]. However, the increase in activity hasn't been enough to prevent a slump in sales, with own-label sweet biscuits and cakes down 6.2% and 4.2% by value respectively [SymphonyIRI].

According to Assosia, almost all of the major cakes and biscuits brands with the exception of Mr Kipling and Fox's have increased the number of deals they have run year-on-year [52w/e September 2010].

There has been a shift away from x-for-y deals across the category, adds Sandy. "We have seen a shift from multibuy promotions to a much more heavily price-led approach," he confirms.

UB's Sugden claims Burton's new Cadbury biscuit range has done well on the back of "pretty cheap promotional prices". UB has indulged in similar tactics itself, with just over half its category portfolio available on promotion. Meanwhile, Nestlé has tapped into consumer enthusiasm for round-pound deals by maintaining the £1 price point on multipacks of Kit Kat, Blue Riband and Breakaway.

The question is whether such price points can be maintained. "It's a challenge," says Sugden. "Commodity prices have had a significant impact on our product mark-up. We have huge volatility; ultimately we will have no option but to reflect the ingredients mark-up on the business."

There is still an opportunity to exploit the £3.9bn lunchbox market, he adds. "Buying multipacks to take home and then eat out of the house makes up the equivalent of 6% of all meal occasions," he says.

Growth at the other end of the market impulse is being hampered by "really poor" stocking levels in independents, he claims, adding that if these were improved, the cakes and biscuits category would reap the rewards. "If you take McVitie's Digestives, 45% of retailers do not stock them," he says. "Independents still go for the lowest and best prices, and promotions in cash and carries and wholesalers."

Whether the indies can be convinced to indulge remains to be seen. Fortunately, it looks as though the public will continue to do so in a healthy way, of course.

Focus On Cakes & Biscuits