Flowers Foods leans on better-for-you and snacking brands to drive Q2 growth
Takeaways
Consumer trends: Shoppers are willing to pay a premium for value-added attributes and prefer smaller pack sizes at lower price points.
- Wonder brand expansion: Launch of Wonder cakes contributed to 70 basis points unit share gain; national rollout continues.
- DKB snacking portfolio performs well: Protein bars and snack bites showing strong consumer uptake.
- Simple Mills acquisition strengthens natural snacking: Expands access to the growing better-for-you snack segment.
Breakroom and snacking channels: Products with better-for-you positioning outperform in break and snack occasions despite overall soft bread sales.
Though inflationary pressures are affecting net sales and profits, says Flowers Foods in its second-quarter financial report, the strength of the recently acquired Simple Mills brand, consumer preferences for better-for-you products and growth driven by its Wonder brand’s push into the snack cake category helped drive growth.
“While the bread category overall is under pressure, differentiated products, particularly those with better-for-you attributes, are outperforming. For example, organic and keto category sales rose 3% and 4%, respectively. We believe our leading share in these and other attractive subcategories positions us well to capitalize on the available growth opportunities,” said chairman and CEO Ryals McMullian in prepared remarks.
“We are also leveraging our strong brands to expand our product lines outside of the bread category in areas with significant market share potential where we believe we have a right to win. Our DKB snacking portfolio is just the first example of this strategy. And our acquisition of Simple Mills amplifies this shift, providing access to the growing natural snacking category,” he continued. “Wonder’s move into the cake category, which is off to a strong start, is another example of extending our brands where it makes sense.”
McMullian noted that while its overall break sales underperformed overall, products with better-for-you attributes were an area of strength.
“Consumers are responding to differentiation and are willing to pay a premium for value-added attributes. Recent innovations, including Nature’s Own keto products, and DKB protein bars and snack bites, continued their strong performances,” McMullian said. “Consumers are also seeking lower price points and smaller pack sizes, which our expanded line of small loaves addresses perfectly.”
Wonder’s push into the snack food aisle is paying off, McMullian noted. “Our sweet baked goods business benefited from the spring launch of Wonder cake products, which significantly outperformed the category. We gained 70 basis points of unit share, the most of any vendor, led by Wonder’s strong performance. Importantly, Wonder’s growth did not cannibalize TastyKake sales, which posted flat unit share. Reception from retailers and consumers alike was enthusiastic and we are excited about the growth potential for this business. The national rollout will continue into the second half of the year as we add new distribution and work to drive additional trial through promotions.”