Milling & Baking News - February 3, 2004 - 15

F I N A N C I A L

R E S U L T S

health beneﬁts of nuts," the company
said.
The new cookie introductions represent a small part of the portfolio changes
planned for Kraft, Mr. Deromedi said.
"We face rapidly changing consumer
needs and customer channel dynamics," he said. "On the consumer side,
the growing importance of health and
wellness has altered buying patterns to a
degree I have not seen before in the food
industry. Low-carb diets like Atkins and
South Beach, the focus on trans fats,
concerns about obesity, and increased
demand for natural and organic products are requiring a shift in how we
market and what we market. And just as
important as lifestyles change, the need
for convenience continues to grow."
Among pending introductions highlighted by Mr. Deromedi were new
products with reduced or zero trans fatty
acids, beginning with zero grams trans fat
Triscuit. "You'll see a continuous roll-out
of zero gram and reduced trans fat cookies and crackers throughout the remainder of 2004 and into 2005," he said.
Consumer concerns extend far beyond

trans fatty acids, Mr. Deromedi said.
"We've seen signiﬁcant shifts in consumer buying patterns, caused not by
one single need or changing attitude but
instead by several new needs," he said.
"Which ones are fads and which ones
are lasting, only time will tell. But it's
clear we need to respond with a range of
new products and marketing initiatives.
Some consumers are looking for absence
of perceived negatives, illustrated by
demand for low-carb and reduced fat
products, and the increased interest in
sugar free products. Others are seeking
the presence of positives, such as a desire
for added calcium and other nutritional
fortiﬁcation, as well as the rapid growth
of natural and organic foods."
The vehicle Kraft will use to expand
in the natural and organic sector is the
company's recently acquired Back to Nature trademark. Mr. Deromedi said production in a number of new categories
would be introduced under the brand
name in the ﬁrst half of 2004.
Tapping into growing consumer demand for low-carb foods, Kraft will leverage its products such as Kraft cheeses with

Soft pretzel sales pave way for
strong '03 earnings at J&J Snack
PENNSAUKEN, N.J. - Strong performance from its food service business
group, which includes a line of soft pretzel products, paved the way for record
sales and earnings at J&J Snack Foods
Corp. in the 2003 ﬁscal year, the company
said in its annual report.
As previously reported, J&J in the
year ended Sept. 27 posted net income of
$19,902,000, equal to $2.26 per
share on the common stock,
up 9.9% from $18,113,000, or
$2.07 per share, in ﬁscal 2002.
Sales of $364,567,000 rose
3.2%. (see Milling & Baking
News of Nov. 25, Page 14).
Providing the biggest boost
to sales was success in the
company's food service business. Total food service sales rose 8%
for the year, primarily due to growth in
J&J's Pretzel Fillers and Gourmet Twists
product lines.
During the year, J&J gave particular
attention to food service. The company's
food service soft pretzel sales grew 15%
to $76,062,000 during the year, primarily
driven by surging sales in its gourmet
style soft pretzels. Improved sales to two
customers accounted for about 64% of
the increase, the company said. In addition, the pretzels found outlets in an
expanding array of venues from conve16 / Milling & Baking News, February 3, 2004

nience stores to snack bars, J&J said.
While the company's ﬂagship brand,
SuperPretzel, provided most of the food
service soft pretzel sales during the year,
Pretzel Fillers, a hand-twisted soft pretzel with ﬁllings and toppings, and Gourmet Twists, an old-world, hearth-baked
soft pretzel, invigorated the category.
SoftPretzel brand sales in supermar-

kets - which includes SoftPretzels, SoftPretzel Bites and Softstix cheese-ﬁlled
soft pretzel sticks, which are co-branded
with Kraft Foods Inc. - enjoyed another
year of growth thanks to a 14% sales increase in the Softstix line.
J&J is seeking to extend its growth
in 2004 with the launch of SuperPretzel
Pretzelﬁls, which began test marketing
at the end of ﬁscal 2003. The product
features ﬂavored dough combined with
ﬁllings and toppings.
Sales of bakery products increased
$3,661,000, or 6%, in ﬁscal 2003. Growth

portfolio-wide advertising and packaging
changes. "And we'll be doing the same on
our Oscar Mayer meats," he said. "We'll be
ﬂagging our carb counts on packages and
promotional materials across the portfolio.
Nuts are another food lower in carbs."
In questions and answers, Mr. Deromedi was upbeat about the cookie business,
both at Kraft and category-wide. "If you
address consumer needs appropriately,
you can ﬁx the category and get it moving in the right direction," he said.
Frozen pizza, which had been a rapidly
expanding product line for Kraft, saw a
sales decline in the fourth quarter, the
company said. The company said it would
be expanding the channels in which many
of its other grain-based products are sold.
"We've recently expanded an alliance that
will make many of our most popular products more readily available for a unique hot
vending system," Kraft said. "Soon we'll
have Tombstone pizza, Kraft macaroni and
cheese, Kraft grilled cheese sandwiches
and Oscar Mayer hot dogs available on
demand in more convenience stores, colleges, hospitals and businesses around the
country." MBN

in the company's contract private label
business, along with an increase in bagels,
donuts, mufﬁns and other fresh bakery
products sold to WaWa Inc., a convenience
food retailer, contributed to the sales gain.
J&J, which makes frozen cookie
dough, pre-baked cookies and packaged cookies under such names as Mrs.
GoodCookie and Camden Creek, also
experienced strong sales in those product lines.
While sales of Tio Pepe's churros expanded further, both in the United States
and the Asia-Paciﬁc region, the
company's funnel cakes came
under pressure as the result of
a rain-drenched summer that
limited sales opportunities.
Sales in the company's Restaurant Group and Beverages
units declined 9% and 1%, respectively, in the year.
Going forward, the 2004 ﬁscal
year began with signiﬁcant news when
the company's $12.2-million bid for assets of Country Home Bakers, Inc. was
approved by the U.S. Bankruptcy Court
for the District of Connecticut at New
Haven.
In addition to Shelton, Conn., ofﬁce
assets, J&J acquired Country Home's
Metropolitan Parkway plant in Atlanta.
The plant produces cookies, biscuits
and frozen dough under the Readi-Bake
and Country Home brands and private
labels sold through supermarket in-store
bakeries. MBN
bakingbusiness.com/world-grain.com

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Milling & Baking News - February 3, 2004

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