Overcoming Obstacles

February 1, 2005
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Overcoming Obstacles
by Julie Cook Ramirez
Pudding manufacturers struggle to overcome high ingredient costs and a less-than-healthy image.
In the immediate post-9/11 era, much ink was spent writing about comfort foods. From coast to coast, anxious Americans embraced the tastes of days gone by, from steak and potatoes to macaroni and cheese.
Surely, no manufacturer wished to bask in the glow of sales increases brought about — in part — by a tragedy. But there’s no denying numerous food and beverage categories benefited from the impact.
As they sought comfort in food, many people turned to pudding, a childhood favorite many consumers had long ago forgotten. Never the most vibrant category, suddenly sales of old stand-bys like chocolate, vanilla and tapioca soared.
Pudding is apparently something folks are clinging to, at least if the latest figures from Chicago-based Information Resources Inc. are any indication. Sales of shelf-stable pudding and gelatin rose 7.7 percent in dollars and 12.6 percent in units during the 52-week period ending December 26, 2004.
That trend hasn’t carried over to chilled product, where sales fell 0.1 percent in dollars and 4.8 percent in units. That compares to respective increases of 4.1 and 3.8 percent last year.
As with many categories, the low-carb craze did not serve pudding manufacturers well. Courtney Hodge, director of sales and marketing for Hinsdale, N.H.-based Echo Farm Inc., reports people reacting negatively to the high carbohydrate content of pudding.
“All of a sudden, people knew they were supposed to stay away from carbs and sugar, so they were constantly reading the label, whether they were shopping low-carb or not,” she says.
Hodge reveals that Echo Farm has been contemplating a line of no-sugar-added puddings, but has not yet figured out a way to develop such a product without abandoning its commitment to all-natural ingredients. Excited by the prospect of using stevia, an herbal sweetener currently sold as a dietary supplement, Hodge met with a manufacturer’s representative, only to learn that the product isn’t even close to being approved for commercial use by food processors. The U.S. Food and Drug Administration has deemed stevia an unsafe food additive.
Carousel Foods of America Inc. found itself well-positioned when the low-carb craze hit, as the Farmingdale, N.Y.-based company had already developed a line of no-sugar-added puddings. Sweetened with Splenda and sold under the Missy’s brand, it has built a following among diabetics and others who want to enjoy pudding but need — or want — reduced sugar content.
TOP 10 SHELF-STABLE PUDDING/GELATIN BRANDS*
 $ Sales(In Millions)% Changevs. Year AgoUnit Sales(In Millions)% Changevs. Year Ago
Total Category$283.67.7%213.212.6%
Hunt’s Snack Pack93.719.673.928.3
Kraft Handi-Snacks55.9-1.447.40.1
Dole Fruit and Gel Bowls36.65.417.45.6
Del Monte22.318.110.218.4
Private Label20.05.719.56.1
Hunt’s Snack Pack Dessert Favorites 11.8 2.1 10.3 22.5
Kraft Handi-Snacks Gels6.5-39.35.6-39.1
Kool-Aid Gels6.1N/A5.3N/A
Hunt’s Snack Pack Juicy Gels6.0-21.95.4-20.1
Del Monte Fruit and Gel To-Go5.99.32.78.3
* Total sales in supermarkets, drugstores and mass merchandisers (excluding Wal-Mart) for the52-week period ending December 26, 2004.
SOURCE: Information Resources Inc.
TOP 10 REFRIGERATEDPUDDING/MOUSSE/GELATIN/PARFAIT BRANDS*
 $ Sales(In Millions)% Changevs. Year AgoUnit Sales(In Millions)% Changevs. Year Ago
Total Category$570.4-0.1%260.5-4.8%
Jell-O145.15.452.02.0
Jell-O Gelatin Snacks86.211.130.48.0
Kozy Shack83.310.534.44.6
Jell-O Free56.4-3.919.9-6.8
Swiss Miss48.28.218.98.4
Private Label34.60.118.25.7
Jell-O Smoothie22.959.48.054.6
Jell-O Extreme15.0-22.95.4-25.1
Jell-O Crème Savers11.1-54.33.9-55.7
Señor Rico9.31.429.0-4.5
* Total sales of all forms of pudding, mousse, gelatin and parfait brands in supermarkets, drug stores and mass merchandisers (excluding Wal-Mart) in the 52-week period ending December 26, 2004.
Source: Information Resources Inc.
A Matter of Time
Soaring raw material costs and sky-high fuel prices also combined to make 2004 a difficult year for refrigerated pudding manufacturers, Hodge says. When Echo Farm first began producing puddings seven years ago, the price of a gallon of vanilla extract stood around $100. This past year, says Hodge, it cost a whopping $557. What’s more, when you factor in the fuel surcharges that came with every ingredient shipment — from tapioca to cocoa to sugar — you’ve got a significant challenge.
“We spent the whole year holding our own, buying more in bulk and trying to figure out where we could make savings, so that we wouldn’t have to pass any additional costs on to the consumer,” Hodge says. While Echo Farm worked hard to keep its prices in line, other refrigerated manufacturers were not able to achieve this feat.
Consequently, Hodge believes, higher prices served to drive the shift to shelf-stable pudding. “The market is kind of precarious when it comes to pricing,” she says. “You wind up with a parent going, ‘I can’t afford to spend 60 or 70 cents a cup on pudding.’ Then they see shelf-stable as a much better value.”
The portability and long shelf life of shelf-stable pudding also contribute to its popularity, according to Hodge. That sentiment is echoed by Gregg Steinhauser, president and chief executive officer of Carousel Foods. However, he’s confident it’s just a matter of time before consumers recognize what he considers the inferior quality of shelf-stable pudding.
“Shelf-stable is high in starch and gets nowhere near the taste or the quality of dairy pudding, which is clearly a better product with a better nutritional value,” Steinhauser asserts. “As we’re required to do better labeling and people become more knowledgeable, it’s going to become clear that the fresh products are better for the consumer.”
While consumers may come to view refrigerated pudding as healthier than shelf-stable pudding, the category still struggles from a deep-seated image problem. Its close cousin, yogurt, has long been branded a health food, while pudding is typically viewed more as an indulgent snack or dessert. This has led to nothing but frustration for a number of pudding manufacturers, chief among them, Echo Farm’s Hodge, miffed over the exclusion of pudding from the 3-A-Day program. Hodge’s frustration over pudding’s image peaked again when her company’s product was denied placement in a New England regional healthy-schools initiative because it contains whole milk.
Steinhauser agrees that pudding is typically viewed as a dessert, while yogurt is deemed a healthy snack or even a meal replacement. However, he feels that pudding manufacturers shouldn’t get too wrapped up in trying to change their product in order to alter its perception. Rather, they should embrace it for what it is and help consumers make more appropriate comparisons.
People compare it to yogurt, but if you compare it to other desserts, like ice cream, you see that pudding offers what ice cream does with less fat,” he says.
What’s more, Steinhauser says, yogurt manufacturers have been trying to make their product taste like more pudding for years (for example, custard-style yogurt). Unfortunately, he claims, the major players in the pudding industry have sat back and watched while yogurt not only reaped the benefits of its healthy positioning but attempted to encroach on pudding’s territory as well.
“Some of the larger manufacturers have really missed the boat by not promoting pudding properly,” he says. Coincidentally, the biggest pudding players — Kraft Foods, Kozy Shack and ConAgra Foods, maker of Hunt’s Snack Pack — declined to comment for this article.
“If the big companies were behind it and really promoted pudding the proper way,” Steinhauser says, “the consumer would look at it in a different light.”  
Julie Cook Ramirez is a freelance journalist based in the Chicago area.

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