Sugar Bowl Bakery Highlights Higher Margins For More Premium Bakery Items


Sugar Bowl offers five styles of premium baked goods: palm trees, madeleines, brownies, duets (a madeleine-brownie hybrid) and apple fritters. They are sold to most major US retailers, including Walmart, Kroger, Albertsons and Safeway, in most cases through private labels in the bakery department.

Like other categories of the packaged food industry – from kombucha snacks – Sugar Bowl knows it can no longer ignore the convenience channel. According to NACS, catering now accounts for almost a quarter of total sales.

Individually wrapped madeleines offer a real buttery alternative to common convenience store pastries. (Photo courtesy of CFF)

“We never managed to penetrate the convenience store channel. We are seen as being too expensive because of our quality ”,said Pete Thomsen, director of sales and strategy at Sugar Bowl. But stagnant foot traffic means even convenience stores must find a way to increase basket sales.

Thomsen noted the growing inclination of consumers towards fewer functional calories: “As humans, we will need to get a better return on the calories consumed. For us, in the category of delicacies, what we find is that “I want to be full by eating a bite instead of 10”, and this is the case with butter. Butter only makes it better for one simple reason: that you’ll be satisfied sooner.

Sugar Bowl has been fighting against the ambition of the food industry for decades to reduce costs at the expense of quality and sometimes taste. The law of diminishing returns does not apply to value, said Thomsen: “I can push the value as hard as I want. “

Butter adds value and builds loyalty

Sugar Bowl was born after the five Ly brothers immigrated to the United States in 1979, and in 1984 they collected enough money to buy a coffee. There, they made pastries from scratch and sold them to other local businesses. Today, Sugar Bowl has 400 employees and two 60,000 square foot solar installations in California; its products reach around 70% of the market, according to Thomsen.

Ly Brothers CFF
The Ly brothers, founders of Sugar Bowl Bakery (Photo courtesy of CFF)

The Ly family still uses real butter rather than partially hydrogenated oils or other supplements often used by standard practical baked goods. This choice not only increases the value proposition for the retailer – who may take a higher margin for the more premium offering – but also for the consumer.

At NACS, Sugar Bowl has launched individually wrapped versions of its Madeleines, Brownie Bites, and Duo Bites, which are typically packaged by the dozen in plastic bakery containers.

The company hopes the single-serve madeleine, for example, will give consumers another choice when they want something sweet but not too dense – and when they just want one.

“That’s the idea of ​​the trial. If I can understand how [to reach] someone who needs a snack in the next 30 seconds, that would be a great solution for them, but not if they can’t afford it ”,Thomsen said, noting that Hostess Brands’ classic cream-filled chocolate cake is often the only option.

Instead, products like Sugar Bowl Madeleines offer retailers “A reasonable path towards this creation of value”, He continued. “Instead of the opportunities that generate $ 0.10 in income, we have an opportunity that earns $ 0.30 or $ 1 – wherever you want to play.”

Madeleines and palm trees: a surprise to attract repeat purchases

Madeleines are by far the bakery’s bestsellers, Thomsen said, followed by bite-size brownies. But it is the palm trees that he sees as facing the biggest hurdle with consumers.

Installation_Palm trees
Palm, sometimes referred to as pig’s ear or elephant’s ear, is a crispy puff pastry dusted with lots of sugar. (Photo courtesy of CFF)

“How would you describe a palm tree? Our challenge is to convince everyone who is currently buying Hostess that there is a better solution ”,he told BakeryandSnacks. “Joy is when you are surprised at the quality of something. It’s that inherent “it’s better than expected” nature of humans telling others about it. “

For in-store bakeries, Sugar Bowl is hoping its products can draw consumers to the department week after week – and, in Thomsen’s words, their friends too.

“There are a lot of people walking past the bakery; there aren’t many people who buy things in the bakery – and if they do, they buy it once ”, he said. “Forty years ago every bakery smelled like chocolate chip cookies. They don’t feel it anymore.

“If you’re just starting out and you feel really good selling a chocolate chip cookie, they come back every two months. Our intention is to say: let’s try to fill the void. We’re not saying they aren’t going to keep buying chocolate chip cookies, but we do think consumers want variety in their lives. Instead of different flavored cookies, you bring in a madeleine because you then add a fourth choice to their rotation, which usually results in a higher turn.

Bakeries remain an important part of people’s lives, Thomsen said, and balancing everyday life with special occasions is key to the industry’s growth.

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