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156-year-old Clabber Girl rolls out new products

September 4, 2006

The 156-year-old Terre Haute company that quietly churned out nothing but its trademark baking powder for more than a century is now serving notice to General Mills' Bisquick and other well-known brands that the status quo is dead.

Clabber Girl, owned by the Hulman family of Indianapolis Motor Speedway fame, is ramping up for a national launch of an all-purpose baking mix in early 2007 and is already developing cookie, brownie and corn bread mixes to challenge the industry leaders.

"You could definitely say this is a seismic shift for the company," said Eric Gloe, Clabber Girl vice president of sales and marketing.

With plans to add employees and double the size of its plant, Clabber Girl is posturing more like a brash prizefighter than the innocent-looking, old-fashioned girl that adorns its products' labels.

But why shouldn't Clabber Girl, a privately held subsidiary of Terre Haute-based Hulman & Co., be confident? Company officials said annual sales have risen more than 20 percent in recent years and more than 30 employees have been added to the mix in the last 12 months.

Clabber Girl's owners bought the famed racing oval six decades ago, in part to promote the baking powder manufacturer. The firm's next bold move, diversification, didn't come until 2002, but it's paying off.

The cornstarch Clabber Girl started selling four years ago quickly ascended to the nation's No. 2 brand, behind Argo. And its all-purpose baking mix is flourishing in six test markets across the country.

Calling out category killers

Although food industry experts were surprised Clabber Girl could amass 10 percent of the cornstarch market share in four short years, they said taking on a brand like Bisquick is even more daunting.

"Bisquick has such market saturation, it's almost a generic name for baking mix," said Joan Fulton, professor of agricultural economics at Purdue University. "Clabber Girl has some solid brand equity built up in the baking arena, but this is definitely a step up the food chain."

Clabber Girl began testing its baking mix this March in 1,500 U.S. grocery stores, including at Marsh Supermarkets in Indianapolis. Other markets include Phoenix, St. Louis, Dallas, Houston and San Antonio.

While baking powder and cornstarch each represent $30 million categories among American consumers, U.S. sales of all-purpose baking mix is more than $100 million, according to New Jersey-based American Institute of Food Distribution. Bisquick owns 80 percent of the baking mix market.

"This is definitely a change in strategy for us," said Clabber Girl President Gary Morris. "But we think we're poised to make this leap."

Not that the company had a choice. The baking powder category that Clabber Girl long dominated became stagnant as baking from scratch became more rare.

But the company isn't shrinking from the task.

Clabber Girl, which employs more than 140 people, is so confident its new strategy will work, it's planning a 70,000-squarefoot addition to its Terre Haute headquarters and additions to its second and third shifts.

Clabber Girl used its long-standing relationship with national grocers-including Wal-Mart-to grab shelf space for its cornstarch and is doing the same for its baking mix. It's a common practice for grocers to cut deals with manufacturers for shelf space, but established clients can get better opportunities to prove new offerings where new players would not.

"There's no doubt Clabber Girl is an established brand, and I'm sure that helped them get their foot in the door," Purdue's Fulton said. "The next step is winning consumers' confidence, and that will be the bigger challenge."

Clabber Girl's battle for baking mix supremacy will be fierce for the company whose trademark logo shows a smiling girl serving biscuits.

"You can bet General Mills has taken notice of this move, especially given what Clabber Girl has done in the cornstarch segment in four short years," Fulton said. "I'm sure they'll do what they can to keep them from getting a foothold and eroding their market share."

Connecting with consumers

The key for Clabber Girl will be transferring its popularity from one generation to the next, said Ann Beriault, a consumer-brand marketing expert for Young & Laramore, one of Indianapolis' largest advertising agencies.

"Clabber Girl is beloved by a strong group of bakers, but their demographic is old," Beriault said. "The question is, will the children and even grandchildren of Clabber Girl devotees remember the brand?"

Even with its reputation among grocers, Clabber Girl won't have long to prove itself.

"The retail and grocery store environment is not for the faint of heart," Beriault said. "It's a dogfight every day. Tens of thousands of new products are introduced every year, and 90 percent of them fail. The patience of the retailer is so thin because they want to see profits on the shelves every day. Clabber Girl will have to turn product very quickly, or they'll lose their shelf space. Some grocers will give them as little as 90 days to prove themselves."

One thing Beriault thinks Clabber Girl has going for it is its consistent image.

"Clabber Girl's packaging is very memorable," Beriault said. "It's pure, wholesome and has a nice retro feel. I think Clabber Girl represents a wholesome time people long for."

More than a pretty face

Clabber Girl President Morris is banking on the baking mix's packaging and the fact that the mix is made with less fat and in an audited peanut-free facility. While brands such as Bisquick and Jiffy are sold in cardboard boxes, Clabber Girl's mix is sold in resealable plastic tubs. "We've always been known for our trademark packaging," Morris said. "First with our baking powder sold in tin cans, and now with this unique plastic tub." Morris said the tub is not only eye-catching, but also more practical than a cardboard box. "It's much easier to scoop the mix out of the tub with a measuring cup, and the resealability keeps the product fresher, longer," Morris said. But there's a downside.

"Unique packaging is a strong strategy, but round containers are not storage-efficient, especially on grocery store shelves, like squared-off boxes are," Purdue's Fulton said.

Morris said 90 percent of consumers surveyed by his company preferred the resealable tub. He also said the peanut-free environment of the Terre Haute manufacturing facility is a big hit with consumers.

"A lot of people have allergies, and we want to be sensitive to that," Morris said. "A lot of other food makers claim to be peanut-free, but we're the only company using an outside auditor tracing all the way through our suppliers. People want to eat healthier, and we want to be at the forefront of that."

Marketing matters

Clabber Girl's challenge will be communicating its selling point to consumers.

Fulton said taking on companies with financial resources like General Mills will be a challenge.

"A direct marketing war could prove disastrous," Fulton said. "Some of these companies have extremely deep pockets."

Clabber Girl will have to use a wise mix of print ads and newspaper coupon inserts along with in-store promotions, Beriault said. Some television ads will help, he said, but TV can quickly raise the cost of an ad campaign.

"A national ad campaign for a product like this can pretty easily get into the seven- or even eight-figure amount," Beriault said. "So you'd want to manage that pretty closely."

Clabber Girl's connection to the world's most famous racetrack could also come in handy, marketers said.

The Hulman family fortune allowed Anton Hulman Jr. to buy the Indianapolis Motor Speedway in 1945, and now Tony Hulman George, the great-great grandson of Hulman & Co. and Clabber Girl co-founder Herman Hulman, operates IMS and the Indy Racing League.

Company meeting minutes from 1945 indicate the primary reason the track was purchased was to help promote the Hulmans' business.

Clabber Girl's connections to the track are still active, with the facility serving as the company's entertaining and networking hub. It was used as a primary marketing venue for the company's cornstarch launch in 2002, and Clabber Girl partnered with Indianapolis Motor Speedway Productions to make a television commercial for the firm's newest product that will initially air in Texas then roll out nationally.

Of course, Clabber Girl officials point out that packaging and marketing won't be the only factor in differentiating its product.

"The real key is, we use tenderizing flakes that make our product rise like no other," Morris said. "This is not an overnight recipe. It's been tested and tested ... and tested some more. This mix makes wonderful pancakes and biscuits. That's where we really think this battle will be won."

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