Product Spotlight: SpongeBob conquers animal crackers

Character cookies create an
opportunity for kids to feel
comfortable with the cookie and
enhance the play value of cookies.



By Hollis Ashman and Jacqueline Beckley, Consumer Understanding Editors

Animal crackers are part of everyone's childhood. Cookie manufacturers count on kids pestering their moms at their favorite cookie aisle location. As the kids grow older, they are likely to look for new cookies in the same location. So it is a way to get kids into the brand franchise and keep them there as they grow older.

Nabisco’s Barnum's Animals crackers, created for the 1902 holiday season, are the most popular choice. The package enabled consumers to place the box on the tree and give it as a Christmas present. Keebler for a few years has marketed its Animals Cookies, a line that has used icing, frosting and Lion King characters in attempts to make its mark in this category.

With SpongeBob SquarePants Animal Crackers, the subsidiary of Kellogg Co., Battle Creek, Mich., has taken a friendly cartoon character and updated crackers to bring new news to the category.

Cookies have always needed new news to keep the consumer (actually gatekeeper mom) from asking why she’s spending so much money on cookies. However, creating new news is not easy, as the marketer and developer only have a few variables to play with. The formulation must stay the same. A coating can be added, the color can be changed … but shape is a fast, easy way to make changes in this category with minimal investment.

Understanding the marketplace

The cookie market has been in a downward spiral for several years now, with only private label gaining share. Sales were upwards of $6.6 billion in 1999, according to Packaged Facts. Sales for 2004 are estimated to come in at $4.7 billion, according to Mintel International, a decline of 3.5 percent in the past year.

Key issues the category has faced have been the impact of the low-carb diet, presence and now removal of trans fats, an overall focus on healthier alternatives and private label. Both category leaders, Nabisco and Keebler, have seen 7-8 percent sales declines. Private label grew 2.9 percent in the same timeframe. Private label has been driven by aggressive store merchandising and price. Store brands have been merchandised next to the top-selling brand, including the use of special displays, and most larger store chains have developed a signature brand.

The top 10 brands for cookies in 2003 are Nabisco Oreo, Nabisco Chips Ahoy, Keebler Chips Deluxe, Nabisco Newton’s, Pepperidge Farm Distinctive, Keebler Fudge Shoppe, Nabisco Teddy Grahams, Nabisco Snackwells, Pepperidge Farm Classics, and Nabisco ‘Nilla, according to Information Resources Inc. figures. Of these brands, only Nabisco Teddy Grahams could be construed as fitting into the animal cracker framework.

Character cookies create an opportunity for kids to feel comfortable with the cookie and enhance the play value of cookies. The animal shape allows kids to develop rituals and imaginative play around their snacking. Licensed characters allow kids to feel an even closer connection to the character via the cookie and their play value.

TV character licensing drives a general level of interest and sales, and those licensed characters with movies (such as “SpongeBob SquarePants: The Movie,” released in November 2004) generally report a blip in associated product sales. For manufacturers, licenses can enhance brand equity and help offset price competition from private label. The marriage of strong licenses and major brands also adds fresh merchandising when there are limited product introductions. What's more, licensed products provide value-added opportunities, such as premium offers, cross-merchandising and store events.

Keebler SpongeBob SquarePants Animal Crackers are available in a 13-oz. stand-up bag selling for $2.99.

The show “SpongeBob SquarePants” began airing in 1999 and has attracted a wide audience beyond the expected 2-11 year olds, with broad acceptance by teens and adults. It generated licensing revenue for Nickelodeon of $750 million last year from more than 100 companies. That was a full 50 percent above expectations. SpongeBob appears on quite a few food products currently, from ice cream to macaroni and cheese, and even Keebler parent Kellogg uses him on a cereal.

SpongeBob is a fun, wholesome, edgy, approachable character that both kids and parents like. Keebler is a brand that stands for fun, innovation and imagination. After all, Keebler cookies are baked by elves in a magic tree. Keebler stands for warm, generous and caring values.

With the significant reduction in sales of cookies, Keebler is looking to use a licensed character to drive cookie sales and to take share from Nabisco’s Teddy Grahams and Barnum’s Animal Crackers. Keebler has found a way to get kids into the franchise and try to keep them there. The company hopes a licensed character will deliver better play value than Teddy bears, animals and anything to come from private label.