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Menuing ‘America’s Favorite Cookie’

Nabisco views its partnership with quick-service brands as an effort to create an all-important sales boost. “It’s good for brand equity to have the Oreo in front of the customer outside the house,’’ Hedtke says.

It’s good for brand equity to have the Oreo in front of the customer outside the house.”

The Oreo is an iconic American brand, but it’s also a mature one. Oreo has been the top-selling U.S. cookie brand for the past five years, according to Information Resources (IR), a company the provides market information services. It consistently holds a 14 percent share of the cookie market. But grocery and convenience sales dropped in the early 2000s and then stalled. The last time the company reported Oreo sales was 2002 when it said it sold $937 million worth of the cookies. In 2003, IR reported sales (excluding Wal-Mart, wholesale clubs, and institutional sales) at $492 million. That number has barely budged since. In 2006, IR reported $496 million in Oreo sales.

Oreos have suffered the same fate as the cookie market in general. Mintel reports a 4 to 5 percent drop off per year in cookie sales between 2002 and 2004. A big reason for the drop is that fewer kids are eating cookies. The number of children aged 6 to 11 who eat cookies dropped from 97 percent to 90 percent between 1995 and 1996. Mintel’s 2006 Cookies and Cookie Bar report suggests parents are directing children to what they perceive are healthier snacks, such as granola or cereal bars.

Growth in dessert categories in general is going away from standard choices toward what Balzer calls “health or indulgence.’’

So while Nabisco puts Oreos in 100 calorie packs to cater to customers’ health interest, it works the indulgence angle via the Oreo-based treats at quick-service.

Like Oreo, Domino’s is a powerful, yet mature, brand. Domino’s same-store sales were down 4.1 percent from 2005 to 2006. It has successfully boosted same-store sales in the past with the addition of wings and appetizers and one dessert offering, Cinna Stix. “Domino’s does a great job with its core lunch and dinner entrées and appetizers, but it is tough to get customers to think about dessert,’’ says Woodruff, who notes that the brownie Domino’s tried last year didn’t boost same-store sales. “Oreo gives [the dessert] instant credibility.’’

The Domino’s Oreo pizza came about as the result of an internal competition for new products. The pizza maker needed an easy-to-assemble dessert that could go through the store ovens for the same time and at the same temperature as the pizzas. The Oreo pizza was selected in 2006 as the idea most worthy of a test-kitchen effort. “Oreo has a lot of equity with the customer,’’ says Jim Zimmer, national calendar manager for Domino’s.

Domino’s went to Kraft to discuss the idea, and the two companies did some research together. “Kraft was very helpful. They were open to a dialogue,’’ says Jimmy Simonte, Domino’s new product marketing director. The product took about a year from initial concept to rollout.

In the end, Domino’s debuted a slightly sweet thin dessert crust topped with vanilla sauce and large bits of Oreo drizzled with icing—its debut of a dessert pizza. The pizza is a limited-time offering, but if same-store sales see an increase the Oreo pizza might find a permanent place on the Domino’s menu.

Feedback from stores has been positive so far. Consumers like it, too. A September 2007 event in New York’s Times Square where the company handed out hundreds of samples drew “lines around the corner,” according to Domino’s spokeswoman Dana Harville.

Still, Jack Trout, a branding expert who has worked with Burger King and General Mills, says quick-serves should be wary of a co-branding arrangement that is too far removed from what the restaurant’s main focus is. “You don’t want to be trapped into a promotion that is about something you don’t really sell,’’ he says. Particularly for quick-serves that operate in highly competitive environment, a co-branded dish should help to differentiate the concept from the competition. The question to ask, Trout says, is “Does an Oreo [offering] separate my pizza from Pizza Hut’s pizza?”

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