Cookie and Cracker Manufacturing
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Industry Overview
The cookie and cracker manufacturing industry includes about 300 companies with combined annual revenue of $10 billion. Major companies include Kraft's Nabisco subsidiary, Kellogg's Snacks Division, and PepsiCo's Frito-Lay. The industry is highly concentrated: the top 50 companies account for 90 percent of industry revenue.
The cookie and cracker manufacturing industry doesn't include companies that make tortilla, potato, or corn chips; fresh-baked cookies, pies, or breads; hard or soft pretzels; or refrigerated flour or dough mixes.
Competitive Landscape
Demand is driven by population growth, consumer tastes, and health considerations. The profitability of individual companies depends on efficient operations, effective marketing, and a strong sales force. Large companies have advantages in purchasing, distribution, and marketing. Small operations can compete effectively by manufacturing allergen- and sugar-free products, high-end cookies and crackers, or products containing unusual ingredients. Average annual revenue per employee is $325,000.
Cookie and cracker manufacturing competes against other "impulse" food providers, including bakeries, fast food restaurants, and manufacturers of snack items like candy and potato chips.
Products, Operations & Technology
The industry's major products are crackers (50 percent) and cookies (50 percent). Major types of crackers include saltine, cracker sandwiches, and graham crackers. Other cracker products include melba toast, cracker meal and crumbs, and taco shells. Popular cookies include chocolate chip, oatmeal, crème-filled, and sandwich cookies. Other products in the cookie domain include toaster pastries, ice cream cones, and wafers for ice cream sandwiches.
Cookie and cracker making typically begins by blending starter ingredients like granulated sugar, shortening and oils, leavening, and flavorings in industrial mixers. If the food uses yeast or requires fermentation, the initial mix may need to rest for several hours. Following the initial blend and waiting period, workers mix in water and bonding agents like oats, gluten, and wheat flour. Blenders can quickly process 2,000 pounds of dough per batch.
After mixing, dough is lifted into a hopper. Crackers are spread onto a sheet and layered (laminated) by a series of metal gauging rolls. If the machine makes shaped crackers (animal or round), rotary cutting machines slice the dough into shapes. Excess dough is lifted and mixed with fresh dough in the hopper. Round cookie dough is forced through inch-long openings at the end of the hopper cylinder, which cuts pieces off with a sharp blade or wire.
The cut cookie or cracker dough moves by conveyor belt to a series of natural gas ovens, which can be up to 300 feet long. Crackers and cookies typically take five minutes to bake and 15 to cool down. The cooled product moves to a finishing station. For sandwich cookies, a stenciling machine squirts a shortening-and-sugar mix onto alternating rows of cookies. Air suction brings the two cookies together to complete the sandwich. In some cases, machines spray flavoring agents like cinnamon, icing, or chocolate. Crackers often receive a final application of spices, herbs, and salt.
The packaging stage varies depending on the product and where it's sold. Cookies and crackers can be individually plastic-wrapped or sold in snack packs or boxes. Finished products are put into cartons and warehoused for shipping. To reduce shipping costs, companies typically operate multiple manufacturing plants across the US. Most plants can manufacture a range of products, though each plant typically specializes in one or two popular brands.
Common inputs include wheat flour; soybean and cottonseed oil; sweeteners like cane and beet sugar, high-fructose corn syrup (HFCS), molasses, and honey; cocoa powder and chocolate syrup; and flavorings like herbs, salt, and spices. Key energy inputs include water, electricity, and natural gas. Commodities can be in short supply due to unpredictable weather patterns and government farm subsidies for competing products. Imported ingredients like chocolate and cinnamon can be in short supply and sometimes of inferior quality, depending on the conditions of major producers in Africa and South America. Manufacturers increasingly rely on HFCS in place of sugar, which is expensive due to federal price supports.
Recent technological advances include the ability to quickly prototype and launch new products, automated quality control instrumentation, more uniformity in product shapes, and fully integrated networks to automate baking and packaging. Most large companies track sales in real time using a network of handheld wireless devices and centralized enterprise resource planning (ERP) systems.