There’s no better symbol of how the world has been turned on its head than the jammy doughnut. At the beginning of last year the poor old ball doughnut was in a sorry state. Sales had been declining for several years, with sexy young newcomers such as iced ring doughnuts, making all the running. It looked like the jam doughnut’s best days were behind it.

But fast forward 12 months and ball doughnuts have miraculously risen from their sick bed and are showing the young Turks a thing or two about how to do well in an economic crisis. Peter Brett, marketing manager at doughnut supplier Speedibake, says the turnaround is a direct result of people looking to tighten their belts. "We are seeing a significant shift, with consumers trading into different places as they look to improve value for money and reduce check-out shock," he says. "They’re still looking for a treat, but they want to reduce the cost of their shopping. Five ball doughnuts for 65p suddenly looks like a better deal than four ring doughnuts for £1.09 or a twin-pack of Danish pastries for £1."

To put ball doughnuts’ renaissance into perspective, TNS Worldpanel says volume sales are up by 19% for the 52 weeks to the end of January, with the final quarter of the year showing growth of 25%. Ring doughnut volumes on the other hand grew by just 4% in the past year and actually showed a 6.5% decline in the last quarter. In value terms, the entire doughnut market is up 11% to £66m, although Brett says much of this increase is due to inflation caused by rising input costs.

Supermarket promotions have played a key part in boosting sales. As value has come to the forefront of consumers’ minds, supermarkets have focused on economical lines such as doughnuts, with many now running deals such as two five-packs for £1.

This can be seen at the Co-op, for example, where bakery buyer Ian Kevitt says the retailer will begin running a two-for-£1 promotion this month. "We previously had a 10-pack of jam doughnuts, but have gone to a five-pack and have introduced a new custard filling. They retail for 65p a pack, but we will be running a promotion, partly to push the new flavour but also because it offers shoppers value right now," he says.

Promotions are helping to draw new shoppers to the doughnut category. As BakeMark UK marketing manager Lisa Boswell says: "[TNS] research shows that 51% of households bought doughnuts in the last year. Consumers have been buying doughnuts more frequently and in greater bulk, with a rise in purchase frequency of 3.7% and total purchased packs per trip rising by 7%."

It’s not just ball doughnuts that are showing growth either. Boswell says that sales of BakeMark’s Nestlé-licensed doughnuts have grown by 62.5% in the last year. Yum yums and finger doughnuts are also performing well, she says. "This category has grown by 19% in value over the last 12 months, which demonstrates customer demand for innovative alternatives to doughnuts."

Archy Cunningham, MD of United Central Bakeries (UCB) in Scotland, says the firm has seen sales of yum yums increase by around 10% year-on-year. "In a recession, people want comfort food that’s value for money," he says. "You can buy four yum yums for 99p."

Keeping prices this low requires super-efficient production processes. UCB invested over £3m in new equipment after fire devastated its factory in 2006. Much of this was spent on a new BVT production line, which produces 6,000 yum yums per hour. Cunningham has recently invested in jam injecting equipment to produce filled yum yums - a product he says will be a first to market, if he can perfect the tricky process of injecting a twisted product. Fillings will include chocolate, apple and raspberry. For the product to be successful, costs must be kept to a minimum and this means running the line at a good speed. "It’s all about the price and the injector slows things down. We’re trying to keep productivity going to keep a reasonable price," he says.


Production efficiency

With tiny margins on their products, doughnut manufacturers are also looking to improve production efficiency, says Simon Moon, key accounts director at equipment supplier Mono. "Companies are increasingly concerned about energy usage and the amount of fat they use," he says. "Everyone is looking at how much each product is costing and challenging us to do what we can to bring prices down."

To this end, companies now tend to float-fry their doughnuts rather than using the traditional process of submerge-frying, he says. Float-frying moves the doughnuts through the hot fat on a conveyor, before flipping them to fry the other side. This typically cuts fat usage by 50% - a key benefit with palm oil prices reaching record highs last year.

Product development in doughnuts tends to be evolutionary rather than revolutionary. Vandemoortele recently launched a filled nougat and hazelnut ring doughnut and a new mixed variety box of its Doony’s Doughnuts, made with all natural colours and flavours. "We’re trying to stay ahead of what’s happening in foodservice, but be proactive," says marketing manager Chelsea Young.

Speedibake has also worked recently on doughnuts made with natural flavours, says Brett. Other projects include working with retailers on ’baker’s dozen’ concepts with 13 sugar-ring doughnuts for £1. "You don’t see heroic product development work in doughnuts. It tends to be small advances behind the scenes," he says.

Examples of this could include adjusting the size of doughnuts, he says, with convenience stores selling slightly larger products to justify the higher price point compared to supermarkets. This is hardly earth shattering, but then doughnuts are doing well precisely because they are an uncomplicated, value-for-money product. "Heroic" NPD might have to wait until the recession is over.


=== The future of doughnuts ===

Startling innovation in a mature category like doughnuts is unlikely, especially in the midst of a recession, but there is room for fresh thinking, and inspiration could well come from abroad.

That’s the view of Kerstin Schmidt, development director at BakeMark’s new Innovation Centre in The Wirral. Opened in October with a strong focus on doughnut NPD, the centre is one of four operated by BakeMark in Europe. This reach gives the firm a good overview of what is happening in other markets. "In Spain, for example, fully enrobed chocolate doughnuts, made with choux pastry, are very popular. This could work in the UK," says Schmidt. "In the Alpine region you have lots of recipes with fruit pieces inside. I could see a limited-edition, seasonal doughnut with a fresh summer fruit filling doing well here."

The centre recently developed an apple crumble doughnut with a Bramley apple filling and a crumble topping. Other future innovations could include tear-and-share doughnuts. "It’s popular in bread, so why not doughnuts?" says Schmidt.


=== Retail detail ===

Country Choice has launched a doughnut and coffee concept for retailers. The Boston’s branded offering comprises a self-serve Fairtrade coffee machine and merchandising units containing American-style yeast-raised doughnuts. Varieties include Boston Creme; Triple Belgian Chocolate; Bramley Apple and Cinnamon; Lemon Meringue; and Sugar Glazed Jam varieties.

The concept, which is targeted at convenience stores and garage forecourts, also comes with Boston’s-branded packaging, point-of-sale material and takeaway boxes for up to six doughnuts. The thaw-and-serve doughnuts have a two-day shelf-life and merchandising units include counter-top and floor-standing options.

The new format will be rolled out in April.