David takes on bake-at-home Goliath; challenges no.1 Pillsbury for piece of cookie dough market

Nation's Restaurant News, Oct 27, 1986 by Ken Frydman

David (Liederman) takes on bake-at-home Goliath

Challenges No. 1 Pillsbury for piece of cookie dough market

In a modern-day David-versus-Goliath story, David Liederman is poised to take on giant Pillsbury in the refrigerated cookie dough supermarket business.

Next month Liederman, the David behind David's Cookies stores, will introduce Chocolate Chunk and Oatmeal Raisin cookies to the refrigerated food cases of 138 Waldbaum supermarkets throughout the New York metropolitan area. The rollout will spread to 1,400 regional supermarkets within a 50-mile radius of Manhattan--David's Cookies' home base--by Dec. 15, according to Liederman, who will add Peanut Butter Chocolate Chunk and Pecan Chocolate Chunk by the first of the year.

Pillsbury currently controls 96% of the $130 million-plus nationwide refrigerated cookie dough market, according to the 1985 SAMMI annual report, which charts the sales of supermarket items.

The diversified food-service conglomerate had "no comment' on Liederman's move into supermarkets. "We [Pillsbury] have nothing to say about Mr. Liederman's decision to enter the refrigerated cookie dough business,' said Betsy Wray, Pillsbury's senior media representative.

True to form, the combative Liederman had plenty to say, however, about Pillsbury.

"Phillsbury has had a monopoly in this business for a long time,' he noted. "It's time to give it a run for its money in the bake-at-home cookie market.'

This is not the first time Liederman has come up against Pillsbury. Takanashi, a Japanese ice cream manufacturer, had been producing David's Ice Cream until Pillsbury bought Haagen Dazs in 1983. Today Takanashi produces Haagen Dazs--not David's Ice Cream.

David's refrigerated cookie dought will be sold in two serving sizes--the 8-oz. "Yuppie Pack' and the 20-oz. family pack. The cookie rolls will average $3.89 per "chub' package, which equals 20 ozs. and makes 24 to 36 cookies. The price per refrigerated cookie will be 13^, compared with the typical 34^ store-bought David's Cookie.

Thanks to the name brand recognition of David's Cookies, Ice Cream, French Bread and other specialty-food products, Liederman avoided paying the prohibitively high "slotting' fees supermarkets charge product manufacturers for refrigerator real estate and shelf space.

Currently 189 of the 204 David's specialty-food stores operate in the United States. Thirteen stores are located in Japan, and two just opened in Toronto.

"Forty percent of our stores are located between Washington and Boston, so that's where we're going to concentrate on our refrigerated cookie dough business,' Liederman said.

Most of his start-up investment has gone into research and development--getting the product labeled, packaged and promoted. Each package of David's refrigerated cookie dough is backed with a promotional booklet listing dessert dish recipes. The product will be supported by in-store demonstrations, print advertising and, eventually, television commercials in the New York ADI (Areas of Dominant Influence), Liederman said.

Meanwhile, he has increased his labor force and tuned up his Long Island City, N.Y., dough-manufacturing plant to operate 24 hours a day, seven days a week. He is also renovating the 21 New York City David's Cookie stores--the first step in evolving the business into a full-service specialty-food operation.

"We're growing out of the cookie business,' Liederman explained. "We want to become a one-stop shopping specialty-food business--everything from importing and manufacturing to distribution and sales.'

Photo: David's Cookies founder David Liederman inspects his products at a New York City outlet.

Photo: Leiderman is renovating his 21 New York City stores as a first step toward repositioning.