All Puffed Up Upstart Challenges Quaker Oats For Slice Of Rice Cake Business

With a hiss and a puff of fluffy crumbs, round cakes that resemble popcorn snap out of machines and start down a conveyor belt, on their way to becoming packages of Simply Snacks flavored rice cakes.

The crispy snacks have been tumbling off the assembly line at Foodland Industries MN Inc. for the past year, entering a $400 million-a-year industry dominated by giant Quaker Oats.

Foodland’s General Manager Keith Bjella sees room for growth in the rice cake market, and the company is expanding its product line with a Minnesota twist.

The newest offering, due out next month, will be cakes made partly of wild rice supplied by Gourmet House of Clearbrook in northern Minnesota.

“The wild rice is going to play a key role in what we do here,” Bjella said. The wild rice cakes will be sold under the Gourmet House name and will come in apple cinnamon, caramel, taco and sesame flavors.

One of the reasons for putting Foodland in Aitkin, about 100 miles north of Minneapolis, was the 10,000 or so acres of wild rice paddies in the area.

Currently, the company makes flavored cakes from brown rice, which are sold in various markets in the United States under the Simply Snacks label. They come in 4-inch rounds, in 2-inch “wheels” and in “minis” packaged in one-ounce snack packages. Flavors include strawberry, blueberry, caramel, almond, honey nut and apple cinnamon.

Foodland can also make flavors to order for customers. A potato chip company recently asked Foodland to make a cappuccino-flavored rice cake under a private label.

The company had sales of $210,000 in January, and Bjella believes there is room for the market to expand. About 80 percent of the people who eat rice cakes, sometimes compared to Styrofoam hockey pucks, are women and children, he said. That leaves men and older people as an untapped market.

“We see this as being a $5 million business out of Aitkin,” Bjella said. “We still have to double our production to do that.”

John McMillin, an analyst for Prudential Securities in New York, said the rice cake industry had tremendous growth for a number of years, but it has slowed.

Quaker still has about 80 percent of the market, but competitors are trying new flavors.

“Whether this is a fad or a long-term trend, I think rice cakes have hit the crossroads,” McMillin said.