Going Private

Store-brand candy and snacks surge in c-stores, complement national brands.

D. Gail Fleenor, Freelance writer

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Peg boards and clip strips of private- label candy, chips and other snacks are joining national brands across c-stores nationwide. Punctuating the private-label trend is profit and value, essentials especially during a down economy, and arguably even more vital for a retail channel continuing to get past decades of perceived insult pricing.

Yet there’s more to this private-label story: increased loyalty, opportunity, assortment and cementing a distinctive brand value.

About 46% of shoppers today buy private- label products in convenience stores, according to data from SymphonyIRI Group, Chicago. Though still a relatively small slice of total inside turns, sales of store-brand candy and snacks have grown, spurred in part by the recession and the introduction of private-label candy and snacks by the largest c-store chain, 7-Eleven. Share of store brands may be highest in the grocery channel, but private-label growth is strongest in convenience stores, according to the data.

National brands have earned their firm hold on categories and customer cravings; private label, while growing, faces formidable competition. This may be why some chains opt to enter subcategories not generally on the majorbrand radar screen.

Retailers considering adding private label sometimes wonder how this might affect contracts and spacing with national brands. However, among the category managers interviewed for this story, none had experienced any contract challenges or spacing issues with major candy or snack brands.

In fact, Chris Switzer, category manager for Corpus Christi, Texas-based Stripes convenience stores, a subsidiary of Susser Holdings, thinks his company’s private-label program has actually enhanced his brand operations.

“The success of our private-label brand has caused major candy and snack suppliers to bring better programs to the table to grow their existing brands,” he says. “We are bringing new customers to the category.”

Some trends in the private-label movement:

Prices of private-label products must be at least 30% less than national brands to sway shoppers.

Peg bagged candy is a good option for private label because it rarely competes with national brand options and loyalty.

Gummies are the focus of baggedcandy sales due to continuing popularity and no real major brand competition. Store-brand snacks must have quality, taste and variety to attract and keep sales.

Let customers “taste test” privatelabel chips in foodservice combos.

Huge private-label margins are impressive, but only if the store-brand items make it into shoppers’ baskets.

Private-label experts stress that retailers who consider adding storebrand snacks and candy must get their pricing right.

“Private-label prices in c-stores must be at least 30% less than national brands to convince shoppers that they are receiving an outstanding value,” says Thom Blischok, president of innovation & strategy for SymphonyIRI. “Shoppers will hesitate to buy if there is only a 17% to 20% difference —30% will sway them.”


Paving the industry path toward private label is easily 7-Eleven. The Dallasbased chain ended 2009 with more than 250 of its 7-Select items on shelves, and it plans to top 300 by year’s end. Launched just a couple of years ago, the chain’s 7-Select brand snack category includes bagged candy, nuts, potato chips, beef jerky and trail mix. Prices for the products are 10% to 20% lower than comparable national brands sold in 7-Eleven stores, according to company spokesperson Margaret Chabris.

Handee Marts, a licensed 7-Eleven operator, offers a range of 7-Select candy items, representing 3% of its total candy sales. “We have nine SKUs of bagged gummi worms, bears and orange slices, and they are selling really well,” says Jim Monroe, director of foodservice and QA manager for the Gibsonia, Pa.-based chain. “The big advantage is that the bagged candy is cheap to get into. For example, we might buy six-packs at 57 to 58 cents a unit, then sell them for $1.19 each and make a 50% margin.”

Monroe isn’t concerned about contracts with major candy companies. “You can lose dollars by following the restrictions of national manufacturers,” he says. “For example, you may not need their top 33 products and end up carrying dead inventory.” Instead, Handee Mart manages its inventory store by store, item by item.

Convenience stores need value offerings, Monroe says, especially during the recession. “A price of $1.19 for a bag of candy is significantly lower than national brands,” he says. Pricing is important. “Customers are not going to trade down for only 10 to 20 cents.”

The 63-store chain carries almost 40 SKUs of 7-Select potato chips, which accounts for 2% of its total salty-snack sales; however, most stores carry only eight to 10 SKUs of chips and pretzels according to customer preferences. Handee Marts prices its take-home bag at $2.99, about $1 cheaper than national brands, while its single-serve bag sells for 79 cents. “This is a big enough difference in price to encourage a customer to try our brand,” Monroe says.

Private-label crackers and cookies are also big sellers for Handee Marts. “We sell 3 SKUs of cheese crackers similar to [national brand] peanut butter on cheese crackers. We pay 14 to 15 cents a pack, sell them for 49 cents and reap a 67% gross profit,” Monroe says. The chain also sells 10 SKUs of private-label cookie packs— 5% of its cookie category.

“At a price of 79 cents,” he says, “we gain more gross profit than on national brands and the customer gets more cookies in the pack.

“We are making more gross profit dollars with private label, even though the retail is lower than national brands—that’s what you take to the bank.”


At Tedeschi Food Shops, the store is the brand. Established in 1923, the well-known store name is part of its privatelabel name. After testing products in other categories, the New England retailer decided to introduce a line of candy, according to Dan Powers, category manager for the Rockland, Mass.-based company. “We felt by introducing a private- label candy line we could grow the category and offer more value to our customers,” he says.

Tedeschi Select Candy includes an extensive line of sweets in two sizes: 22 SKUs of a two-for-$1 size bag or 59 cents for one, and 16 SKUs of a 99-cent bag size. “We recently rolled out four flavors of private-label licorice at $1.99,” Powers says. Candy selections vary from gummi items to butterscotch candies and caramel creams. “There’s something for kids as well as adults.”

And the returns are impressive. “Our Tedeschi Select Candy is 45% of the subcategory in sales and 70% in units,” he says. Indeed, several varieties of the chain’s bagged candies are some of the top sellers in the bagged category. Margins on the chain’s private-label candy vary from the mid-40s to low 50s, he says, delivering healthy margins to complement the major brands.

For customers craving salty snacks, the 189-unit retailer offers private-label potato chips in a 5-ounce bag. A line of Tedeschi Select nuts, snacks and trail mixes recently debuted, with margins for its salty snacks maintaining the company’s targeted range.


Stripes has opted not to use the company name for its private- label offering. Instead, the catchy Monkey Loco moniker is used for Stripes’ bagged candy and is available in 11 varieties (the chain’s slush drink also bears the “monkey” name). The candy includes traditional peppermints and caramels but focuses on gummies in all their squishy shapes because “that’s where the growth is,” Stripes’ Switzer says.

The chain’s private-label brands have higher transaction frequencies than their major supplier counterparts by two to one. “This is due to strategic pricing and merchandising initiatives we have implemented to grow our private label,” he says.

Stripes’ private-label candy margin is a healthy 50% and 3% of total candy sales. The line debuted in April 2009, with plans to expand during the second half of 2010 with one to two more SKUs and other possible additions. The chain chose not to offer a private-label chip, though it is currently investigating such options. “We are concerned about managing stales with chips (shorter shelf life) and offering a big enough value to our consumers at a lucrative price point,” Switzer says.

Instead, Stripes offers private-label meat snacks. “Thunderstick is a value-brand meat stick comparable to Slim Jim, and we offer it at a great retail,” he says. “Smokin’ Barrel is our bagged jerky line that competes with [national brands]. It is marketed as a premium brand with value pricing.” In all, Stripes’ private-label snacks represent about 2% of total snack sales.


Not all retailers choose the peg-candy route. Nice N Easy Grocery Shoppes, for example, in the spring launched a 2-ounce kettle chip and is working on a line of gourmet nuts and trail mixes, says Jared K. Sturtevant, director of category management for the Canastota, N.Y.- based chain.

“We introduced the Easy Street Gourmet Snacks Kettle Chips line as a natural product bundle with our Easy Street Eatery MTO subs and wraps, and also to free ourselves from the limitations of DSD,” Sturtevant says.

The chips, 15.2% of total potato-chip sales, are available on off-shelf displays and in the foodservice area. New nuts and trail mixes will sell under the Easy Street Gourmet Snacks label as well. “This line will give us higher margin than even warehouse-delivered national brands. It is exciting for us to be able to offer premium products with our own label at a fair price,” he says. Nice N Easy does not offer private-label candy. With these six SKUs, Sturtevant says, “We have doubled our margin, exceeded the quality of major brands and helped build our own brand.” Indeed, he points out, private-label snacks “are going to be at least 20% more gross margin percentage than the national brands we offer.”

 Oil companies are embracing private label, too. “Our products are very competitive with national brands,” says Bill Day, spokesperson for San Antoniobased Valero Energy Corp. “Space is at a premium, and major brands have to compete with our label because we offer shelf space based on what consumers want. Success of our label puts pressure on major brands.” Valero offers bagged candy, kettle-cooked potato chips in take-home and single-serve bags and jerky under its Fresh Choices label.

Valero’s store brand maximizes margin within limited store space, Day says. While no specifics were provided, Hal Adams, vice president for retail merchandising, says Valero “has a goal of penetrating a category or segment by a minimum of 20% when we enter the private-label space.”


Many wholesalers and distributors, large and small, are offering c-stores the option of private-label products. “We can add variety to retailer’s candy lines where larger branded programs can’t,” says Tom Haraske, owner of T&L Distributing Co., Northampton, Pa. The regional distributor covers parts of Pennsylvania, New York, New Jersey and Maryland and serves about 350 convenience stores, both independent and chain.

“Private-label or peg-bag candy is very competitive with the nationalbrand candy section in terms of sales and profit, foot for foot,” he says. “If done right, both will fit in c-stores. Private- label candy deserves as much space as pegged [national brands] because they are equally profitable.”

T&L offers Kelly’s Gummy and Nostalgic Candies, which c-stores can sell under that label or under their own store brand; the distributor also offers its own beef jerky, Blackbeard, which can be store-branded. However, many stores prefer to use the Blackbeard name. “It’s a local favorite,” Haraske says. “Blackbeard was the first brand in the area before national brands, so it’s very popular locally.”

Heading west, AMCON Distributing Co., based in Omaha, Neb., operates in the Great Plains and Rocky Mountain regions. While c-stores are a big component of its customer base, so are discount, drug and grocery stores. Private- label candy is one of its offerings.

“We carry 32 varieties of Eagle Premium bag candy, prepriced at 99 cents, eight varieties of Eagle Premium Chocolates prepriced at $1.89 and 10 different Snack Shoppe trail mixes and nuts,” says Rick Vance, vice president of marketing for AMCON.

Vance does not view shelf space or contracts with major brands as an obstacle. “Very few of the major candy suppliers have much focus on the pegbag section,” Vance says. “It is not a high-volume area for them. Peg-candy volume is dominated by nationalbrand gummi items and private label in our stores.

“Having a private label candy line allows us to offer our customers a true value on a variety of items to offer to their consumers,” he continues. Margins on private label and nationalbrand items are about the same, he says. “It really comes down to the price point that is the difference—more for less.”

C-store operators offering privatelabel products or considering the option must maintain a balance between national and store brands, SymphonyIRI’s Blischok says. He says there will always be a national- and private- brand presence at retail: “I believe there will be a lot of changes over the next few years that will bring a better value equation to the shopper.”  

Is Control ‘Private’?

Some convenience stores opt for control brands or labels instead of store brands. Although similar, control labels, distributed by wholesalers, retailers or stores that do not compete with each other, are exclusive to a certain geographic area, according to common definition.

Williamsville, N.Y.-based Wilson Farms Neighborhood Food Stores offers a control label for peg candy under the name Select Sweets. “Although private label has really come into focus with the current state of the economy, we have offered this control label for several years,” says Rachel Montgomery, category manager.

Montgomery works Select Sweets items into plan-o-grams just as she does national brands. “As with all items in our set, they are evaluated using general category-management practices,” she says. “They do not adversely affect any of our contracts with the ‘big guys.’ Select Sweets is only 2% of the total candy category.”

Margin on the Wilson Farms’ control label candy is about 15% higher than branded product, with a transaction rate of about two to one, compared to national brands. 

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