Snacks & Candy

Packaged Snacks Catch Up With the Keto Diet

Consumers’ hunger for specialized eating regimens provides opportunity for c-store retailers
Photograph: Shutterstock

CHICAGO — You know a diet has reached the mainstream when it appears on Waffle House’s menu.

“I was in an Arkansas Waffle House on a business trip, and the term ‘keto’ appeared on menus to describe some food items,” says Vincent Kitirattragarn, CEO of Berkeley, Calif.-based Dang Foods, the maker of keto, plant-based and gluten-free Dang Bars.

Waffle House might not be a paragon of trendy, but it knows an opportunity when it sees one. Keto—short for ketogenic—has become king of the specialized diets, selected the most popular for 2019, according to more than 1,300 dietitians surveyed in the seventh annual What’s Trending in Nutrition survey from Today’s Dietitian magazine.

In the keto diet, dieters limit their calorie intake to a mix of approximately 70% fat, 20% protein and 5% each of simple carbohydrates and nonstarchy vegetables. This forces the body into a metabolic state known as ketosis, in which it reportedly burns fat instead of carbohydrates for energy.

Google searches for the word “keto” skyrocketed 300% in January, Kitirattragarn says, and snack makers such as Dang Foods are eager to convert web searches to transactions. The key is the proliferation of keto- friendly, portable products rolling out across multiple snack categories that makes it easy to induce trial. Dang Bar debuted last fall, exclusively on Amazon online, and today has gained distribution in 10,000 stores across grocery, mass and drug channels while taking “baby steps in the c-store channel,” says Kitirattragarn, who witnessed 40% year-over-year growth for the line dating back to September 2018.

New Snacking Profile

Asking the average consumer in 2017 about the keto diet likely would have resulted in a glazed-over expression. Kitirattragarn says that as recently as late 2018, he counted only four keto bars available in virtual aisles.

But rising healthcare costs and the popularity of making healthy choices, plus social media influences, are boosting keto’s profile. Rachel Krupa, a Southern California c-store retailer who operates The Goods Mart, is capitalizing on the trend. Such bars are a “gateway snack,” she says.

“I call them gateway snacks because they open a whole new world of healthy and flavorful snacks to core snack consumers,” she says. One variety she stocks is the Saigon Cinnamon Chocolate Dang Bar.

While some adopt a strict keto lifestyle, other consumers are just trying to eat right, says Krupa. “Most of our customers don’t ask for keto but seek clean, ‘free-from’ ingredients like nut butters, hard-boiled eggs and jerky,” says Krupa, who recently opened a second store in New York’s SoHo neighborhood. “People tend to try some options, and it’s, ‘Oh, by the way, that’s keto.’ ”

Other keto-friendly snacks include cheese, avocados, olives, nuts, fatty cold cuts, cottage cheese and pork rinds.

Krupa says it boils down to locating snacks with high flavor, great taste and health appeal. Eric Richard, education coordinator for the International Dairy Deli Bakery Association, Madison, Wis., agrees, pointing out that retailers can win by positioning products as “naturally fortified foods with protein as a core ingredient rather than a product that’s protein-added.”

“We see these kinds of diets as a manifestation of the changing landscape of what people seek in the foods they eat,” he says.

Consumption Drivers

Rising healthcare costs likely will continue to fuel interest in the keto diet, along with the paleo diet, which is based on foods that might have been eaten during the Paleolithic era: lean meats, fish, fruits, vegetables, nuts and seeds, says Sally Lyons Wyatt, executive vice president and practice leader for Chicago-based IRI.

“Disease states not prevalent a decade ago are proliferating, while healthcare costs are a problem for many,” Lyons Wyatt says. “People are seeking a holistic healthy lifestyle that incorporates sleep, exercise and diets that enhance one’s immune system, digestion and more.” She cited a medical group survey that found that 45 million U.S. residents activate a diet each year, be it commercial or self-subscribed.

IRI data indicates that snack dollar sales for keto in multioutlet units rose by double digits in 2018, with plant-based snack sales up 19% and vegan snacks growing by 16%.

A second driver of keto and other diets is social media. Melissa Rosen, co-owner of Locali, an independent c-store operator with one location in Venice, Calif., and another in Florida, vouches for that.

“People come to Locali looking for MCT (medium-chain triglycerides) oil, celery juice, paleo bread and keto bombs because they saw posts on Facebook or Instagram about the health benefits,” says Rosen, who expects growth of keto snacks at her stores to be about 15% to 20% this year. Locali offers products such as Ketomanna’s ketogenic chocolate fudge and Nick’s Sticks Free-Range Turkey Snack Sticks.

Rosen and Krupa have seen a growing number of customers try new keto or paleo snacks without much knowledge of the formulations. So what influence does keto diet marketing on snack packaging have?

“The average person is struggling with mastering the basics, let alone abiding by a more stringent diet.”

With the pipeline filling robustly with these snacks, Lyons Wyatt calls it a “chicken-egg” phenomenon. “I’d like to drill down to see if CPGs were motivated to act on new snack formulations like these due to pent-up demand or whether they rolled out snacks first and consumers jumped on board afterward,” she says.

Kitirattragarn was inspired to create Dang Bar after speaking with area tech professionals in Northern California. Dang had already succeeded with flagship Dang Coconut Chips and was looking to branch out.

“Dang Bar was a confluence of things: We listened to our fans who wanted a coconut snack with no sugar that delivered ‘healthy fat’ in a bar format,” he says. “I also heard a lot about keto [after] talking to Silicon Valley professionals who saw it as a way to optimize performance—it’s known to enhance mental acuity.”

Dang Bar allows consumers to engage in on-the-go consumption of keto ingredients rather than having to prepare a meal or, say, a fresh avocado—a keto staple but not very portable, says Kitirattragarn.

Larger brands are following suit. Recent launches include Unilever’s SlimFast Keto meal replacement shakes, bars and snacks; Borden’s whole milk mozzarella string cheese and cheese snack bars; and Mars’ Creamy Snickers Bars, formulated with freshly ground, creamy nut butters.

Last fall, Minong, Wis.-based Jack Link’s debuted its Cold Crafted Linkwich, a refrigerated meat snack that is infused with cheese, which adds 15 to 18 grams of protein, making it even more keto-friendly.

“Most people are just striving to make better dieting decisions” without being tied to one particular diet, says Collin Frantz, brand manager for Jack Link’s Cold Crafted line, which is represented in 15,000 c-stores. “The average person is struggling with mastering the basics, let alone abiding by a more stringent diet. We sought to leverage the power of portable protein with a product like this.”

Frantz says protein anchors most diets, giving Jack Link’s an additional lever to pull. “Cold Crafted expands on the way Lunchables appealed to moms for their kids years ago. It can be communicated to consumers as a refrigerated snack pack of the Lunchables mindset, merging snack and protein,” he says.

Jack Link’s is not marketing its Cold Crafted products as keto-friendly snacks, because its protein value stands on its own, according to the company.

“We’ve not addressed this diet directly, but our goal is to make it easy for consumers to choose foods that correspond to their respective diets—and there are so many out there,” says Frantz.

Will Keto Sustain?

Low-carb diets such as South Beach and Atkins are still hanging around, but they’re not the rock stars they once were. Can keto sustain its momentum?

In consumer research, Dang found that 40% of people are sustained keto devotees, while another 40% consider themselves “lazy keto” consumers. “They don’t count every single carb and they go on and off diets,” says Kitirattragarn. “It’s a very hard diet to engage because you’re forced to count calories, macros, and people don’t want to do that. If they prepare keto entrees, that’s more work.”

That’s where packaged snacks have an opportunity: making keto easy for consumers.

Lyons Wyatt says retailers can build healthy-eating endcaps or create digital message boards touting healthy food departments, with keto integrated into it. “Some larger retailers are putting dietitians and nutritionists on-site to guide customers on eating goals,” she says. “It’s an expense, but when you measure the cost and the long-term payoff, it’s a strategy that can pay for itself.” (See sidebar, below.)

Specialized diet or not, people are seeking products with clean, transparent values, as many scrutinize ingredient lists. “Watching people shop for jerky, they grab the bag and squeeze it to make sure the meat is tender and there are not hard pieces,” says Frantz of Jack Link’s.

Krupa of The Goods Mart says some customers are obsessed with a ketogenic diet, while others are not as indoctrinated. In many ways, the diet seeks them out rather than the other way around—a back door way of engaging, with retailers facilitating.

“People tend to go on their own eating adventures to find out what works for them,” she says.

Guiding Consumers to Informed Choices

To introduce the uninitiated to snacks with paleo-, vegan- and ketofriendly ingredients—and encourage trial—The Goods Mart stores in Silver Lake, Calif., and New York have introduced “Discovery Zone” endcaps. Featuring brands such as Epic Provisions and Dang Bars, The Goods Mart Discovery Zones bring in new users to a brand, a category or even a diet, says owner Rachel Krupa.

Eric Richard, education coordinator for the International Dairy Deli Bakery Association, Madison, Wis., says c-stores can connect with consumers who might be in specialized diet mode via messaging and POS techniques. “C-stores are smaller formats, so I would use that to their advantage, and there can never be too much messaging as it relates to traditional signage and digital POP displays,” he says. “Overall, people on a keto diet already have a sense of what they want, so make it easy for them to find the products with those high-protein and higher ‘good fat’ attributes.”

In fact, the fat-centric profile that underpins keto brings a concern about recruiting those who have developed a stigma about fatty foods—even the good fats such as monounsaturated and polyunsaturated.

Some believe that the right communication and education can change minds. “Fat is no longer a bad word as more consumers are looking for products with real ingredients, and ‘good’ fat is part of that mission,” Richard says.

For example, bread suffered a stigma for years with some consumers, thanks to low-carb diets. “But you can convert that mindset by stressing the breads that are made with natural, simple ingredients with no preservatives or colors,” says Richard. “And to stress that it’s OK to have real sugar in a diet. Focus on the fat payoff via marketing. You are seeing more and more U.S. consumers seeking natural fats.”

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