Snacks & Candy

Snacking's Dual Income

Consumers have their cake and granola bars too—giving you twice the snack sales opportunity

It's official: We are a nation of split personalities. American clamor for healthy foods, and then look for something indulgent to eat.

This is the paradoxical landscape in which c-store operators play. It’s time we think of it not as a pestering consumer tic, but rather an incremental opportunity.

“People are getting more attracted to alternative snacks, and that’s where we’re seeing the biggest growth. But as much as you think people are going healthy, they still have that traditional sweet tooth,” says Madalena Ferreira Morgan, director of c-store operations for Bobby & Steve’s Auto World, Eden Prairie, Minn.

The surge of interest in alternative healthy snacks, she says, merely “takes the spotlight away from the all-time favorites, which includes the salty category, where sales are still very strong.” Chips top the category in sales at Bobby & Steve’s, but several nut products also hold top-10 spots.

Healthy or not, snacking dollars are up 3.5%, according to Chicago-based IRI. However, unit sales are lagging, so price is playing a role in that growth, said Sally Lyons Watt, executive vice president and practice leader, client insights, during the company’s State of the Snack Food Industry webinar in April.

“Snacking is something we do with purpose now, not just something we do in our idle time,” says Jordan Rost, vice president of consumer insights for Nielsen, New York. Nielsen research shows eight in 10 Americans snack at least sometimes.

And we’re snacking a lot: We average 2.7 snacks per day, and 46% of us are gobbling down three or more daily, says IRI.

While consumers may still be sending mixed signals on healthy eating, both healthy and indulgent snack sales are strong. According to IRI, indulgent snacks grew 3.4% in the past year vs. 3.8% for healthy snacks.

Healthy or indulgent, alternative or traditional, snack sales likely won’t decline anytime soon, Ferreira Morgan says. “Smaller meals translate into snacks throughout the day,” she says. “Grabbing that snack is becoming our life.”

Continued: Healthy And Alternative: On The Upswing

Healthy And Alternative: On The Upswing

Stinker Stores has made significant changes to its snack set in the past half-year. “We’ve taken a stronger stance in healthy,” says Lon Audet, merchandising manager for the Boise, Idaho-based brand.

“We still serve the ‘Bubba’ who wants the hot dog and nachos, but in our efforts to get a different clientele into our stores and also to take care of current clientele, we have noticed the good-for-you category is growing.”

Conscious of the fact that the baseline was low, Audet is nonetheless pleased with the double-digit sales he has seen in better-for-you items. “Now it makes a lot more sense for c-stores to carry these products,” he says.

Among shelf-stable items, granola bars and almonds do well, “but it’s amazing how much of the meat snacks we sell, both bulk and packaged,” Audet says. Jack Link’s is the best-selling brand, followed closely by Old Trapper.

One of the difficulties in getting a good-for-you selection off the ground lies in the price point; however, customers interested in these products are used to paying more for them, and the gross margins are comparable to that of traditional items, Audet says.

Stinker is confident a healthier snack selection can yield success. “If we as a group of stores continue to focus on ‘good for you,’ we will change the consumer’s mindset,” Audet says. “I think we can convince our customers we can be a one-stop shop for all their shopping, but it will take some time.”

Having a healthy section can also mean blocking the c-store veto vote: A male shopper buying a hot dog can pick up something healthier for his wife or kids, Audet says.

  • 3.4% - Dollar sales growth of indulgent snacks - Source: IRI
  • 3.8% - Dollar sales growth of healthy snacks - Source: IRI

Now, Stinker needs to get the word out about its healthier snacks, and its strategy lies at the forecourt. “Once people are in the store they can see what’s available, but it’s just getting them in that first time,” says Audet. The chain also wants to create a catchphrase—something like “Fresh and Fast”—to use in the stores to grab customers’ attention.

It’s also a good idea to make an impact on consumers as soon as they come in, Audet says: “If you walk in and [a health selection] hits you, it’s going to have a huge impact rather than a bit of healthy stuff here and a bit there.

“If you make a category out of it and you make it look as big as you can so they see it, they will gravitate toward it and will start exploring.”

At Bobby & Steve’s Auto World, meat snacks and bars such as PowerBars and Kind bars are driving alternative-snack sales. Ferreira Morgan sees sales of these categories spike at the beginning of the week, and then traditional snack sales pick up some slack as willpower wears off toward Friday.

Other healthy snacks gaining traction are dried fruits and fruit snacks such as That’s It—all-natural fruit bars containing nothing but fruits and natural flavors such as cinnamon or ginger.

To boost sales of healthy snacks, Ferreira Morgan creates store-by-store strategies at Bobby & Steve’s eight locations. If healthy snacks do well, she tends to merchandise them throughout the store in different categories; otherwise, she draws attention to them on a mixed category 4-foot endcap to make them easy to find.

Meat snacks—big brands such as Jack Link’s, Krave and Slim Jim—also are popular at 25-store VERC Enterprises, Duxbury, Mass., and consumers at these stores are looking for different meats and flavors, especially spicier ones. “Plain and teriyaki are doing well, but we’re finding people are interested in the new and interesting types with a hint of a flavoring like pineapple or ginger,” says Anna Bettencourt, snack category manager.

Meat-snack sales likewise continue to increase at the 34 Rotten Robbie stores owned by Robinson Oil in Santa Clara, Calif., sold from an endcap or inline. What really has made a difference to sales, says Reilly Robinson Musser, marketing manager, are the big $12 and $15 bags, although the single sticks are the biggest sellers.

Overall, meat snacks’ big surge in popularity is slowing down, but we’re not abandoning them by any means. Up 6.1% in unit counts in 2014, they were only up 3.3% for the year ending Dec. 26, 2015, according to Nielsen.

But the innovation hasn’t ended. New product types are helping boost meat-snack sales even further in the c-store channel, says Tom Vierhile, innovation insights director with New York-based market research company Canadean.

The latest example of such innovation, according to Vierhile: a snack mix from Oberto containing both trail-mix ingredients and jerky pieces. “They’re trying to broaden the appeal and household penetration of meat snacks by piggybacking on the popularity of trail mix, which has significantly higher household penetration than jerky does,” Vierhile says.

Other healthy snacks such as energy bars are inline at Rotten Robbie stores, usually near cookies and crackers. Nutrition bars continue to sell well, although protein-bar SKUs have been reduced. “They’re a little expensive,” Robinson Musser says. The chain is instead seeing strong sales of Kind, Clif and Quest bars.

Continued: Traditional And Indulgent: Snacking Stalwarts

Traditional And Indulgent: Snacking Stalwarts

Consumers may say they want low-sugar, high-fiber and high-protein snacks with added nutrients, but there’s one thing they aren’t ready to say goodbye to: good old-fashioned indulgence.

According to Nielsen research, 78% of consumers say they snack to have a treat. “People still want to enjoy their snacks,” says Nielsen’s Rost, “and it can be a treat for all your good behavior, especially in smaller package sizes.”

Rotten Robbie stores have this covered with bite-size indulgences priced at 50 cents, such as Daelmans cookies and Ghirardelli and Lindt chocolates. “They’re a change maker, and it’s a little bit of indulgence,” Robinson Musser says.

Salty snacks sell best at Rotten Robbie. The stores tend to keep $1.49 bags of Frito- Lay chips by the counter, to replace the candy that used to be there as an impulse buy. “Chips are less of a ring but more people buy them,” says Robinson Musser.

Salty and sweet snack sales are doing equally well at VERC Enterprises. For the salty set, smaller bags of chips tend to sell best, and traditional flavors still rule. Like at Bobby & Steve’s, protein-packed nuts are enjoying strong sales, says Bettencourt.

What’s really popular at Stinker Stores is the crossover point between salty and sweet.

“The big flavors are sea salt and caramel, so manufacturers are trying to hit both of those functions with one product,” says Audet.

And while the chain is making great strides with healthier options, “we are still the king of unhealthiness just because this industry has that mentality—although probably not as much as it used to,” he says.

Bobby & Steve’s Auto World is testing some coffeehouse-style baked goods—including croissants and caramel rolls—in its bakery case at one location. “After the morning rush, we remerchandise them with bars and other bakery items you usually don’t see in a convenience store,” Ferreira Morgan says. The program is too new to have any results yet.

“There’s always room for that sweet treat and a lot of consumers look to snack for a treat,” says Susan Viamari, vice president of thought leadership for IRI. “That’s why we’ve seen increasing prevalence of bite-sized and gourmet sweet snacks.”

And with snacks getting smaller, indulgent products are smaller still. They take up very little room but can be a launch pad into a new niche for c-stores.

Continued: Foodservice: A Focus On Fresh

Foodservice: A Focus On Fresh

Consumers see snacking opportunities everywhere, and retailers are not only offering them up among their packaged goods. Some foodservice portions are getting smaller in order to capture those snack dollars.

C-stores aren’t the only ones to notice changing consumer behavior, of course, and they’re up against some heavy competition as restaurants get into the snacking game.

“Restaurants are responding to this trend,” says Lizzy Freier, managing editor, menu analysis, for Chicago-based Technomic, sister brand to CSP. The limited-service segment is seeing a lot of mini entrées such as burgers and wraps, while full-service concepts are focusing on better bar service, happy-hour snacks and premium offerings, she explains.

“Various sizes have been really useful for helping meet consumers’ different need states,” Freier says. “A lot of restaurants are trying to offer healthy snacks, and the smaller portions are appealing for people who want something indulgent.”

Restaurants also are starting to encroach on convenience-store territory, she says, launching packaged snacks that they’re selling as grab-and-go items in their eateries as well as through other retailers.

Five of Bobby & Steve’s Auto World’s stores have full kitchens, so foodservice is already a significant endeavor for the chain.

“We started with pizzas but we’re looking into snack opportunities for the afternoon,” says Ferreira Morgan. The chain is testing cheese sticks and pizza rolls, and is considering launching them this fall with a parallel focus on snack items in the deli case, including fruit cups and yogurt. “Anything that’s quick and has a healthier connotation with it,” she says of her target products.

“People appreciate the freshness, even if the margins aren’t the best.”

IRI’s research shows the big opportunity for foodservice snack items is between lunch and dinner, and that’s when the stores will offer them. “A lot is done in-house, and I think that attracts many people to our foodservice,” says Ferreira Morgan.

Stinker Stores are doing well with a pizza-by-the-slice program. The company makes the pizzas in its distribution center and sends them frozen to stores, where they’re baked.

But it’s Stinker’s refrigerated program that’s really taking off. The 64 stores are bringing in local produce for cups of cut fruits—some mixtures, some just one fruit such as grapes or cantaloupe—and salads. Through the summer, the stores merchandised seasonal whole fruits such as peaches and nectarines alongside cut fruit in the open-air coolers.

The stores also merchandise Idaho cheese curds in these coolers, along with Chobani Greek yogurt, private-label sandwiches and other fruit such as apples and oranges.

The big key is providing freshness cues, Audet says, “and that’s why I think this produce program is taking off.” The sandwiches and salads, he says, are made twice a week so they’re fresher than some traditional sandwich offerings.

Sales of both yogurt and cheese are up approximately 4% each in all retail outlets, according to Nielsen research. “They deliver on health and wellness considerations; they’re also self-contained and convenience-oriented,” Rost says. “It’s this balance of getting nutrition and protein and also taste and indulgence and satiation.”

Refrigeration, says IRI’s Lyons Watt, “was a clear theme in 2015, pointing toward consumers’ quest for fresh.” She notes the steady growth of hummus, and says sushi and dips have been doing well, but the huge driver in sales has been private-label sandwiches.

The open-air deli cases in Rotten Robbie stores are helping move healthier snacks such as cut fruit, sandwiches and hardboiled eggs. These cases, located near the fountain drinks and coffee, are appealing to the typical c-store customer, including laborers, construction workers and landscapers, says Robinson Musser.

Consider when consumers are snacking when strategizing around foodservice snacks. Lunch is most often replaced by a snack (51% of consumers told IRI they replace it with a snack), followed by breakfast (48%), while dinner lags (41%). “That gives us an indication where there are most snack opportunities,” says Nielsen’s Rost.

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