GROCERY: Cookies, Crackers, and Snacks: Smart cookies

With more people than ever trying to get or stay in shape, the introduction of better-for-you cookies, crackers, and snacks would seem to be a no-brainer for enterprising manufacturers and retailers. But can such products really keep America munching?

Data from ACNielsen's LabelTrends suggests that they can. Movement data on cookies, crackers, and snacks sold in U.S. supermarkets and featuring labels with fat, gluten, sugar, or salt content claims for the 52 weeks ending Dec. 2, 2006 showed healthy sales dollar increases. For example, low-fat cookies were up 17.7 percent, low-salt or -sodium graham crackers 29.8 percent, and sugar-free flavored snack crackers 40.6 percent.

These better-for you segments are shaping up as a business of some girth, even in the larger context of total snacks. According to ACNielsen, in crackers, for example, total dollar sales (in U.S. supermarkets) were roughly $2.9 billion in 2006. Of that, $917 million was accounted for by crackers with some kind of fat claim (low, reduced, or fat free) on the packaging. Cookies addressing the fat content issue constituted a $198 million business, while gluten-free cookie sales grew from a $1.3 million chunk in 2002, to a $5.5 million piece of business in 2006.

Gluten-free items, which the industry certainly appears to have pursued with some conviction in recent years, have performed especially well: Cookies, crackers, and snacks in the segment logged 30.2 percent, 178.6 percent, and 43.9 percent sales dollar surges, respectively.

Resourceful retailers have helped spur greater awareness of gluten intolerance, and thus more sales of gluten-free items.

"We're very involved with the local celiac support groups, and have dedicated space in all stores for gluten-free products," says Robb Pretasky, specialty foods director at Onalaska, Wis.-based Skogen's Festival Foods, a family-owned company that operates one Skogen's Market and nine Festival Foods stores in the state. "We have gluten-free lists available for our guests to make their shopping experience easier."

More generally, the retailer has sharpened its better-for-you snack assortment. "We've been selling some healthy snack alternatives for years, but it's only been in the last three years that we've really focused on the category," notes Pretasky. "We have dedicated 16 feet to 20 feet for natural/organic chips, as well as eight feet for cookies. These sections are located in the first aisle and are highly visible."

Pretasky defines healthier snacks as those containing "low fat and sodium content, zero trans fats, no artificial preservatives and colors, no chemical additives, no artificial flavors/sweeteners, no hydrogenated oils, and no GMOs," as well as "allergen-free alternatives."

Promotion of such products is a high priority for Skogen's Festival Foods. "We're working with our vendors to promote more items in weekly ads, dedicating more end caps for displays, and looking for secondary placements such as chip racks to promote the products and increase sales," says Pretasky. "We're always looking at expanding our selection and section sizes, to accommodate the demand for new items as this category grows. We're also running an aggressive allowance program with the support of vendors."

Niche markets gain prominence

While the efforts of big manufacturers such as Kraft and Kellogg Co. to offer portion-controlled products and reduce fat and sugar content in their cookies, crackers, and snack foods have been well publicized, some smaller companies are making their presence felt by focusing on more specialized health-and-wellness markets, among them consumers with the aforementioned conditions of gluten intolerance and food allergies.

"I was diagnosed with celiac disease in 1994, and needed to find products that I could eat and would want to eat," recounts Mary Waldner, principal of namesake company Mary's Gone Crackers, based in Gridley, Calif. "I developed these crackers so I would have something to take to parties and restaurants, when others were eating bread and wheat crackers." Today the crackers are available in Original, Caraway, Black Pepper, Herb, and Onion flavors.

For the future, she adds, "our crackers will be in individual snack bags for sale by March. We have another whole grain snack coming out by the spring. Cookies will come later on."

When it comes to cookies, Pamela's Products, which specializes in the gluten-free variety, is certainly on a roll. "In the general category, cookies have been on a decline, but we are experiencing double-digit growth," notes Stephanie Torlakson, who handles marketing and community relations for the Ukiah, Calif.-based company. (The other companies contacted for this article reported similarly spectacular sales.)

A large part of Pamela's current success comes from its promotions strategy. "Pamela's Products has a long history of working directly with the retailer on in-store promotions that allow us to service the consumer in very personal promotions," notes Torlakson. "We supply samples and information as well as fun giveaway items for events that bring consumers to a store, and that allow the consumer to feel connected to their stores. We also provide shelf talkers, coupons, and tailor-made POS materials. All have been very helpful in bringing customers to Pamela's Products in the store."

"Food allergies are increasing in frequency and severity," notes Jill Robbins, president of Windham, N.H.-based Gak's Snacks, as well as the mother of a son with food allergies. "According to the Food Allergy and Anaphylaxis Network, one in 17 children under the age of 3, and more than 2 million school-age children, have food allergies....I designed products I would want to feed my own child -- they're organic, whole grain, and contain no fat or cholesterol. All our products are baked in a dedicated facility free of peanuts, tree nuts, eggs, and dairy."

Gak's Snacks began as a primarily Internet-based concern, but according to Robbins, "Customers are so eager to be able to purchase our products in their local stores," that the company is preparing to widely distribute items in six-ounce boxes she considers "perfect for retail." There will also be an addition to its cookie line: An oatmeal variety is expected to roll out this month, along with the new-size packaging.

Sometimes, identification as a better-for-you snack is determined by market demand, as was the case with The Kitchen Table Bakers, a Syossset, N.Y.-based company that produces All Parmesan Gourmet Wafer Crisps.

Says v.p. Seth Hayden Novick: "We started out as a low-carb product because my dad (and boss) was on a low-carb diet....Because of the quality of our wafers, the company went from low-carb to 'gourmet with healthy lifestyle benefits.' We then were 'rediscovered' by the wheat-/gluten-free, sugar-free, rich-in-calcium, and naturally-low-in-carbs markets, without changing anything, because we were always all-natural [and] have multiple market outlets."

Unlike some other comparable products, the company, which recently rolled out a flaxseed-flavored crisp and is currently working on single-serve "Grab 'N Gourmet" packaging containing three Aged Parmesan flavored crisps, prefers to be carried in the specialty/cheese department. The reason for this, according to Novick, is "because they typically sample products. [I]f we are put in the cracker section, we are often thought of as 'just another flour cracker,' and at the premium we are forced to sell a package for because of the cost of quality cheese, in many instances we get passed over unless we are sampled."

The placement challenge

Skogen's Festival Foods takes a hybrid approach to the problem of placement in either the mainstream aisle or a dedicated section.

"The majority of our healthy snacks are located in our natural food section," says Prestasky. "However, we do have some products integrated, as well as some secondary display locations. For the most part, I think our guests would prefer the items together; however major brand-name products can sometimes get lost if they're not integrated."

On the manufacturer side, some specialty companies take a diametrically opposed tack. "If we were in the mainstream cracker section, I'm afraid our product would get lost on the shelves," opines Waldner of Mary's Gone Crackers, who adds, "Awareness and desire for healthful food is certainly on the rise, but we are not yet in the same league as Nabisco."

Others see the advantages of mainstream placement. "The Annie's brand appeals to a broad range of consumers, including those who shop the mainstream aisle, so there are benefits of being placed in both locations," notes Sarah Bird, v.p. of marketing for Napa, Calif.-based Annie's Homegrown, which, among other products, offers a line of baked snack crackers made with organic wheat flour and cane syrup, and featuring no artificial ingredients, preservatives, hydrogenated oils, or trans fats.

In 2006 Annie's introduced three new snack cracker varieties: White Cheddar Bunnies, Sour Cream & Onion Bunnies, and Chocolate Chip Bunny Grahams. This year the company is considering the rollout of a Bunny Grahams multipack "to complement the success of [our] existing Cheddar Bunnies multipack of one-ounce pouches," says Bird.

The manufacturer's focus isn't just on making better-for-you foods for kids and their parents, though. "Annie's commitment to healthier products also extends to the way in which we do business," observes Bird. "Our foods are produced in a sustainable way for the health of families and the environment. We source our ingredients from small family farms whenever possible, use recycled 100 percent paper for our packaging, and support local communities through donations and special programs."

Healthier options present other challenges beyond placement, though. "Our snacks are built healthier than the majority of options out there, but we're certainly not selling carrots and celery here," notes Michael Sands, c.e.o. and founder of Tuckahoe, N.Y.-based LesserEvil, which produces a line of gourmet popcorn snacks and has recently introduced a baked potato snack, Krinkle Sticks. "The majority of healthier-positioned snacks lead with a 'health' message, giving consumers the impression they're going to have to sacrifice taste. We instead lead with deliciousness."

When asked to consider the near future regarding the better-for-you snack segment, Skogen's Festival Foods' Prestasky replies: "We will continue to increase our selection of healthier alternative chips, cookies, and crackers. There's a flood of new items, and customers are looking for us to meet their shopping needs. I see the cost of such products decreasing as the vendor/manufacturer competition heightens. We will continue to promote healthy snacks both in our ads and in-store specials. The future for healthy snacks is bright."
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