$nacks: A Healthy Trend

7/2/2011

Brands are back, and healthy concerns are driving sales.

Consumers are returning to their favorite snack brands at the expense of private label, and they are more frequently purchasing them in supermarkets and drug stores, according to the 2010 “State of the Snack Industry” report developed by Chicago-based SymphonylRI Group.

Healthier snacks also are gaining in popularity at the expense of indulgent products, and a growing number of consumers are now seeking all-natural and organic products while also taking into account that the sustainability practices of manufacturers influence their buying decisions, according to the snack tracking report, which was prepared for the Arlington, Va.-based Snack Food Association.

A similar conclusion was also reached by a Packaged Facts study on snack foods that was released in June, which found that health concerns are a continuing strong motivator for food and beverage purchases among U.S. consumers, and are expected to remain so for the foreseeable future.

“As consumers seek ways to achieve a healthier lifestyle, snack foods that are marketed as ‘better for you’ will remain popular,” Packaged Facts predicts. “Companies are realizing that they must highlight attributes such as vitamins, minerals, fiber content and lower sodium to both educate consumers and take advantage of demand for such products.”

Rockville, Md.-based Packaged Facts also advises marketers to offer “secondary appeals to attract consumers, such as unique flavors or ingredient blends, with great taste as a given.”

The SymphonylRI Group report's data on sales performance was based on the market research firm's

InfoScan Reviews, Marketinsight and Health & Wellness Advantage ^studies. Shopping behavior data was developed by SymphonylRI's Consumer Network, and consumer attitude information was developed in the company's 2011 “Consumer Snacking Study.”

Consumers are still concerned about the economy, and expect food and energy prices to increase, reports Sally Lyons Wyatt, SVP at SymphonylRI. As a result, 42 percent said they are spending less on snacks, 30 percent are trying to make their household snacks last longer and are snacking less frequently, and 25 percent are eliminating unplanned snack purchases.

Despite those efforts by consumers to stretch snack dollars, Walmart lost ground, with snack dollar sales declining 3.1 percent in 2010 and volume sales dropping 5.2 percent vs. 2009. Meanwhile, drug stores increased snack dollar sales by 2.6 percent and volume by 3.1 percent, and grocery sales gained 1.9 percent, while volume was up 1 percent. Convenience stores increased dollar sales by 1.6 percent, while volume declined 2.1 percent.

Grocery Gains

The report showed that grocery gained share in 2010 vs. 2009 at the expense of Walmart across two-thirds of snack categories, including cookies, cracker salty snacks, chocolate candy and ice cream/sherbet.

“Grocery is having to keep up with every channel out there, including Walmart, but Walmart is still losing,” says Wyatt, who notes that while drug stores have “done an amazing job, grocery has done a great job of merchandising and making sure they are getting the right mix around the store and the right products on the end aisle.”

Citing data from the report, Wyatt says consumers are deciding where to buy their snacks based on convenient location (56 percent), lowest everyday price (53 percent), best selection of products (43 percent), get in/get out quickly (40 percent), selection of private label (29 percent), and one-stop shopping (27 percent).

Snack industry dollar sales, meanwhile, increased an average of 1.1 percent, while volume dipped by 0.6 percent. Leading volume gainers were snack/granola bars and yogurt, up 5.5 percent and 5.4 percent, respectively. Salty snack volume across the industry was down 2.2 percent, but sales dollars increased slightly, by 0.4 percent. Price fluctuations were moderate, with a 1.6 percent industry average increase; prices were heavily influenced by promotional activity and merchandising support, according to the study.

Brand Power Plus Price

“Brands are back,” declares Wyatt. “Private label is here, but consumers are not buying private label for everything. They want their brands, but their brand purchasing decisions are still heavily influenced by price.”

Indeed, consumers are showing a growing affinity for their favorite brands despite the difficult economy, according to the SymphonylRI Group study, with 68 percent saying they prefer their favorite brand, up four points since 2009.

While 44 percent said brand decisions are “very strongly” influenced by item price, 27 percent said they want their favorite brands at a reasonable regular price, an increase of seven points over 2009. Those seeking favorite brands on sale declined from 44 percent in 2009 to 41 percent in 2011. The survey showed that 32 percent purchase any brand, if the price is right.

Consumers' actual experiences with brands are essential, Wyatt says, as 46 percent report that their brand decisions are very strongly influenced by brand trust. “Consumers are gravitating toward the concept of finding their favorite brands at a reasonable everyday price,” Wyatt explains. “Everyone should look at that and not forget it.”

While store brands still are an important factor for many consumers, as 47 percent said they switch to those snacks when money is tight, private label snack volume declined by 0.4 percent to a 17.1 percent share last year, with dollar share flat at 12 percent vs. 2009.

Wyatt says innovation played a key role in increasing share across several snack categories — at the expense of private label products in those categories. For example, 11 new yogurt “pacesetter” offerings cut 1.2 percent from store brands' share, and 10 salty snack “pacesetters” helped to reduce private label's share by 0.2 percent.

Crunching Health and Wellness

“Consumers are trying to eat healthier (71 percent),” she says. “Predominantly, they feel that if they can stay healthy, they can avoid medical expenses,” an observation that the study said accounts for a shift of 7 percent since 2006 in healthier snack purchases compared with indulgent products.

While 60 percent of consumers are trying to eat foods that help prevent health problems and/or manage existing health conditions, the study found 24 percent of shoppers are now seeking snacks that offer benefits beyond basic nutrition. And though consumers still want to know about products low in fat, cholesterol, sugar and calories, as well as those containing high fiber and whole grains, they also want to be told about products with low sodium content and those that are all natural or contain natural ingredients, the study revealed.

Importantly, the study showed that 51 percent of consumers want retailers to clearly identify healthier products in the store, and 47 percent want comments or symbols on packages to help them select healthier options.

As such, Wyatt advises the industry to join forces with parents as they teach their children about healthy eating, and to offer snacks with nutrients, watch portion sizes, and offer snacks that are fresh and not processed, as well as those that are low in fat and calories. The balance between price and nutritional value should also be reinforced, she adds, as 71 percent of parents look for snacks that are inexpensive, and 43 percent will compromise on nutritional value to save money.

Other noteworthy nuggets in the study pertained to organic and natural snacks, dollar sales of which rose 8 percent and 7 percent, respectively, indicative of their continuing clout with consumers. Indeed, 29 percent of consumers believe it's important that snacks are natural/organic, and 20 percent said they're trying to increase consumption of such foods.

A Healthy Response

Snack manufacturers are responding to the growing demand for snacks that are perceived to be healthier while still delivering a tasty snacking experience. It's not exactly a new trend for some companies, but it's certainly growing.

Back in 1995, for example, Hyannis, Mass.-based Cape Cod Potato Chips launched its reducedfat, all-natural kettle chips produced by a proprietary system that “spins” excess oil from the chips after they've been fried, which the company says allows for the crunchiness of a regular kettle chip, but with 40 percent less fat.

“It's been the No. 1 item in our lineup for the last several years in terms of unit velocity, and it didn't take a marketing genius to suggest expanding that portfolio,” says Don Helms, salty snacks brand director at Snyder's-La nee Inc., Cape Cod's parent company. “So now we have four items that are reduced-fat and made with this process: Original Flavor, Sweet Mesquite Barbecue, Sea Salt & Vinegar, and Aged Cheddar & Sour Cream,” the last of which was launched in June 2011.

Cape Cod also recently released another effort to satisfy health-conscious snackers in the New England market: a low-fat kettle-cooked chip featuring 17 grams of whole grains that if well accepted, will be rolled out to other areas of the country.

The success of Paramount Farms' humor-laced Wonderful Pistachios “Get Crackin'” campaign, meanwhile, is clearly resonating with consumers, “and the proof is in the pistachio,” notes Dominic Engels, VP, global marketing for the Los Angeles-based subsidiary of Roll International Corp. The Wonderful Pistachios brand — which features upscale, premium packaging and a bold, contemporary look that appeals to a sophisticated, health-conscious consumer&emdash; has experienced record-breaking sales and had a vigorous impact on the $8 billion salty snack category, thanks in no small part to its clever, memorable Get Crackin' multimedia campaign.

Featuring such “salty” personalities as Nicole “Snooki” Polizzi of “Jersey Shore” fame, NFL Cincinnati Bengals wide receiver Chad Ochocinco, Golden Globe award-nominated actor and real-life drill sergeant R. Lee Ermey, stand-up comedian and actor Lewis Black, YouTube sensation “Keyboard Cat,” and Charles M. Schulz's “Peanuts” gang, the campaign has cemented the brand's fourth-place position within the $12 billion salty snack category, and is credited for a 21 percent dollar sales leap on top of the company's year-ago 233 percent increase.

Another company making inroads in the healthy snack arena is New York-based KIND Snacks, which company officials say was built on the premise that many consumers want healthy food that tastes great and is made from understandable ingredients.

“Historically, people have viewed health and great taste as being mutually exclusive — and when it comes to purchasing decisions, taste has typically trumped all,” says company spokeswoman Ellie Stassen. “At KIND, we challenge these false compromises, and instead, create foods that unite both tasty and healthy.”

Made from ingredients that Stassen says “you can see and pronounce,” such as whole nuts and fruits with honey, KIND snacks are free of emulsified fillers and chemicals, which she says “can lead to compromised taste.”

At Gridley, Calif.-based Mary's Gone Crackers, the focus is on gluten-free products that meet the needs of consumers with gluten intolerance and celiac disease.

“Today, more and more people are waking up to the connection between their poor health and gluten consumption, and retailers are responding by having gluten-free sections in their stores and tagging gluten-free items on the shelves,” notes Mary Waldner, company founder.

The projected U.S. sales of gluten-free foods are expected to exceed $5 billion by 2015, she says, adding “Mary's Gone Crackers hit the wave of this surge in the gluten-free lifestyle, as well as the growing trend toward healthier eating, resulting in skyrocketing sales for the past several years.”

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