Spread the Wealth

3/15/2014

Products that meet consumers’ needs for variety and healthy eating take this category way beyond sandwich fillings.

Shelf-stable spreads are seen by many as reliable — if unexciting — standbys, affordable stock-up items to keep on the shelf both for everyday use or in case of emergency.

Given this view, it’s unsurprising that such products, especially on sale, would be snapped up by practical-minded shoppers in search of bargains. Indeed, according to Melissa Porter, VP of marketing at Grocery Discount, a Berkeley, Calif.-based chain specializing in overstocks and closeout products — what she refers to as “an opportunistic buying model” — spread products “have sold very well as long as they were priced right.”

But even though they’re shopping on a budget, that doesn’t mean extreme-value shoppers are averse to venturing out of the ordinary. “We did receive some excess inventory on flavored hazelnut spread last year, and it sold well at our discounted price,” notes Porter.

That interest in novelty, even among those watching their pennies, isn’t news to hazelnut spread segment leader Nutella, a brand of Somerset, NJ.-based Ferraro USA Inc. Noah Szporn, category director for the Nutella brand, points to “an increased demand for new and original flavors outside of the peanut butter category” in recent years. Even Hershey’s has gotten into the act, introducing a line of chocolate spreads in January.

“In the past couple of years, there has been some much-needed rejuvenation of the spread aisle, and now consumers have more variety,” concurs Steffany Lee, marketing director at San Francisco-based Lotus Bakeries North America, whose Biscoff cookies are the basis of an indulgent spread. “With spreads, like other categories, consumers like to try new products.”

Touting multiple uses is also key. “Consumers are looking for a product that is more than just a spread,” observes Szporn. “Aside from great taste, everyone wants that versatile spread that can be paired with just about anything — pancakes, waffles, crepes, croissants or even fresh fruit.” Further, shoppers desire “new ways to include spreads into their daily routine.”

Accordingly, inspired by findings that breakfast, lunch and on the go are the top three spread-eating occasions, as well as the rising trend of small meals, in 2012 Ferraro introduced Nutella & Go, a 1.8-ounce portion of the spread packaged with breadsticks for dipping.

Reflecting these consumer needs, Nutella sales “are up 17 percent since last year,” says Szporn, while Lee notes steady sales growth since Biscoff Spread’s launch in 2011, with last year bringing a double-digit increase.

To help generate even more smiles, Nutella has launched the “Spread the Happy” integrated marketing campaign, which draws on fans’ accounts of how Nutella has helped them enjoy personal everyday moments.

Better-for-you Benefits

Health is another important consideration for consumers when choosing a spread, points out Justin Gold, CEO/founder of the eponymous Justin’s Nut Butter, which has seen sales of its peanut, almond and hazelnut spreads grow. “When consumers are trying to decide on nut butter, they look for a product that provides a unique experience that will benefit their overall health while being delicious and satisfying,” he explains, adding that “as more consumers learn about the heart-healthy benefits of almonds and that the good fats in nuts can aid in weight loss, the market for our spreads expands further.”

In keeping with its better-for-you outlook, Boulder, Colo.-based Justin’s recently launched 6-count boxes of portion-controlled 80 Calorie Squeeze Packs in five flavors, including Chocolate Hazelnut Butter. Similarly, citing the category’s growing portion control trend, New York-based Peanut Butter & Co. has developed a 5-pack of its popular 80-calorie, 0.5-ounce squeeze packs for retailers that want to sell them by the box.

Meanwhile, noting that the Biscoff line has no artificial flavors, colors or preservatives; features 0 grams of trans fat per serving; and is “surprisingly vegan,” Lee observes that consumers’ interest in health also extends to “finding all-natural products or non-GMO ingredients [additional attributes of the brand’s products], or addressing specific allergies such as dairy or nut allergies.”

But how has the peanut butter segment fared in an environment where peanut allergies are a major concern? “Peanut allergies don’t seem to really have affected sales of peanut butter,” replies Lee Zalben, founder and president of New York-based Peanut Butter & Co. “Perhaps that’s because peanut butter is consumed by more adults than kids every day. We work closely with the National Peanut Board and the American Peanut Council in supporting programs that promote good manufacturing practices for products containing peanuts, as well as consumer education about peanut and tree nut allergies.”

Mike Guanella, senior brand manager Skippy Peanut Butter at Austin, Minn.-based Hormel Foods, says that working with the board yields “fact-and science-based information for consumers to help them make decisions about peanut allergies.”

As proof that peanut allergies haven’t put a damper on business, Zalben notes that the brand has grown in volume sales, dollar sales, unit sales and ACV. Guanella likewise affirms that after Hormel’s 2013 acquisition of Skippy, “we have had a successful year of growing the portfolio, with the brand becoming “a strong performer for our grocery product division.” Recent product innovation includes the May 2013 introduction of Skippy Natural Dark Chocolate, and more new items are due this spring.

“We think consumers are looking for a lot of different things when they’re shopping the spreads aisle — nutrition, convenience and value are all high on their list — but we think flavor trumps everything,” concludes Zalben.

Cross Purposes

When it comes to promoting spreads at retail, in-store displays fostering cross-merchandising are among the most important tools.

“Canister racks aid in off-shelf placement near complementary grocery items, like produce and bread,” says Gold, while Lee describes in-store displays that “feature appetizing header cards that grab consumers’ attention, display the product nicely, are easy to set up and have a smaller count of product that retailers of all sizes can sell through reasonably.”

Adds Lee: “We have been very successful when we can display our Biscoff cookies and spread together. Since consumers know our Biscoff cookies, when they see the cookies and spread merchandised together, they can really make the connection that the spread is made out of the cookies, and both products experience a sales lift.”

Guanella notes a forthcoming back-to-school-themed partnership that will showcase “everyone’s favorite sandwich, PB&J. Creative in-store displays will feature Skippy Peanut Butter, a jelly partner and coupons for free bread — making it very easy for consumers to get everything needed for a tasty meal.”

Along with shippers, Peanut Butter & Co. employs “a wide array of promotional tools at retail, including TPRs, shippers, IRCs, digital and traditional coupons, co-op coupons, and grand-opening events,” according to Zalben. “We also participate in most retailers’ loyalty card programs.”

All indications are that the category, which Grocery Outlet’s Porter characterizes as “exploding with innovation,” will continue to spread out.

“Consumers are looking for a lot of different things when they’re shopping the spreads aisle — nutrition, convenience and value are all high on their list — but we think flavor trumps everything.”
—Lee Zalben, Peanut Butter & Co.

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