The below article, which includes quotations from W. Capra Executive Consultant Ed Collupy, has been re-posted from Convenience Store Decisions. The original article can be found here.
As more consumers are shifting to healthier and protein-filled salty snacks as meal replacements, c-stores are well positioned to reap the rewards.
By Lisa White, Contributing Editor
The salty snack category in the last few years has experienced a resurgence with new products and healthier options, due to the fact that today’s consumers are replacing meals with snacking more often.
In its “Salty Snacks: U.S. Market Trends and Opportunities” report published this past July, Packaged Facts forecasted that dollar sales of salty snacks in the U.S. will grow at a compound annual rate of 4%, reaching $29.3 billion in 2022.
Undoubtedly, a significant share of those sales will come from convenience stores.
The report notes the inclination of more Americans to seek healthier snacks such as nuts, seeds and dried fruit, to offset more indulgent snacking, will continue to augment a category traditionally led by popular potato chip brands, tortilla chips and other salty products.
Still, innovation across the whole category continues to spur loyal consumers to try new flavors, while attracting a whole new audience. With the convenience channel well-positioned to capitalize on these trends, a number of salty snack brands are experiencing healthy growth.
According to National Association of Convenience Stores’ (NACS) “2017 State of the Industry Report,” salty snacks grew sales by 5.6% to $84,477 annually per store. Gross margin increased by 0.82 percentage points, helping gross profit dollars grow by 7.9% to $32,622 annually per store, NACS reported.
“The approach to salty snacks varies widely amongst c-store operators,” said Ed Collupy, executive consultant at Chicago-based W. Capra Consulting Group.
For example, at chain-operated stores, such as 7-Eleven, Cumberland Farms and Speedway, there are ample ways to maximize sales and margins in this category with store brands.
“Private label products are very prevalent at these stores and clearly provide customers with variety and value. Choices go well beyond the traditional potato chip; 7-Select’s Caramel Popcorn Clusters to Cumberland’s Farmhouse Trail Mixes come in multiple flavors,” said Collupy. “Upscale salty snacks abound, with Speedway’s Speedy Choice brand’s Premium label nut line and regional operator Alltown, in a three-foot section, offering Terafina nuts.”
Private label products also offer consumers better value.
“In my shopping, I’ve seen savings on the low end at 8%, but also over 40% on a big bag of chips,” said Collupy.
Single-store operators have different opinions on what works.
“Mom and pops clearly recognize the value of stocking the local namesake brand, while many of the chains don’t carry the locally-named brand,” said Collupy. “One operator told me that he lets the route drivers decide what variety to carry, while his competitor chooses to carry specialty brands—Oogies, Pretzel Pete, Joe Chips—and takes advantage of rack display units provided by some of the brands.”
“Last year, the trend in salty snacks was all about being salty-sweet. This year’s fad is about taking simple snacks and making them haute,” said Daniel Levine, director of the Avant-Guide Institute, a consultancy in New York.
FOCUS ON HEALTHY
NACS’ report reveals health-conscious consumers shifted the landscape for snacking, but they are not willing to sacrifice flavor and indulgence. Instead, cleaner labels and simpler, healthier ingredients have become more prevalent.
While sales of puffed cheese jumped 9.3% in 2017, sales of potato chips and corn chips also experienced sales spikes of 6% and 4.9%, respectively. Still, some retailers report strong sales with more nutritious offerings.
“We’re seeing a lot of trends towards healthier options, such as the nut mixes and things like that,” said Marylou Mendez, chief financial officer at Plaza Chevron Service Center, Costa Mesa, Calif. “Also, there’s been growth in the meat snack products, as people are looking for no carbs. There is lots of jerky like turkey jerky and all the different flavors, while manufacturers are getting away from the oily sticks [of the past].”
Plaza Chevron is part of Chevron’s joint-venture chain, ExtraMile Convenience Stores LLC, which comprises about 770 locations in California, Florida, Hawaii, Oregon and Washington state.
On the other side of the country, Utica, N.Y.-based Clifford Fuel Co.’s 19 stores are seeing growth in the salty snacks category.
“Nuts and seeds have been a great category for us,” said Mike Clifford, category manager. “Part of it is offering a better assortment of flavors, and it could be a little more on trend with healthy eating. Although more people are looking for nutritious options, our Doritos numbers are also great.”
Levine has seen a number of healthier salty snack launches.
“Clean-label salty snacks are part of this foodie trend,” Clifford said. “Foodies want ‘real’ food, even when they are snacking. I am seeing many new snacks that offer a healthier form of indulgence.”
INNOVATIVE OFFERINGS
Salty snacks is one category that is constantly evolving. Today’s products are not only healthier, but also provide spicy options, international/ethnic flavors and seasonal snacks, according to the NACS’ report.
Plaza Chevron recently added P3, a new portable protein snack pack from Kraft Heinz to its salty snacks lineup. A number of varieties are available that combine nuts, cheese, turkey, bacon, beef jerky and other ingredients.
“Those are doing really well because they come packaged in portion control packs,” said Mendez. “Also, in our deli, we have a hummus and pretzel combo that is a hot seller as well as a dill pickle packaged in a foil packet with no juice for easier eating on the go.”
Clifford Oil recently expanded on its Biggs lineup from Boulder, Colo.-based Thanasi Foods with new flavors.
“One of the big ones is the Taco Bell Supreme sunflower seeds,” said Clifford. “Other snack varieties weren’t so out of the norm in terms of varieties.”
Experts note the number of salty snack SKUs continues to increase in c-stores.
“I just tried Phoenix-based Halfpops’ Dill Pickle popcorn snacks, but could have enjoyed anything from Berkley, Calif.’s The Good Bean’s Chili Lime Chickpeas to the UK’s Graze Snacks’ Sweet Memphis BBQ peanuts to Fairfield, Calif.-based Calbee North America’s Harvest Snaps Red Lentil Snack Crisps,” said Collupy about the focus on flavor and new varieties.
More and more, the salty snacks category is facing significant competition from meat snack offerings, which is experiencing innovation as well.
“Jerky is a growing snack food category, and pulled pork jerky is taking a simple snack to a delicious extreme,” said Collupy. “In addition, Jim Beam is lending its credibility to the co-branded Burts Chips Jim Beam Original BBQ Crisps. Calling them crisps upscales them, as does the packaging, which promises they are gluten-free and made without MSG, artificial flavorings or colors.”
PACKED PROMOTIONS
A number of convenience stores continue to dedicate considerable shelf space to salty snacks, but also use temporary floor displays and wing-like fixtures on aisle end cap shelving to offer and expand on their salty snack selection throughout the store. The more placements, the better.
“The growing foodservice category in c-stores also provides cross category promotional opportunities for salty snacks,” said Collupy. “Small package chips are merchandised above the fresh food refrigerated case, on low-profile racks in front of the service counter and at the checkout counter. Cumberland Farms has even created a product line called Diner Side Snacks—turning foodservice items like mac and cheese and sweet potato fries into salty snacks.”
Collupy added that salty snack items are often used in promotions, such as ‘two for’ pricing and buy a soft drink and get a salty snack for free.
Plaza Chevron promotes salty snacks constantly, mainly chips, but also nuts and nut mixes. It recently promoted its new P3 brand line with a two for $3 promotion, which was successful.
“Hummus and pretzels don’t need a promotional push,” said Mendez. “Our salty snack offerings are in a separate and dedicated gondola.”
The store is currently one of 50 c-stores that are part of Chevron’s ExtraMile pilot program called The Snack Bar, where retailers dedicate an entire gondola to salty snacks on one side, energy and meal replacement bars on the other and end caps with kettle and Hispanic-style chips.
“It’s similar to ExtraMile’s HydraZone beverage concept,” said Mendez. “With that program, manufacturers have to pay to be included in the display.”
Clifford Oil places its salty snacks near the cooler doors by the beverages.
“Although we haven’t yet done any cross promotions, we have some end cap displays with bigger chip packages and beer,” said Clifford. “Potato chips are a huge seller, but numbers have been pretty flat, and we’re seeing growth in nuts, seeds and tortilla corn chips like Doritos and Tostidos.”
Innovative flavors, healthier options and protein snacks are expected to remain on trend in this category for the foreseeable future, as consumers seek more nutritious meal replacement options without sacrificing flavor.