When the Chips Aren't Down

May 20, 2010
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Today’s consumers refuse to allow a little thing like a down economy hinder their right to crunch. To satisfy their salty snack cravings and still stay within budget, hungry consumers increasingly are opting for store-bought salty snack fare to replace restaurant favorites such as chips and salsa. They also are choosing wallet-friendly store brands more often, according to data from Chicago-based SymphonyIRI Group Inc. (formerly Information Resources Inc.).

Although dollar and unit sales within the total salty snacks category grew a healthy 6.5 percent and 2.7 percent, respectively, during the 52 weeks ending Feb. 21 (supermarkets, drugstores and mass merchandisers, excluding Walmart), growth on the private label side was even more impressive. Here, SymphonyIRI reported a 16.0 percent rise in dollar sales and a 13.5 increase in unit sales during the same timeframe.

“We’re continuing to get new consumers that are trying own brands,” notes Jim Wiegmann, executive vice president with Shearer’s Foods Inc., Brewster, Ohio. (Wiegmann had been an executive with Snack Alliance Inc., Vancouver. In March, Shearer’s Foods signed a definitive agreement to acquire Snack Alliance’s operations).

Wiegmann says many of these folks have been buying private label in other categories, but are only starting to buy salty snacks.

“We’re keeping a lot of those new consumers,” he adds. “The quality improvements are really helping us.”

Eye on Health

Although dietitians certainly won’t be recommending an increase in daily salty snack consumption any time soon, a number of health-minded trends are playing out within the category.

“Healthy snacks have kept their momentum, increasing about 3 percent in 2009 vs. 2008 and up 8 percent since 2005, so their growing presence and popularity is time-tested,” notes Jim Wilsky, national sales manager for Coldwater, Ohio-based Tastemorr Snacks, citing a SymphonyIRI consumer survey.

He points to natural, organic and baked (instead of fried) items as some key areas for private label growth.

Wiegmann agrees that healthful offerings make for a significant private label opportunity.

“The real coming space inside own brands is going to be in the better-for-you multigrain,” he stresses, “whether it’s off of a twin-screw extruder or off of a sheeted product.”

But perhaps the greatest opportunity can be found on the reduced-sodium front.

“One of the biggest areas of attention, if not the biggest, is referenced in the category name itself: salt,” says Michael G. Farley, marketing manager for Marfood USA Inc., Taylor, Mich. “For Marfood USA and our meat snack products, sodium is an area of concentration. Since our whole muscle product comes from natural grass-fed beef, sodium is really the only variable inconsistent with the raw material.”

Wiegmann says he has been preaching sodium reductions to the trade for years. But now the national brands are quietly beginning to take action, he says, so it’s a fine time for retailers to rethink the sodium levels within their own salty snacks.

“When you look at the demographics and the aging of the population, and with hypertension being a big thing, we need to be taking down the sodium,” he maintains.

Wiegmann suggests a slow reduction, beginning with wavy potato chips - and advises retailers not to call it out or make a big deal out of it. If consumers don’t notice - or do notice, but respond positively to the change - then he suggests carrying over the reduction to the original version of those chips.

But the health-minded trends don’t end with formulation adjustments and processing methods. Package downsizing also is gaining favor among consumers.

Wilsky believes smaller-size options, including portion-control and single-serve packs, fit in well with today’s on-the-move, busy lifestyles as well.

And folks also are looking for value. Bill Stewart, vice president of sales and marketing for Tom Clark Confections Inc. of Glendora, Calif., notes that ready-to-eat popcorn, one of the highest-growth segments in salty snacks for 2009, packs a double-wallop: It’s a better-for-you product vs. other salty snacks, plus a better value per ounce.

But no matter how healthful the snack, consumers seldom will sacrifice taste, stresses Mark Singleton, vice president of sales for Lima, Ohio-based Rudolph Foods.

“The people who are solving the better-for-you equation in something that tastes great are really making headway in the market and will continue to do so,” he says.

But don’t put all your salty snacks into one healthy basket, Wilsky warns.

“I think it’s important to recognize the fact that the Americans over the age of 55 consume more snack products than any other age group,” he says. “This is somewhat due to the aging of America and also generations that have grown up with salty snacks firmly embedded into their eating habits. Indulgence and a self treat are still major influences in salty snack purchases.”

Flavors in Favor

Flavor trends, of course, are an important part of the quest for a great taste. Although the traditional “plain” and wavy potato chips, pretzel twists and rods, and tortilla chips always will enjoy strong demand, consumers also are looking for new flavors that stir up some snacking excitement. Stewart says his company is seeing increased interest in savory flavors.

And Wiegmann notes a big movement to sour cream and cheddar, as well as heightened interest in parmesan and salt and pepper flavors.

“Salt and vinegar is moving out of the Northeast and becoming a bigger part of the portfolio,” he adds. “Jalapeno and cheddar is getting a lot of traction.”

Spicy and full-flavored products also are in vogue, Wilsky notes, thanks to the growing influence of Hispanic consumers, as well as a general leaning toward spicier products.

Wiegmann also sees opportunity in more unusual flavors. He points to Loblaw Companies’ launch of a President’s Choice General Tso’s Chicken potato chip as an example. And such flavors do not necessarily need to be designed for the long-term.

“Snacks are like a fashion category,” Wiegmann contends. “People want a change. Everybody involved in that process has to know that it’s going to be short-lived - maybe a quarter, maybe six months, then changed out.

Singleton adds regional flavors to the store brand opportunity list. He notes that Rudolph Foods produces pork rinds in a variety of flavors, many unique to a specific retailer or a specific region of operation for that retailer. (The company also produces veggie chips and multigrain cinnamon twists, or churros.)

“They’ve done deep analysis and know what flavors work well where,” he says. “Barbecue works better than hot in the Midwest. Hot works better in the South and Southwest.”

The breakdown, of course, goes even deeper than that, Singleton says, with some regions preferring a vinegary, hot sauce kind of heat and others a chili-type of heat and so forth.

Positioned to Sell

The excitement within the private label salty snacks segment goes beyond better-for-you formulations and tantalizing flavors. Packaging also has grown more sophisticated, and retailers are stepping up the merchandising and promotion game.

On the packaging side, a good barrier is critical, Singleton stresses, but retailers also need to work on a truly unique look that goes hand in hand with the one-of-a-kind offerings they are beginning to offer. He adds that resealable bags are a significant area of opportunity for private label.

Package designs must be bright and modern to stay current with the national brands and “consumer impulse-driven choices,” Wilsky maintains. He says it’s also critical for retailers to call out any health attributes right on the package.

Stewart notes increased interest in clear-bag-with-label packaging.

“[It] gives a more handmade/homemade look that gets away from the mass-produced look of traditional branded snacks,” he says.

Farley is not quite sure what the next breakthrough packaging innovation will be on the salty snacks front, but does note the need for retailers to be on the lookout.

“One of the most obvious areas to address would be related to the environment,” he says. “The packaging challenge is much like sodium. Both are tradeoffs for extended shelf life, product integrity and convenience.”

On the merchandising side, end caps and secondary displays continue to be the top sales drivers for salty snacks, Wilsky says.

“We have found our POP shippers to be particularly useful and productive in selling our private label pita chips,” he says. “In addition, we tie in with a promotion display and sampling on a private label hummus in-store, when possible.”

Wiegmann sees a greater willingness on the part of national brands to partner with retailers in cross-merchandising products such as soda, paper plates and paper cups. And private label variety packs also provide a vehicle for new product introductions, he adds.

“We’re telling our retail partners to throw in a coupon for something new in the variety pack bag,” he says. “It takes nothing to do that, and you’re going to increase trial.”

For its part, Marfood USA created a proprietary Web site for its private label customers to use as a hub for custom promotions, incentive distribution and shopper insight, Farley says.

“This program also gives our customers the flexibility to react quickly to the shopper environment.” PLB

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