Raising the Bar on Snack Sales

Energy bars are most often associated with top athletes and endurance sports. But as consumers have found themselves pressed for time—and energy—the category has morphed into an array of tasty, low-cost products that provide a quick meal solution across multiple dayparts. More importantly, the category has evolved to include a multitude of variations from healthy snacks to sugar-free and low-carb options that target niche consumers.

The popularity of bars lies in their simplistic, portable format. Any kind of food bar provides grab-and-go convenience and portion control. “This definitely makes them handy for a fast breakfast or between-meal snack,” said Ben Jatlow, director of business development for High’s of Baltimore.

“I would say the category is growing, but the more appropriate term would be ‘evolving,’ added Jatlow, whose chain operates 69 High’s Dairy Stores in Maryland and Delaware. ”The shift appears to be from energy bars to protein or snack bars.”  

At High’s, bars fall into the alternative snacks category. Some of the items were in the sub category granola/fruit snacks, while others were in the health/energy bar category. Regardless of the classification, sales are up across the board. Comparing the first quarter of 2010 to the first quarter of 2009, the quantity sold surged 25%. Sales dollars at High’s stores were up 42%. The average gross margin of the category was 50.62%. Retail prices have also held strong. The average bar price at High’s increased 16 cents over the past 12 months from $1.17 to $1.33.

Along with price, Jatlow attributed stronger sales to improved flavor profiles. “Consumers care about taste and therefore are reaching for more snack bars as opposed to the traditional energy bars, which are often calorie heavy,” he said. “While this is a benefit for serious athletes or even people who work out on a regular basis, it’s a problem for the consumer looking for an on-the-go breakfast or a lighter, healthier, tastier snack. The breakfast, snack and protein bars often have a texture that is more like a granola bar rather than that chewy energy bar texture.”

Sales data from SymphonyIRI Group, which tracks the snack bar/granola bar category, confirms Jatlow’s analysis. The research firm reported that for the 52 weeks ended March 21, 2010, category sales in U.S. convenience stores jumped 4% to $464.49 million. Overall unit sales increased 2.32% to 397.33 million with an average price of $1.17. The total breakfast/cereal/snack bar subcategory performed well, posting a 31.82% increase in dollar sales during the same period.

The nutritional/intrinsic health bar category performed well, but sales slipped as customers seemed to gravitate toward snack bars and granola bars. Segment sales dropped 2.79% to $238.74 million, while unit sales sold in convenience stores fell 4.43% to 115.64 million. The average price per unit, however, increased three cents to $2.06.

The Price is Right
Joao Carvalho, who owns three Islander Marketplace stores in downtown Miami, said energy bars are attracting a wide range of customers from people simply too busy for breakfast or lunch, or customers on the way to the gym.

“Because the category appeals to such a diverse audience there is a tremendous potential to increase sales,” Carvalho said. “They key is to not overwhelm customers with too many brands. Customers tend to be brand loyal, so listen to what they ask for and keep the products in stock.”

The category also has quite a bit of price elasticity, said Carvalho, who has tested prices by increasing them about 10 cents at a time. “We were able to increase our margin about 25% by pricing on the high end of what customers are willing to pay, without seeing a drop off in sales,” he said. “That has been a pretty big boost to our bottom line.”

New Products Coming
The market has rapidly specialized in order to target the growing number of interested consumers, including women, the diet conscience (both for weight loss and general health) and those with special dietary needs, such as arthritics and diabetics.

The changes in the market’s structure have aided its growth. Over the past five years, the share of sports and energy bar products sold in health food stores dwindled from 38.7% to 7.5%, as the mass distribution networks of supermarkets and conveniences stores took control, Mintel International reported. In addition, the competitive arena has transformed from a fragmented market owned almost entirely by small and regional players to one that is now largely controlled by conglomerates.

More new food bar options are available in the market in a larger variety of flavors. Last year brands began offering more raw and natural options instead of highly processed, protein-packed products that dominated the category in previous years.

While the number of energy drink brands continues to expand year after year in the U.S., consumers can expect to see energy concepts grow well beyond the non-beverage format, according to Mintel, a global market research firm.

“Energy drinks have quickly become a daily beverage choice,” said Krista Faron, senior new product analyst at Mintel. “As more Americans use energy drinks, we’ve seen a rise in products being launched with innovative new ingredients, claims and consumer targets.”

“Energy bars are familiar to many Americans,” Faron said, “but other energized foods, such as candy, chips, milk and cereal, are definitely not. We expect the concept of energy—both physical and mental—to greatly influence food product development.”

Caffeine is also emerging in foods from energy bars to cereals.

“Energy is poised to take food in a new direction, giving consumers who need a boost many different ways to get it,” Faron said. “From natural energizers like omega-3s or antioxidants to foods that are fortified with energizing ingredients, we are seeing ‘energy’ emerge as a core benefit in new food products.”

 

Breakfast is Served
SymphonyIRI Group, which tracks the snack bar/granola bar category, reported that for the 52 weeks ended March 21, 2010, category sales in U.S. convenience stores jumped 4% to $464.49 million. Overall unit sales increased 2.32% to 397.33 million with an average price of $1.17. The total breakfast/cereal/snack bar subcategory performed well posting a 31.82% increase in dollar sales during the same period.
     
 Dollar sales% Dollar sales changeUnit salesAVG Price
Total Breakfast/Cereal/    
Snack Bars $84,931,60031.82%92,902,760$0.91
Kellogg’s Nutri-Grain$28,825,3402.38%35,716,510$0.81
General Mills Golden Grahams  $12,980,690227.14%10,497,890$2.67
Kellogg’s Special K Bar$8,772,6663.73%10,820,520$0.81
General Mills Cinnamon Toast  $7,616,55235.41%8,597,227$1.82
General Mills Honey Nut Cheerios $5,458,3714.27%6,466,795$3.19
General Mills Fiber One $4,889,041262.39%5,464,352$1.85
General Mills Chex Mix $4,785,534137.57%6,506,158$1.77
Odwalla$2,707,904-26.97%1,718,180$1.58
Bobos Oat Bars$2,586,081500.74%861,037$3.00
General Mills Milk N Cereal $1,066,505-3.22%1,277,584$1.82

 

 

7ads6x98ycss.php