Chips Entice Customers with Healthier Options, New Flavors

Salty snacks continue to drive business to convenience stores. Retailers should look to partner with suppliers to capitalize on promotional activity to boost margins and profits, as well as looking at local suppliers as consumers continue to demand products made closer to home.

Steve Nalu, president of Towns Mart convenience stores in Romeo, Mich., saw his chip sales soar a whopping 45% in 2010, and also sees more brands popping onto the scene. “We see more different types of textures for chips coming out. The kettle-type chips that are crunchier have become a big seller.”

Chip dollar sales overall totaled $1,167,240,000 for the 52 weeks ended Dec. 26, 2010, according to SymphonyIRI Group data for U.S c-stores sector. This was up 4.38% from the previous year. Unit sales also were up 4.56%.

“Potato chips did particularly well in 2010, especially considering we were in a recession, but snack food tends to do pretty well in a recessionary period,” said Christopher Clark, vice president of operations and membership for the Snack Food Association.

Across the snack food category as a whole, Clark noted the influence and impact of ethnic tastes that is expected to continue in 2011. “Years ago we just had barbeque and sour cream and onion chips, but now you have a wide variety of different flavors, and a lot of those are inspired by different ethnic trends. There are now curry- and Thai-flavored varieties and Hispanic or Latin flavors.”

Tracking the Health Trend
The health trend is also affecting chip varieties. “A number of companies have been, for several years, voluntarily reducing the sodium in their products, and a lot moved to healthier oils and oils with healthier profiles, and you’re still seeing that migration,” Clark said.

Indulgent chips remain popular, but brands continue to add line extensions, with healthier options. “The biggest trend,” Clark said, “may be the baked products you see now. Years ago you didn’t have as many options of baked chips or flavors within that variety.”

National manufacturers are stepping up to meet the demand for healthier snacks. “Frito Lay has come out with a chip that is lightly salted versus normal amount of salt and that has been selling very well, especially among the older demographic and people who are more health conscious,” Nalu said. “The kettle-type chips also are selling to the more health-conscious consumers.”

Pretzels are also touting whole grain ingredients to grab that health-conscious consumer wandering down the chip aisle. “We sell a ton of bags of bite-sized pretzels and also the pretzel sticks. We probably sell about 50 bags a week of the pretzel sticks. Pretzels are a big part of overall chip sales,” Nalu said.

But c-store retailers should look out for potato chip and salty snack competition in general from more channels in 2011, as dollar stores, home improvement and craft stores delve into the snack food category in an attempt to gain impulse buys at the register.

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