New Products, Variety Enhancing Salty Snacks

Salty snack sales are a surging category and retailers should be going along for the ride.

“All chip segments have become accepted mainstream food and that’s not going to change in 2012, said Amer Hawatmeh, president of St. George Oil in St. Louis, operator of six Coast to Coast convenience stores.

Part of the attraction to the salty snacks segment is the relatively low price point. While the category is generally more expensive than in years past, it still offers a relative value when compared to other categories around the store.

C-store operators struggle to keep prices down, but they also need to make promotions special and with private label products stress quality to the point where consumers come to expect quality and value.

Susan Viamari, an analyst for SymphonyIRI Group, noted that recent research has helped illuminate exactly what role price plays in consumers’ choices of snacks:
• Nearly 76% of consumers actively look for the best value when buying snacks.
• Despite a prolonged down economy, consumers do, in fact, show an affinity for their favorite brands.
• Approximately 43% of consumers will compromise on nutritional value to save money.

Promoting Variety
The proliferation of brands, many of them regional, will continue to bolster sales in the category, Hawatmeh predicted.

“Today, with the varieties that are out there, it seems like the customers’ options are changing daily. It’s a challenge from that standpoint to manage the different fads and forecasting consumer demand, he said.

For example, Hawatmeh recently started working with a snack manufacturer out of Chicago that has launched a line of different popcorns and chips. “It’s amazing, and we’re getting a 40% return right now,” he said. “That might change, but we’re capitalizing while we can.”

Variety will continue to be necessary to keep interest high even though chip aficionados are loyal to favorite brands.

“When you look at your chips category, I would say that 60% of it has been the same chip for the last 10 years,” Hawatmeh noted. “Your Doritos and your Lay’s are always going to be popular destinations, but limiting a store’s selection to just those top brands is a mistake.”

To sell more in 2012, retailers will need to pay attention to good placement. “Anytime you can, market salty snacks by the front door and keep shelves fully stocked, Hawatmeh said. “It’s one of those categories that people will look for, but if you make it easy— especially if you keep it by the fountain or by the beer—you tend to sell more.”

Strong Gains for Snacks

The weak economy has not taken much of a bite out of salty snack sales. Americans are loathe to sacrifice edible indulgences, even in times of financial crisis. All three NACS snacks categories—salty, packaged sweet and alternative—showed increases in average sales per store over the past 12 months, and showed gross-margin percentage and average gross-margin-dollar-per-store gains.

The Snack Food Association of America (SFA) reported that meat snacks were among the handful of winners in an environment of conservative shoppers. The industry average was a 4% bump in sales.

One curious finding in SFA’s industry report was that grocery stores’ sales of the top five snack categories (salty snacks, ice cream/sherbet, yogurt, crackers, cookies) surged while Walmart’s slipped. The convenience channel’s snack sales grew 1.7% in dollar sales, but fell 6.7% in volume sales.

Other shopping behavior findings from the SFA report include:
• More than 80% of consumers actively look for the best value when buying snacks.
• Approximately 26% are trying to make household snacks last longer.
• 31% are snacking less frequently.
• 42% are cutting back on money spent on snacks.
• Nearly 22% are cutting back on unplanned snack purchases.

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