AWMA will soon be publishing a new study, Convenience, Confections & Profit: Targeting the Core, a study that is expected to provide help to c-store distributors and retailers seeking to increase snack sales and profits.  Preliminary research already shows that as much as $500 million per year in increased convenience channel sales could be achieved if distribution of warehouse-delivered snacks can be maximized , according to the study's author, Kit Dietz, of Dietz Consulting, LLC.  The new AWMA study will be released at the end of year.

Targeting the Core
During AWMA’s Summit Program, September 14, 2010, in Key Biscayne, Florida, Industry consultant Kit Dietz detailed the opportunities for convenience distributors for boosting candy and snacks profits, highlight results of last year’s study on candy profits opportunities and a new study currently being finalized on warehouse delivered snacks.  While the 2009 study was co-sponsored by AWMA, NCA and NACS, this new study is being sponsored exclusively by AWMA.

He said that the top 50 candy and warehouse delivered snacks SKUs offer a $750 million incremental sales opportunity if properly leveraged.

“Efficient assortment can drive continuous improvement for you and your retail customers,” Dietz said, urging distributors to focus on making certain that core products are always in stock and effectively merchandised. “Leverage new data, new tools and new thinking that aligns strategic opportunities across the channel,” he advised.

Dietz said his research indicates that while the top 50 SKUs of warehouse delivered snack products produce 33.1 percent of category sales, they do so with just .7 percent of SKUs. The next 350 SKUs generate 35.1 percent of sales with just 5 percent of total SKUs. The next 50 SKUs generate 14.7 percent of sales with .7 percent of SKUs, while the bottom 6,550 SKUs produce 17 percent of sales with a whopping 93.6 percent of total SKU count.

“We really have not identified what our most important SKUs are,” he observed.

Dietz said there are major gaps in distribution of the major SKUs of WD snacks. Salty snacks average an ACV of 51 percent. “That’s pretty poor when we have some great items in the category,” he observed. Packaged sweet snacks constitute a major void, he added, with average distribution of 39.5 percent.

The challenge, of course, is to increase the share of warehouse delivered snacks products in the store vs. DSD products, Dietz said. Today, DSD controls 60.4 percent of snacks, compared to the 39.6 percent share held by WD snacks.

“We have an opportunity to take category management to a new level to drive margin in the snack category,” he said. “We need to get out and impact the stores. We’re all in this together --  manufacturers, distributors and retailers, joined at the hip to better serve consumers.”