Despite economic woes, brands are back.

By Bob Gatty

Even though consumers have been struggling economically and are trying to make their snack dollars go further, many are returning to their favorite snack brands, particularly those that are considered healthier – at the expense of private label.

That was one of the key conclusions in the 2010 State of the Snack Industry report developed by SymphonyIRI Group and presented in mid-March at the Snack Food Association’s (SFA) SNAXPO convention in Orlando.

The report’s data on sales performance was based on SymphonyIRI’s InfoScan Reviews, Marketinsight, and Health & Wellness Advantage studies. Shopping behavior data was developed by SymphonyIRI’s Consumer Network, and consumer attitude information was developed in the company’s 2011 Consumer Snacking Study.

According to Sally Lyons Wyatt, SymphonyIRI senior vice president, consumers are still concerned about the economy and expect food and energy prices to increase. As a result, 42 percent said they are spending less on snacks, 30 percent are trying to make their household snacks last longer and are snacking less frequently, and 25 percent are eliminating unplanned snack purchases when they go to the store.

Despite those efforts by consumers to stretch snack dollars, Wal-Mart lost ground, the report said, with snack dollar sales declining 3.1 percent in 2010 and volume sales dropping 5.2 percent vs. 2009. Meanwhile, drug stores increased snack dollar sales by 2.6 percent and volume by 3.1 percent, and grocery sales gained 1.9 percent and volume was up 1 percent. Convenience stores increased dollar sales by 1.6 percent, while volume declined 2.1 percent.

Commenting on the study, industry consultant Kit Dietz, Dietz Consulting LLC, Huron, OH, points out that total snacks in the convenience channel generate 48.6 percent of total center store sales, 42.7 percent of adjusted gross profit, and 13 percent of true profit dollars.

“There is a lot of opportunity to increase profit in the snacks category,” Dietz says, “but wholesalers need to drive improved category management, with support from manufacturers, to make that a reality.”

Wyatt said consumers are deciding where to buy their snacks based on convenient location (56 percent), lowest every day price (53 percent), best selection of products (43 percent), get in/get out quickly (40 percent), selection of private label (29 percent), one-stop shopping (27 percent).

Snack industry-wide, dollar sales increased an average of 1.1 percent, while volume dipped by .6 percent. Leading volume gainers were snack/granola bars, up 5.5 percent and yogurt, up 5.4 percent. Salty snacks volume across the industry was down 2.2 percent, but sales dollars increased slightly, by .4 percent. Price fluctuations were moderate with a 1.6 percent industry average increase. Prices were heavily influenced by promotional activity and merchandising support, the study showed.

Brands Weather the Storm

The study showed that many consumers are still struggling with 38 percent of those surveyed saying they are worse off than last year and only 17 percent saying they are better off, and a full two-thirds view their personal finances as stagnant or deteriorating.

Moreover, Wyatt said 42 percent of consumers are cutting back on money spent on snacks and 30 percent are trying to make their household snacks go further. Some 30 percent are snacking less frequently and 25 percent are eliminating unplanned snack purchases. Nevertheless, branded snack products began last year to take share away from private label. Sixty-eight percent of consumers said they prefer their favorite brand vs. private label, up 4 points since 2009.

“Brands are back,” declared Wyatt. “Private label is here, but consumers are not buying private label for everything. They want their brands, but their brand purchasing decisions are still heavily influenced by price.”

While 44 percent said brand decisions are “very strongly” influenced by item price, 27 percent said they want their favorite brands at a reasonable regular price, an increase of 7 points over 2009. Those seeking favorite brands on sale declined from 44 percent in 2009 to 41 percent in 2011. The survey showed that 32 percent purchase any brand, if the price is right.

“Consumers are gravitating towards the concept of finding their favorite brands at a reasonable everyday price,” Wyatt said. “Everyone should look at that and not forget it.” Shoppers’ actual experiences with brands are essential, Wyatt stressed, with 46 percent saying their brand decisions are very strongly influenced by brand trust.

Store brands still are an important factor for many consumers with 47 percent saying they switch to those snacks when their budget is tight. However, private label snack volume declined by .4 percent to 17.1 percent share last year, with dollar share flat at 12 percent compared to 2009.

Wyatt said innovation played a key role in increasing share across several snack categories – at the expense of private label products in those categories. For example, 11 new yogurt “pacesetter” offerings cut 1.2 percent from store brands’ share, and 10 salty snack “pacesetters” helped to reduce private label’s share by .2 percent.

Health and Wellness

“Consumers are trying to eat healthier (71 percent),” said Wyatt. “Predominantly they feel that if they can stay healthy, they can avoid medical expenses.” That, she explained, accounts for a shift of 7 percent since 2006 in healthier snack purchases compared to indulgent products.

The study showed that 60 percent of consumers are trying to eat foods that help prevent health problems and/or manage existing health conditions, and 24 percent seek snacks that offer benefits beyond basic nutrition. A full 40 percent view snacks as an important part of a healthy eating plan throughout the day.

While consumers still want to know about products that are low fat, low cholesterol, low sugar, high fiber, low calorie, and whole grains, they also want to be alerted to products with low sodium content and those that are all natural or contain natural ingredients.

Fifty-one percent of consumers want retailers to clearly identify healthier products in the store, the study showed, and 47 percent want comments or symbols on packages to help them select healthier options.

Wyatt advised the industry to partner with parents as they teach their children about healthy eating, and to offer snacks with nutrients, watch portion sizes, offer snacks that are fresh and not processed, as well as those that are low fat, and low in calories. Also, she said, the balance between price and nutritional value should be reinforced.

The study showed that dollar sales of organic (+8 percent) and natural (+7 percent) indicate that those snacks are performing well across the industry. Some 29 percent of consumers said it is important that snacks are natural/organic, and 20 percent said they are trying to increase consumption of such foods.

Sustainability remains a growth opportunity as well, with 26 percent of shoppers saying reduced/more eco-friendly packaging influences their snack selection, and 21 percent looking for biodegradable packaging. Manufacturer practices/green business influences the snack selection of 20 percent of consumers.

“Green is good,” said Wyatt. “You all are answering that call, and when you do, and when you let consumers know, it works.”

Feeding the Hungries

“Snacks play an important role in providing satiation,” noted Wyatt, pointing out that 28 percent choose them to satisfy immediate hunger, and 11 percent to serve as a “mini meal.” Six percent view snacks as an opportunity to get nutrition.

In part, due to underlying health and wellness and satiation trends, strong growth is evident outside the sweet and savory snacks category, Wyatt said, as such items as refrigerated snack rolls, snack/granola bars, yogurt, dry fruit snacks, and string cheese all have made significant gains.

Snacks touting high protein and low sodium attributes are demonstrating particularly strong growth, the study showed, and a number of new products boasting these attributes made in-roads over the past year—products such as Chobani Greek Yogurt, Wonderful Pistachios, Fullbar weight loss bars, and Dan-o-nino.

Hunger satisfaction steers considerable snack selection, as 68 percent of consumers who purchase meat snacks do so for that reason. Other leaders in the hunger satisfaction arena were snack bars, 54 percent; crackers, 46 percent; snack nuts, 42 percent, and salty snacks, 39 percent.

“If you have a product that can answer that call, communicate it,” Wyatt advised.

Still, many consumers view snacks as something to enjoy purely for pleasure, said Wyatt, as 55 percent said they are more likely to eat what tastes good rather than what is healthy. Thirty-five admitted to eating to satisfy a specific craving, although that is down from 39 percent a year ago.

New Snack Opportunities

Wyatt said 54 percent of consumers snack more during social occasions and 57 percent consider snacks an important part of such occasions. She encouraged marketers to tailor messages to key snack rituals, such as family time/at-home entertainment—and on-the-go-from-home eating.

Thirty-four percent of consumers eat snacks instead of a meal on-the-go, the study showed, and 39 percent seek snacks that can be eaten on-the-go—important factors for the convenience channel.

Because 26 percent of consumers plan specific snack purchases before going to the store, Wyatt urged marketers to take advantage of both traditional media, such as clip-out coupons and new media, like click-and-save coupons, on-line ads, or social media promos to create awareness.

“Getting them to new media is key,” she said. “Getting coupons online or delivered to the handheld is important. It is something that consumers will continue to gravitate to and use. Dig deep with new media efforts designed to build excitement and buzz.”

Bob Gatty is a contributing editor to Convenience Distribution™ and founder of G-Net Strategic Communications.