Snack Foods
March/April 2002

Suppliers strive for space & sales

Salty snack products account for 3% of total non-fuel sales , and convenience retail outlets account for 5% of the total salty snack market. However, they attract gross profit margins of over 40% , and sales growth in C-Stores is more than double that of grocery.

An impulse purchase, the segment's performance is driven by new products, new flavours, innovations and promotions that excite the customer's interest.

Key messages from last time still apply:

• participation in all promotions,
  
• placement in the landmark locations
• the register counter next to confectionery, food service areas, and near the beverages, and
  
• leveraging the beverage with combos.

This year, suppliers are competing energetically for market growth and market share, with lots of promotions, incentives, new products, lively displays, and service - at their cost. Suppliers are broadening the appeal of the salty snack category to cater for the C-Store demographic, from fun food for parent-pestering kids, to healthy fat-free snacks for guilt-ridden adults. The bigger flavour range should find favour with all palates.

This year we recommend you make the best of what the suppliers have to offer.

Market trends
The C-Store salty snack market is worth more than $26m and grew 12% last year. This compares to the grocery market that grew 5% to over $520m. This is a due to an increase in the number convenience stores and better marketing through in-store location, promotions and new products.

Overall, Smith's is the largest supplier, with Snack Brands growing fastest at 25% last year.

MAT* 12 Months TO 23 December Market Share by Value National C-Store Market by Supplier - Salty Snacks
	2000	2001
The Smith's Snackfood Company	46.2%	43.8%
Snack Brands Australia	29.5%	32.9%
Arnott's	15.9%	16.1%
Proctor & Gamble	7.7%	6.3%
Other	0.7%	0.9%

*Moving Average Total
Source: AC Nielsen ScanTrack

The market is divided into three product groups: Potato (68% by value), Corn (14%), and Extruded/Cereal (18%). Smith's dominance is due to its strong presence in each product group, where its main brands (Smith's Crisps, Doritos and Twisties) are still the leaders.

Mat TOo 23 December 2001 Market Share by Value Australian Convenience Market Convenienve Market by Type of Snack by Supplier
	Potato	Corn	Extruded
The Smith's Snackfood Company	32.8%	65.8%	75.4%
Snack Brands Australia	36.0%	33.6%	24.6%
Arnott's	21.6%	N/A	N/A
Proctor & Gamble	9.6%	N/A	N/A
Other	0.0%	0.6%	0.0%

Note: Smith's includes Smith's Crisps, Lays and Ruffles, and Snack Brands includes Thins, Samboy, French Fries, Planters and Colvan.
Source: AC Nielsen ScanTrack

"The Smith's Snackfood Company combines market-leading Australian brands with global icons, offering products in all snack segments." Jamie Eastley, National Account Manager Fuel and Convenience, The Smith's Snackfood Company.

Snack Brand's improved position in the potato product group is due to the improved share of its Thins brand, and the larger number of brands - Thins, Samboy and French Fries - in the category).

Mat to 23 December Market Share by Value Australian Convenience Market - Potato Chips by Brand
	2000	2001
Smith's Crisps	24.4%	24.3%
Kettle	21.5%	21.6%
Thins	14.3%	17.0%
Samboy	10.6%	10.5%
Pringles	11.4%	9.6%
Lays	11.9%	8.4%
French Fries	3.5%	5.0%
Other	2.4%	3.5%
Source: AC Nielsen ScanTrack Corn chip shares remain stable, with Smith's Doritos retaining top position

 

Mat To 23 December Market Share by Value Australian Convenience Market - Corn Chips by Brand
	2000	2001
Doritos	66.0%	65.8%
CC's	33.4%	33.6%
Other	0.7%	0.6%
Source: AC Nielsen ScanTrack

Twisties growth from an already strong position was partly at the expense of fellow Smith's product, Chee-tos.

Mat* To 23 December 2001 Market Share by Value Australian Convenience Market - Extruded Products by Brand
	2000	2001
Twisties	50.3%	53.7%
Cheezels	23.0%	24.5%
Burger Rings	13.6%	15.6%
Chee-tos	9.9%	6.1%
Other	3.2%	0.1%
Source: AC Nielsen ScanTrack

Impulse shopper are still choosing the smaller packs, except in the corn chips range where the 230 gram pack is the clear leader. The 50 gram and 100 gram packs are equally popular in the potato and extruded segments.

Quater to 25 November 2001 Market Share by Value National C-Store Market by Product Group by Pack Size
	Potato	Corn	Extruded
30/33/50/75 grams	35.5%	25.3%	41.4%
100/110/125/140 grams	34.7%	12.5%	50.5%
190/200/230 grams	28.3%	61.6%	8.1%
Larger	1.5%	0.6%	0%
Source: AC Nielsen C*Track

In all States, the top 5 potato chip packs account for between 12% and 16% of the C-Store market, however the top 5 varies between States. The top 5 nationally, accounting for 13.5% of sales, are:

1. Kettle Chips Lightly Salted 100g
2. Kettle Chips Honey Baked Ham 100g
3. French Fries Original Salted 50g
4. Thins Original 50g
5. Smith's Crisps Original 100g

This data is for the quarter to 25 November 2001, and excludes promotions.

"Our research indicates the premium market is growing rapidly because consumers want to reward themselves for working harder. Kettle appeals to the adult palate with interesting flavours, and attracts premium prices." Michele Sterkenburg, Category Director Salty Snacks, Arnott's Biscuits Limited

The national top 5 largely reflects tastes in New South Wales and Victoria. In South Australia they also like Smith's Crisps Cheese & Onion and in Western Australia, it's Samboy Salt and Vinegar. In Queensland, Pringle's Sour Cream 'n Onion gets a look in at number 5. These rankings can change quickly due to a number of factors.

Market shares are volatile and linked to promotions

SBA holds a very solid 30% of the convenience market. During last year's DragonballZ promotion, this reached 45% (by value) which was the number 1 position in the salty snack market in convenience." Cathy Zeppieri, Marketing Director, Snack Brands Australia.

Source: AC Nielsen
Snack Brand's DragonBallZ promotion last year increased sales in the general route and C-Stores by 20%, and sales held when the promotion ended. An updated version is running again this year. "We looked at many licensed properties for this year's promotion", said Cathy Zeppieri, "and could not go past the strength of DragonballZ. It has broad appeal across the age groups."

This year, Smith's main promotion is linked to the Survivor television series. Its Lays and Doritos packs will contain a scratch card for instant prizes. Customers can also watch the programme and win by ringing in with who's getting voted off. The ultimate prize of half a million dollars is the same money as the 'survivor'. The promotion will be heavily advertised on TV and in magazines.

"Promotions like these are free to the retailer. Increased advertising and promotional spending by Smith's add to growing total salty snack sales and profits. Smith's has access to the world's hottest properties, due to its global relationship with Frito-Lay, the world's number 1 snackfood company." Jamie Eastley.

Salty Snacks in the New Age - health, happiness and high tech.
At Arnott's, its an Australian invention - Rix rice chips - that is creating the excitement. Arnott's consumer research identified an untapped market - the health-conscious female who wants a low fat product that does not compromise on taste - and developed the Rix rice chips range. Rix contain 80% less fat than ordinary chips and are 93% fat free.

"The product is performing at double expectations", said Michele Sterkenburg, "We have feedback that indicates that people who were not eating salty snacks previously are now buying Rix. It is expanding the market, not cannibalising market share - a 'miracle' chip."

Encouraged by this success, Arnott's is introducing potato Rix, with the same "fat" statistics as rice Rix. Arnott's is spending $1m on the launch in March, with dedicated advertising, point of sale support and incentives, including bonus cases, for off-location displays in store. "The consumer promotion will see Rix Potato Chips significantly discounted, at no cost to the retailer", added Michele Sterkenburg.

"This customer group has traditionally not been well-catered for in C-Stores even though the demographic favours the fat-free trend", said Jamie Eastley, "Sales of Parker's Pretzels, with a new gourmet range of flavours, grew over 20% last year. This year, we are introducing Baked Lays, a 92% fat-free potato- and rice-based chip in familiar Lay's flavours. The new Baked Lay's and traditional Lay's brand will be advertised heavily this year, with advertising as well as sampling in malls and shopping centres. We have signed up Pat Rafter, to promote the 'Pat Ato' chip."

The kids have not been forgotten. This year's limited edition Twistie flavours will commence with "blue tongue" - a mini Twistie which turns blue in the mouth. It will be sold in a small confectionary-style tube pack from a specially designed caddy to sit on the confectionery counter near the console. The DragonballZ launch included colour change snacks. "Our products are fun food", said Cathy Zeppieri, "and this is every child's dream. It is good, clean and safe fun."

Suppliers go back to basics
"Promotions are the cream, but can miss the mark. It is important to do the basics really well." Lyndell MacFarlane, General Manager, Managed Accounts, The Smith's Snackfood Company

The Coalface Consulting survey of conveniences store retailers places Smith's first in the areas of product range, call service frequency, satisfaction rating, and stock supply. The rating gap between the three suppliers narrows for the main convenience groups of BP Express, Caltex Starmart, Mobil Quix, 7 Eleven and Night Owl, but Smith's is still ahead. This is partly due to the overall market share, but Smith's also attributes the result to its direct store delivery service.

"We believe the benefits of this delivery model, which is based on Frito Lay's global system is the main reason for our success with retailers", said Jamie Eastley, "Our sales representatives carry the full range of stock and display equipment in their vans. Fully trained, they complete the order, raise credits, deliver, invoice on the spot and merchandise, all in one call. We are investing heavily this year in sales training, selling tools, and the fleet. Our reps can help retailers in all aspects of category management, including layouts, category insights, sales performance and consumer trends. That is why Coalface Consulting conclude we are the benchmark."

Arnott's increased the size of the field sales force team dedicated to convenience outlets by 30% in the past six months, to provide a higher level of in-store service for the expanded product range. Similarly, Snack Brands emphasises the importance of supplier support to retailers with regular calls from SBA representatives who are responsible for order-taking, merchandising of stock on shelf, stock rotation and building promotional displays. "Snack Brands also provide support and assistance at a Head Office level in the development of Salty Snack Planograms in all of the National Convenience accounts", said Cathy Zeppieri.

Suppliers often compete for the best locations in the store, but sometimes cooperate to develop the category with through dedicated snack sections. The snack attack shelves at the new On the Run by Mobil C-Store are a good example.

All this attention from suppliers is good for you, the retailer.

ACSN thanks the Smith's Snackfood Company, Snack Brands Australia, and Arnott's Biscuits Limited for their assistance with data and for allowing reproduction of their advertising material.

»UP

Australian Convenience Store News and C-Store 2004 & Forecourt 2004 Exhibitions
http://www.c-store.com.au | © Copyright