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Extruded Snacks - expanded sales

Extruded snacks have a special place in the hearts (and mouths) of kids aged between eight and twelve. Suppliers don’t call the 10-year olds the ‘bulls-eye’ target group for nothing. We know from the confectionery category that kids love to be different. We also know that their parents want them to buy known and reliable brands. The same is true for salty snacks, and extruded snacks in particular. That is why launches of new variants of familiar products are driving the extruded snacks market.

According to the AACS Survey in 2003, the salty snacks product group contributed 2% to store sales and enjoyed an average gross margin of 40%. Extruded is not the biggest segment in salty snacks but it is the fastest growing. Throughput in C-Stores grew 6.5% in 2003. Sales growth was even stronger in value terms, at 12%, in 2003.

C-Store Share of Volume – Salty Snacks, 2003

Source: AC Nielsen

C-Store Volume Growth, 2003

Source: AC Nielsen

Since the takeover of Snack Foods Limited by Arnott’s in August 2002, the salty snack category is effectively shared by Smith’s and Arnott’s. This is particularly the case in extruded snacks where Arnott’s Cheezels battle it out with Smith’s Twisties, Burger Rings and Chee-tos.

Both agree that in recent years growth has been driven by the success of new variants of old favourites. In May 2003, Smith’s launched Twisties Totally Twisted Taste variants - Wicked Cheddar and Flaming Hot. These were limited edition varieties on the market for eight weeks. They tapped into the extreme taste trend and focused on the convenience and route channel with pre-packed units of smaller packs. Their success indicated that Twisties could be more than the traditional products of Cheese and Chicken Twisties.

Smith’s then experimented with a different shape with Twisties Cheese’O’s and found they could change the shape and not affect the brand image.

“Our research indicated that a generation had grown up with the Twisties’ shape and flavours,” says Trang Quach, Assistant Brand Manager, Smith’s Snackfoods. “We were appealing to an increasingly older age group.”

The target market for extruded snacks is kids - always looking for something new. Smith’s then launched Zig Zags in January 2004 in Wicked Cheddar flavour and with a different shape and a different texture - the softer texture being easier to eat.

“The original Twisties (shape, flavour and texture) is still the core product,” says Trang Quach. But these new product launches show you can innovate on Twisties to generate sales."

The Twisties brand experienced strong growth, driven by these new variants. Although less dramatic when Shell sales are excluded, the impact of the new product launches is clear.

Cheezels has since recovered somewhat in the channel, with year on year average growth to 15 February 2004 of 4.5% in 50g packs and 6.3% in 125g packs.

In 2003, Twisties was the clear market leader in C-Stores.

Brand Share of C-Store Volume, 2003

Source: AC Nielsen

According to Smith's, most of this growth was driven by innovation and linking advertising to that associated with the Yu-Gi-Oh inserts (Tazo MetalixTM) over the Smith's salty snack range. There will be more new variants from Twisties this year and next.

In hot pursuit, Arnott’s launched Cheezels Minis, the latest innovation in extruded snacks, on 1 March 2004. As we go to press, data is not available for the petrol and convenience channel, but we do have numbers from grocery. In grocery, Cheezels Minis are outselling the new Twisties variants.

Sales by Volume, Grocery Channel,
4 weeks ending 21 March 2004

Source: Aztec

In C-Stores, extruded snacks sales are impulse purchases.

“Impulse purchases are driven by strong brands and great display,” says Toni Callaghan, Corporate Communications Manager, Arnott’s Snackfoods. “The Cheezels brand was launched in 1971; it’s one of the oldest extruded brands in Australia. Its icon status means it has been a fixture on convenience store shelves for 33 years.”

The smaller pack sizes are the most popular and indicate that kids buy these packs of snacks to eat straight away.

However, the segment can be expanded through targeted marketing. Arnott’s recently trialled a new off-location display at a major petrol and convenience chain. The Cheezels 125g packs were placed in a movable dump bin in areas of high traffic during key shopping periods such as Christmas holidays. The result was a 616% lift in unit sales.

“Convenience is playing a greater role in consumer entertaining solutions,” says Toni Callaghan. “Store execution is key, and innovative displays at major sharing times - such as Christmas and Easter - will drive the average weight of purchase.”
And don’t forget that ‘play value’ is an important attribute in this segment. Extruded snacks are meant to be fun.

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