Crunch time

Salty snacks are on the up and up

It is fair to say that salty snacks have had something of a bumpy ride in convenience and impulse over the past decade or so.

After years of up and down sales growth, there is growing evidence that the category has now stabilised through the channel, and looks set for a period of steady and prolonged growth. Over the past 12 months, for example, value growth in impulse (MAT 07/02/2010) has come in at a very solid 6.2%.

Part of the reason for this strong performance has been the increasingly hectic lifestyles that consumers are leading and the fact that the impulse channel is perfectly poised to capitalise on the eating-on-the-go trend. And, of course, salty snacks are an ideal on-the-go food solution that can help sustain consumers throughout their busy days.

The fact that grocery is enjoying even more impressive salty snack value growth ... some 10.9% according to MAT 14/02/2010 figures (Aztec) ... perhaps suggests that offering a much wider range covering all key brands is crucial if the impulse channel is to improve its salty snack sales performance against the supermarkets.

Within the category, Smiths Snackfoods' products such as Red Rock Deli, Grainwaves, Doritos, Twisties and, of course, the Smiths brand of chips have all been performing well, but so have many of the company's chief competitors.

Snackbrands – which is responsible for leading brands like Kettle, Samboy, Thins, French Fries and Cheezels – has been a key driver of salty snacks growth, and the company's Category Development Manager, Karen Aldridge, is very excited about the future.

"If impulse stores offer a wide range of brands and increase visibility of these brands both in the aisle and via off-location displays, we believe we will see a further acceleration of salty snacks sales as they will successfully convert more browsers into purchasers," she said.

"Another key driver of sales is the large amount of money that both Smiths and Snackbrands invest in supporting their key brands to help entice shoppers to buy."

Indeed, Snackbrands is just coming off the back of a Kettle consumer promotion, and is currently running an AFL and NRL footy inserts campaign which is focused on growing sales in the impulse channel by offering the inserts only in 45g bags.

If C&I operators want to truly maximise the salty snack potential, they obviously need to ensure they are stocking the right range and making the most of the new variants, flavours and pack sizing that become available.

Promotions & innovation

Snackbrands certainly believes that another key reason for its strong performance over the past year has been the innovation it has shown in introducing such things as the new 130g 'value' bags across the Samboy, Thins, CC's and Kettle ranges, as well as relaunching the Samboy brand.

"Value for money is a key driver of success in the salty snack category and the 130g value bag launch created a true point of difference within the category and effectively brought previously lost customers back into the large bag segment," said Ms Aldridge. "Improved ranging by impulse stores of other iconic brands such as Kettle, Thins, French Fries, Cheezels and CCs has also stimulated growth."

The Kettle brand has also benefitted from a major relaunch late last year which included improved base chip, flavouring, updated packaging, a strong marketing campaign, eye-catching POS material and the limited release of a new flavour – Lamb & Rosemary, specifically made for Australia Day.

Snackbrands says it also has some exciting new products planned for launch in the middle of this year, which it promises will be driven from strong consumer demand and will therefore fly off the shelves.

The company is not alone in its innovation, however.

Arnott's Shapes is a $3.5m brand in major P&C and is growing strongly at 14.1%. While the traditional box pack is for everyone and has long been a best-seller, the introduction a couple of years ago of the Shapes 70g bag was a major hit. Targeted specifically at convenience, the format is now a $1.2m brand in major P&C, and new flavours such as Sensations Vintage Cheddar & Chives are constantly being added to the 70g range.

"Shapes 70g sales have helped drive incremental growth into the biscuit," said Lisa Maguire, Campbell-Arnotts National Business Manager – Impulse and Convenience. "To continue to drive the brand and consumer awareness of the 70g format we are running our first ever Impulse & Convenience exclusive above-the-line campaign. 'It's in the bag' is an interactive campaign that works across on-line, radio and in-store – to perfectly target our core consumers."

The core target market for Shapes 70g are males, but it is hoped the new Vintage Cheddar & Chives variant will tap into the female shopper opportunity, as well.

"Sensations is a sub brand of Shapes that has been in the grocery channel since 2007 and has driven incremental sales by tapping into new user groups who are lighter purchasers of Shapes and flavoured snacks," said Ms Maguire. "Sensations buyers are very loyal, with a 47% repeat rate after initial trial, and the flavour is delivering the highest incrementally of a Shapes launch in recent years."

Ms Maguire believes another key benefit of Shapes for the retailer is the product shelf life; which is between six and eight months depending on the variant.

Packaging & sizing

Packaging and pack sizing is also a crucial factor for other snacks such as beef jerky as they attempt to establish themselves as a snack essential.

"As we evolve as a mainstream snack in the market we have come to rely heavily on our packaging to get us to the point that we are at with, not only existing customers, but also new consumers," said Jack Link's Account Manager, Suzanne Norford. "I believe packaging is vital to position the product in the consumer's mind, and packaging is also a sales tool ... it can sell your product without you being there."

Ms Norford says Jack Link's Beef Jerky 50g has been one of the key drivers of its growth with the Original and BBQ variants leading the way in both the grocery and convenience channels.

"Trends are now showing us that consumers want to purchase Jerky products in larger packs and in which they are slowly moving away from the smaller 25g packs to the 50g packs which is seen to be a value for money purchase," she said. "We have recently launched our new 50g Beef Bite in a sweet Chilli flavour, which is a softer style of jerky."

She says that experience has shown that many consumers prefer a softer jerky and, by offering these types of products, Jack Link's can recruit more consumers into this evolving category.

And there is no doubt that the category is evolving. Up until the period ending last December, total beef snacks experienced steady growth of 5.2% in the convenience channel.

"Increased ranging of the 50g variants into P&C is certainly assisting with this growth and being recognised by the consumer as a far better value option," said Ms Norford.

"Traditionally in other markets around the world, the C&I channel has been the driver of long-term growth within beef snacks and we see the convenience channel playing a critical part in the long-term success of our brand within the Australian market."

In-store promotions are obviously another key way of driving sales and one of the most effective ways of enticing shoppers to buy are multi buys – both within the key pack groups as well as cross-category promotions. Soft drink and salty snack combo promotions are very strong drivers of impulse sales.

POS & visibility

One way to ensure a high promotional sales uplift is to communicate the promotion via effective POS in the forecourt and within the store to remind the shopper to buy their salty snacks, as well displaying eye-catching off-location displays.

HIM Spring 2009 research revealed that a primary reason for a failed purchase was lack of visibility – shoppers simply not being able to find their preferred brand.

"It is crucial that a wide selection is available for shoppers to choose from, that planograms are laid out so it is easy for the shopper to navigate the sections, and that POS is displayed to entice the shopper to buy," said Snackbrands Ms Aldridge. "Displaying effective POS within the aisle is difficult for large supermarkets to implement – so this is an area that impulse stores can capitalise on."

The recent HIM study also indicated that while almost two thirds of sales come from the salty snacks aisle, the other third generally comes from outside the aisle ... another area where the impulse channel can gain an upper hand versus supermarkets.

"It can do this by placing eye-catching, effective off-location displays that interrupt the shopper and entice them to buy a salty snack," said Ms Aldridge. "In essence, if a store does not build off-location displays, they could be denying themselves up to a third of total sales potential."

Snackbrands has identified two key off-location areas within a store that will generate the highest sales increase. The first is at the front of the store near the register, the one point that every consumer has to visit. The second is near the drinks cooler in order to engage the high number of drink buyers.

While location and visibility are vital for all salty snacks, they could be said to be doubly so for products like beef jerky, which are generally not seen as mainstream snacks.

"We find that store location is critical for us to grab the consumer's attention fast," said Jack Link's Suzanne Norford. "We have a number of POS options ranging from counter display stands to your generic clip strips to pocket style clip strips ... there's something available to suit almost any store type."

Jack Link's agrees that running with shelf promotions is an effective way to promote product.

"Given the small footprint that meat snacks occupy in-store, operators need to ensure they up-sell at time of purchase," said Ms Norford. "And that they have the product prominently displayed at point of purchase."

She says that many consumers are looking for some form of healthy snack product that they can grab on the run so, if it's whilst grabbing petrol, bread and milk or on the way home from an activity, it all needs to be convenient for the consumers.

"Operators need to be aware of these purchase trends and ensure they either direct consumers into trying other products or have them displayed at point of purchase," she said. "We all know that counter space is the place to be in convenience, so the operators again need to have product positioned and displayed where they will gain maximum exposure."

While, according to the most recent AACS report, potato chips comprise 63% of the snack food category, it is nonetheless very important that convenience stores stock a wide variety of snacks that will potentially provide incremental sales.

Challenges & opportunities

"Beef Jerky offers a point of difference and convenience store operators have the opportunity to be a part of the world's fastest growing snack segment," said Ms Norford. "This is where previous sales data has proven that beef snacks are incremental to the category when included as part of the standard snack offering."

Jack Link's MAT share of total beef snacks within the convenience channel has grown to 50.4% as reported by Nielsen C-track for the period ending 13/12/2009, which is up from 42.3% for the prior year.

"If this is any indication of the overall salty snacks category, then one can only assume that the C&I channel is recognising the sales potential of these types of products within their stores and being proactive about ensuring they capitalise on the opportunities," said Ms Norford.

"With the softer styles of jerky now available on the market and the great awareness of some of the benefits of this type of snack food such as 97% fat free, high in iron etcetera we are starting to see a significant shift in the target market to also include younger adolescents and females consumers."

Traditionally Beef Jerky has been shown as a real blokey type snack and it's this perception that has been one of the biggest challenges for the product in the Australian market. The core target market for Jack Link's Beef Jerky products remains males between the ages of 18-40.

Of course understanding who the customer is and what motivates them to buy is crucial in maximising profits from all categories … and particularly so in salty snacks.

The same could obviously be said for the time of purchase and Snackbrands has discovered that, in both grocery and convenience, self consumption salty snack purchases (<50g) peak between 3pm and 5pm.

It is obviously vital that shelves are fully stocked with all major brands at these critical trading times in order to avoid lost sales resulting from out of stocks.

"As many as three quarters of all shoppers know exactly what brand they want when they come into the store and almost half of all chip shoppers will actually buy their items elsewhere … for example, the supermarket down the road … if their preferred brand is not available," said Snackbrands Ms Aldridge. "And it is not just the lost sale of the packet of chips … it could also include the milk, bread etcetera that they were also going to buy."

Indeed, it is estimated that every customer a store loses effectively costs that store up to $1000 per year in lost sales. It clearly pays then to have all major brands available in store.

Maximizing the growth potential

Besides increasing visibility via off-locations, another way for C&I retailers to leverage the peak 3pm–5pm sales period is to entice consumers to purchase their salty snack in their store as opposed to the supermarket down the road by implementing a time of day promotion – similar to a 'happy hour' promotion.

Snackbrands also urges C&I retailers to use effective planograms to help the shopper navigate the shelves. It suggests grouping products based on occasions. These occasions should include: self consumption which would generally include all bags 100g or less; the newly developed 'entertaining value' segment that includes 101g – 149g; and traditional entertaining which should include large bag entertaining packs of more than 150g.

Clearly then as salty snacks establish themselves as a solid growth category there are a number of measures that all C&I operators can consider implementing in order to maximise the growing potential. With new products, packet sizes and flavours to work with, the general excitement and profit potential has never been greater.

In other words, it's crunch time for salty snacks.