Can meat snacks continue to serve up healthy sales for c-stores?
By Anne Baye Ericksen, Contributing Editor
“High in protein.” “Natural ingredients.” “Low sugar.”
Analysts insist these are some of the top buzz descriptors that today’s consumers look for when contemplating snacking options.
Even popular workout programs like P90X push high-protein meal plans and trending diets, like Atkins and Paleo, which bash carbs, so it’s not surprising more and more Americans have become hyper-focused on their protein intake. In fact, a “Packaged Facts 2014” survey indicates that 63% of individuals make a discernable effort to consume plenty of protein on a regular basis.
Balance that with new reports that younger consumers are substituting full meals with snacking occasions, and opportunity for the continuing growth of the meat snacks segment is as viable as ever. In fact, these factors have coalesced to provide a significant boost to the meat snacks category, for which c-stores remain the top retailer.
“That’s definitely a trend that’s here to stay, and manufacturers have brought that home. Many are putting on their packaging that meat snacks are a source of protein,” said Jared Koerten, senior analyst for Euromonitor International Inc., a market research organization. “There are a few brands with all-natural ingredients, and consumers have shown they know what they are. KRAVE is an example of one that’s minimally processed and seen as a good source of natural protein.”
Meat snacks, such as jerky, sticks, as well as bars and nuggets, which are relatively newcomers, represent one of the fastest-growing segments within the overall snacking industry.
“From candy to yogurt, meat snacks are the standout performer,” noted Koerten. Jack Link’s continues to be the category leader.
Their performance has produced some impressive statistics. For example, Nielsen reports meat snacks tallied $2.5 billion in sales for 2014. Additionally, the Snack Food Association announced dollar sales for meat snacks grew 16.3% and unit sales increased by 10.8% last year. When research firm IRI Worldwide took a closer look at how jerky sales compared with other dried meat snacks, it found other dried meat products outperformed jerky 14.3% to 12.8%, respectively. Jerky still holds onto the largest market share.
“When people think of meat snacks, and they’re not familiar with them, the first place their mind goes is to jerky,” explained Koerten. “That’s the natural inclination of someone coming into the category. Once they’ve been in it longer, they may try meat sticks.”
Perhaps the most impressive figures are the projections for future performance. According to Datamonitor Consumer Data, the entire meat snacks sector is expected to continue to expand over the next three years. In fact, the organization calculates a nearly 19% growth rate for the six-year period between 2013 and 2018.
All these numbers add up to promising news for convenience store owners and operators, especially considering the majority of all meat snack purchases take place in these venues.
“C-stores are the destination for meat snacks and they have the opportunity to have the most influence on the category,” asserted Koerten.
“They continue to be a major driver for our consumables department with sales trending up 3.5% for the last year,” said Randy Demster, buyer for the Army & Air Force Exchange Service (AAFES). AAFES operates more than 925 store locations and PXs on U.S. military bases around the globe. “I anticipate that, for the remainder of 2015, meat snacks at the Exchange will continue to grow. We are marketing protein and healthy snacking in the meat snacks category using our ‘BE FIT’ health and wellness initiative.”
Steve Magestro, president of Mad Max Convenience Stores, has noted a different trend. “We have seen a slight negative. As costs and retails go up, size or portion goes down; we see a small decline in sales so far this year.” Based in Saukville, Wis., Mad Max operates 10 locations in Wisconsin.
Nor is Magestro the only business to notice vendor price hikes or reductions in package sizes.
“Recently, Jack Link’s has updated their packaging and reduced their sizes, [from] 3.25-ounce and nine-ounce bags to 2.85-ounce and eight-ounce bags, respectively. And yes, prices have increased on all meat snacks because the meat industry is in short supply of fresh beef due to the drought and growing demand for U.S. beef from overseas markets. The implication is that fresh beef is at its highest price since 1987,” Demster said.
Still, analysts believe the category will weather these adjustments.
“There is recent data in which we did see a healthy price growth of 3.5-4% across meat snacks,” said Koerten.”There is some room in the category if commodities and prices go up, because you’ll see demand stay the same. Consumers are already making an investment in these snacks that tend to be considered premium based on unit price.”
One reason analysts are so upbeat on meat snacks is their popularity with Millennials. This demographic accounts for some of the biggest snackers who prefer to eat on the go. According to a Euromonitor survey, people between the ages 20-34 snack a minimum three times a week, which is twice the frequency of baby boomers. Jerky and meat sticks fall right in line with this habit. Plus, the high protein content appeals to people who want to feel satiated for a while.
Also playing into the category’s favor is that Millennials and their younger counterparts, Generation Z—those 20 years and younger—appear willing to pay more for items they perceive to offer health benefits.
“That’s the sweet spot for this category. They’ve grown up liking jerky and choosing it frequently as a snack of choice,” said Koerten. “What’s promising for the future of the category is that Millennials are aging. They are starting to get into their careers and first promotions, so they have some disposable income, or at least more than what they’ve had in the past. It’s an important segment of shoppers as they carry the habit as they age.”
Millennials and Gen Z consumers seem to gravitate toward nontraditional flavors. Brands like KRAVE, which was acquired by confectionary giant Hershey earlier this year, have generated buzz for such artisanal combinations as pineapple orange jerky or black cherry barbecue pork jerky. Manufacturers, from industry leaders to small craft operations, are constantly experimenting with flavor combinations.
“We are carrying new vendors and looking at other vendors for one-time buy opportunities. We recently added KRAVE jerky to our premium snacking planogram, and it’s showing great results,” said Demster.
“We have done Jack Link’s resets in all the stores to get some of their new items,” said Magestro.
Of course, traditional flavors like teriyaki and pepper still perform well, too.
“The old standbys are what we see sell the best overall,” Magestro said.
“We have seen customer demand for Duke’s Shorty Smoked Sausages, both in original and hot and spicy flavors,” said Demster.
At the Sweets and Snacks Expo this past May, Koerten noticed a significant number of vendors promoting alternative meats such as bison.
“Beef continues to be 95% or more of the segment, but turkey or pork continues to draw a lot of interest. There’s innovation there,” Demster said.
For example, manufacturers Omnibar and EPIC have created meat bars featuring lamb and bison. Others cater to customers’ whimsical side, such as Meat Chips or Benny’s meat straws, marketed as an accoutrement to various beverages such as a Bloody Mary. And in June, KRAVE announced it is launching a low-sugar protein bar that combines meat combined with vegetables, fruits, and grains this fall.
“Novel products will drive the category with long-term growth,” Koerten concluded.