Americans’ continuing hunger for salty snacks is keeping convenience stores at the forefront of a booming industry.
By Howard Riell, Associate Editor
Americans’ love of salty snacks continues unabated as snacking occasions increase, shelf sets include more variety, spicier flavors gain wider acceptance and niche marketing grows in importance.
The snacking trend continues to gain momentum, which bodes especially well for convenience store sales. The c-store channel brought in 22% of the $21.7 billion in salty snack sales across all retail channels for the 52 weeks ending Jan. 24, according to IRI data.
Salty snack sales are projected to reach $6.8 billion in 2019, Chicago-based Mintel Group Ltd has found, as consumers adopt more frequent snacking occasions, both as meal replacements and to tide themselves over between meals.
“While concerns about the nutrition and ingredients in salty snacks remain top of mind for many consumers, category sales have not been impacted,” Mintel stated.
The salty snacks category continues to propel forward as consumers opt for more frequent snacking occasions, Mintel reported. While some remain concerned about the nutrition and ingredients of these items, consumers also acknowledged there are healthier options on the market.
“Despite these concerns, taste and treating oneself are large purchase drivers, highlighting consumers’ preference for balancing both health and indulgence,” Mintel reported.
Market research firm Packaged Facts recently reported that growth in sales of salty snacks in the U.S. has been steady. Category sales in 2015 increased 3.5% to $22 billion.
Pre-popped ready-to-eat popcorn is experiencing explosive growth for select brands. Potato chips continue to be the top salty snack seller in the U.S., with the category recording sales of $7.5 billion in 2015. Next was tortilla and tostada chips, which generated $5.2 billion in sales. Looking ahead, Packaged Facts forecasted the salty snack market’s compound annual growth rate (CAGR) between 2015 and 2020 will be 4%.
“Health and wellness continues to be a key driver of growth,” said Rob Wilson, a Chicago-based managing director in the Consumer Products and Retail sector for L.E.K. Consulting. “But offerings in sweet and salty snacks in the c-store channel are often not aligned with this trend. C-stores have been perceived for a long time as having an unhealthy halo around their food offerings.”
Convenience store retailers could do more to stock so-called healthy indulgence and clean-label options—for instance, shorter ingredient decks and non-GMO ingredients—into the salty snack aisle, Wilson suggested.
“Millennials are driving food-to-go in the grocery channel from prepared fresh foods. These consumers desire less processed, ‘big food’ offerings,” Wilson said. “C-store retailers should evaluate ways they can bring more specialty, less-processed suppliers that appeal to this critical consumer group within their channel.”
Snack sales are outpacing those of other categories, according to Steven Montgomery, president of b2b Solutions LLC in Lake Forest, Ill. “However, dollars are growing faster than units, indicating that some of this is driven by price increases and sales of large size rather than unit growth.”
MORE VARIETY
Richard Speckman, owner of a string of Mobil Marts in Los Angeles, noted that it is the spicy segment of salty snacks that seems to be dominating his section.
“It’s nuts that have more of a kick to them, and jerky that has the spicy ingredients,” Speckman said. Anything that is labeled ‘spicy’ seems to be doing more. I know we’re buying more of it. It is a slow trend going that way.”
One store is located in west Los Angeles. Its snack space encompasses a pair of two-foot by four-foot racks. The owner eschews promotions, although Speckman said he would be open to exploring bundled offers.
“I just stuff it and make it look good and merchandise it well,” he said.
Reilly Musser, category manager for Rotten Robbie in Santa Clara, Calif., said the c-store chain is planning to expand its salty snacks section sometime in the coming months. The department, in a variety of formats, has currently allotted between six and eight feet.
Rotten Robbie plans to add another four linear feet to include meat snacks, as well. The reason for the expansion is the category’s success: sales over the past year or so have risen from 7-10%.
“We are trying to put more variety in there, and less duplication,” Musser said. “We are just trying to give the customers more options. I don’t know that the products we’re adding are so much new, but they are new for us. There will be more varieties of pretzels, chips and popcorn.”
Offers have also been available on Rotten Robbie’s mobile app, depending on which companies wanted to take part, Musser said. “We are doing some things with General Mills, and as far as salty not a whole bunch more than what I have lined up now. But we are doing more in other categories.”
Rotten Robbie shoppers with mobile devices and the convenience store’s app will find a coupon for something free: snacks, fountain drinks, coffee, frozen beverages, energy drinks or candy each week. Advertising has been restricted to store shelves which, going forward, will present more products options and fewer double facings.
COMING OF AGE
Keeping abreast of both product and sales trends is crucial. Speckman’s advice is simply for operators to consult with their vendors. “See what they’ve got and ask them, ‘What’s hot in this area?’”
Convenience store operators have many means at their disposal to keep salty snacks’ sales going. One is by targeting specific consumer groups.
“Interestingly enough, NPD research indicated that snacking increases as people age,” Montgomery said. “Their research shows the biggest snackers are people between 55 and 64. Why? Because they no longer have young families to cook for. However, it should be noted that this includes all snacks and not just sweet and salty.”
Promotions also help drive sales.
“C-stores do okay with price reductions, two-fers, etc.,” said Montgomery. “Bundling has always been an issue because the items in the bundle are likely not physically adjacent to each other. An example might be trying to bundle a fountain drink or coffee with a candy bar.”
Another factor consumers look for is package size. Scott Cole, vice president of operations for the Convenience Store Alliance in Oklahoma City, Okla. believes that single-serve portions of snacks will continue to be a focus for consumers who want to control portion size.
“We see potato chips and other chip varieties are remaining the largest segment in the snack category, followed by nuts and seeds (whose sales) continue to increase with double-digit growth.”
Healthy, nutritious options that provide an energy boost are also drivers of snack sales, he added.
Merchandizing king-size and bundled snacks next to the register will increase a store’s impulse-buy sales, Cole added. A loyalty program tied to fuel and other products can help move salty snacks, as well.
“The key to a good loyalty program is to use it,” he said.
Cole also suggested that bundling is the most effective way to sell more salty snacks. “Bundling allows you to advertise and promote a lower retail price for a single-item, but still sell 2-3 at a time,” he said. “Always promoting and advertising your discounted bundled price allows you to, in some cases, appear to be the lowest priced option in your market.”
