By Howard Riell, Associate Editor.
A new national study by Amplify Snack Brands and the Center for Generational Kinetics indicates Millennials have been the driving force behind the growth of the better-for-you snack category.
Among the findings, 64% of Millennials—more than any other generation—believe that fewer ingredients mean a snack is healthier. In addition, 79% of Millennials said that understanding all the ingredients increases their level of trust in a packaged snack.
This trend has created a thriving market for so-called alternative ingredient snacks—those made using vegetables and grains such as chickpeas, sweet potatoes, kale and spinach, as well as pulses (including dry beans, dry broad beans, dry peas, chickpeas, cow peas, pigeon peas, lentils, Bambara beans, vetches and lupins).
Indeed, according to Packaged Facts, sales of alternative ingredient snacks in 2017 are forecasted to reach $1.2 billion.
For the second consecutive year, alternative snacks, a category driven by protein- and energy-rich items, reached the top 10 in-store merchandise categories, also signaling a desire by consumers for immediate/healthier snacking options.
The growth of variety in the sub-category has understandably resulted in slowed sales for some traditional snacks. For instance, for the 52-week period ending Feb. 19, 2017, market research firm Information Resources Inc. (IRI) reported that c-store sales of snack nuts surpassed $618 million, a dip of 1.19% from the previous year. Sunflower and pumpkin seed sales totaled $314 million, a 3.63% decline during the same period.
CONSUMERS IN MOTION
The audience for alternative ingredient snacks may well be larger than many retailers assume, noted Ryan Mathews, the president of Black Monk Consulting, based in Eastpointe, Mich.
“A lot of people will probably say Millennials and Gen Z, but I think that’s a mistake,” said Mathews. “Lots of lower-income people, for example, turn to health foods because they can’t afford complex medical care. Older customers also tend to be on restricted diets, so I think the potential may be broader than most people think.”
Mathews sees the healthy snack equation in relatively simple terms.
“I think consumer demands are best understood by thinking in terms of two apparently opposite concepts: good equals the absence of some ingredients—gluten, sugar, salt, GMOs, hormones, etc.—and good equals the presence of other ingredients—super fruits, organics, etc. C-store customers, like everyone else, are demanding both forms of good.”
At this time, the healthy snack category seems a moving target for c-store retailers. “Today’s darlings are tomorrow’s despised,” said Mathews, who pointed out it’s hard to go wrong now with quinoa, which is known for its health halo, but in time another food trend is likely to take its place.
“But again, this is an area where good is more often defined by what is not in a product than by what is,” he said.
For Mathews, the key to igniting this category is simple, but tricky.
“There are a lot of c-store shoppers looking for that sugar/sale fix, so you can’t afford to send them en masse to the competition.”
Mathews said that while product sampling is clearly the best way to stir trial, he has not seen much of it
happening in convenience stores. “I’m surprised that we don’t see more interest in balanced meals, say a hot dog and bag of kale chips and a bottle of water for a hot price.”
“The healthy snacks sell really well for us,” reported Michael Mendez, the owner of Mendez Fuel Holdings LLC in Miami, Fla. “It’s definitely a growing segment for us, so much so that we are looking at healthier drinks, as well.”
Mendez said that he has been carrying alternative ingredient snacks in his four stores for quite some time. “We carry a lot of dairy-free items that are also part of that alternative/healthier snack segment. That’s a big thing, as well, in the healthy area: dairy-free.”
Chief among the popular alternative ingredient brands are Pro Bars. “They really do well for us.” The plant-based line was an early innovator of non-baked bars with raw ingredients, marketing itself as supporting non-GMO and organic agriculture.
“We also carry a lot of paleo products that also do very well for us,” Mendez added. “We have a huge healthy snacks section. In fact, it’s bigger than our regular candy section.”
C-store operators are well advised to merchandise both indulgent and better-for-you options together within the parent category section in the store. For example, according to Louisville, Ky.-based marketing firm Price Weber, meat snacks perform best when merchandised in the jerky section as opposed to being merchandised in a better-for-you section stocked with healthier options from a mix of categories.
Some stores have broken out small organic sections next to conventional items, with signs drawing the attention of consumers. Though specific product selection might vary, the desire for healthier snacking among c-store shoppers remains unmistakable.
“Our healthy shoppers haven’t so much been demanding alternative ingredients like kale, sweet potatoes, chickpeas, etc.,” said Kristie Bell, director of communications for West Des Moines, Iowa-based Kum & Go, the fifth-largest privately held, company-operated convenience store chain in the U.S. with more than 430 convenience stores in 11 states.
“Instead, they are looking for basic high-protein items like Quest bars and beef jerky, or better-for-you indulgent snacks like trail mix with chocolate.”
Kum & Go stores augment those healthful offerings with a selection of fruit cups, yogurt, an egg white breakfast offering, salads and some healthy lunch sandwich options to meet the demands of customers.
The Surprising 70%
In Packaged Facts’ December 2016 “National Consumer Survey,” the research firm asked consumers if they ate salty snacks or crackers made from alternative ingredients including those made from pulses, seaweed, or those using whole, multi or so-called ancient grain formulations made from vegetables.
The survey revealed that a surprising 70% of adults had eaten at least one of these types of snacks in the last 30 days. Whole grain and multigrain formulations were the most popular type of alternative ingredient snack, while the fewest number of adults ate seaweed-based snacks. Among the reasons consumers named for choosing alternative ingredient snacks were novelty and nutritional variety and taste.
One aspect the survey, according to Packaged Facts’ Norman Deschamps, revealed is that people living in urban areas are the biggest fans of alternative ingredient snacks, even more so than people who live in suburban areas and far more than those living in rural settings.
The report revealed that sales of alternative-ingredient snacks increased to approximately $1.2 billion in 2017. As Packaged Facts’ Research Director David Sprinkle said, “Looking at both present trends and towards the future, alternative ingredient snack sales are going to continue moderate to strong growth over the next few years, building on the larger healthier-for-you trend affecting the overall snack market and on the unique flavors and textures consumers are also craving.”
The biggest contributor to rising sales in 2016 was alternative vegetable-based snacks, especially in salty varieties. Packaged Facts estimates that the salty snack segment of the alternative-ingredient snack market grew almost 7% in 2016, outpacing the salty snack category. In the decade leading up to 2016, adults who usually snack on healthy foods increased from 24% to 30%.