Protein-Powered Profits

Convenience retailers hoping to stay in step with consumers’ changing preferences for meat snacks must do their due diligence.

By David Bennett, Senior Editor

A recent study from Nielsen Co. finds that sales of total-channel meat snacks, including jerky and convenience-packaged dry sausage sticks, has grown at the same time chip sales have slowed. Broken down, meat snack sales have increased 3.5% over the last year to $2.8 billion, according to Nielsen, with 7% compound growth over the last four years.

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For convenience stores striving to stay in step with consumers’ changing snacking preferences, a little due diligence can go a long way in terms of increased sales.

In the 52 weeks ending May 14, 2017, convenience store dollar sales of dried meat snacks rose 2.9% to $1.53 billion compared to the previous year, while unit sales dipped 0.13%, according to data from Chicago research firm Information Resources Inc. (IRI).

One driver of rising sales is increasing demand from younger Americans who are putting more emphasis on snacking. More studies show that Millennials are less likely to sit down to full meals and more inclined to snack throughout the day so they’re seeking snacking options that will satiate them for extended periods.

“Millennials are increasing their spending on meat snacks faster than any other generation. That said, they’re still spending less per household than other generations,” said Jordan Rost, Nielsen’s vice president of North American consumer insights. “So there is room to grow penetration with younger consumers. Much of the growth areas within meat snacks pushing towards newer flavors and leaner, healthier proteins align well with the drivers of Millennial consumption so there’s lots of opportunity for future development there.”

In looking across generations and ethnicity, Asian-American households spend the most each year ($31.61 on average), according to the same Nielsen report. In fact, they’re more than 22% more likely to buy meat snacks than the average shopper. In terms of age groups, baby boomers are the biggest buyers, spending $28.48 per individual, per year, making them 10% more likely to buy meat snacks than the average shopper.

One likely factor behind the growth of c-store meat snacks sales is product diversity. As consumers hunger for healthier snacking options, makers of meat snacks are providing those options. Though beef and other traditional proteins continue to grab a bulk of meat snacks sales, demand for specialty meats and wild game such as venison is steadily growing.

“While beef meat snacks have sold more than the next most popular snack by a factor of six, consumers are gobbling up a wider range of proteins,” said Rost. “In fact, within the last year we’ve seen snacks including alligator and wagyu beef (often referred to as Kobe beef), added to shelves.”

As manufacturers continue to expand the meat snacks envelope, c-stores will determine quickly what sells and what fails.

“Sales of leaner cuts of gamier meats are still small but are seeing some of the most rapid innovation and growth in distribution,” said Rost. “Consumers spent nearly $4 million on bison meat snacks over the last year (52 weeks ending May 27, 2017), making it one of the fastest growing meat snacks. Other smaller but rapidly growing varieties include wild boar, venison and elk.”

Despite the propensity to indulge, health plays a key role in the types of snacks consumers eat. Nearly one-third of consumers say the majority of snacks they eat are healthy and 28% say they are snacking on healthier foods this year than in 2016. In fact, snacks with health-related claims are among the fastest growing snack launches, with low/no/reduced allergen claims accounting for 46% of total new snack product launches in the U.S. in 2017, an increase of 30% over 2013, according to Mintel Global New Products Database.

Perhaps no retailer boasts a clientele that thrives on protein snacks as much as the Army & Air Force Exchange Service (AAFES). The organization operates about 650 store locations on U.S. military bases throughout the world, including Exchange Express convenience stores. According to Randy Demster, a buyer for AAFES, demand for leaner meat snack products is also growing among the country’s military members.

“Our younger AAFES patrons are starting to look for healthier options within the meat snack category such as artisan brands Krave, Lorrisa’s Kitchen and Chef’s Cut,” said Demster.

Because of the expanding product mix, AAFES’ meat snacks sales during the first half of 2017 are up 8.9% over the first half of 2016.

“Beef is still the number No. 1 seller, but chicken, pork and turkey are gaining in point of distribution and sales,” Demster said.

While exotic proteins may be gaining traction in the convenience channel, beef meat snacks remain the top protein preference among U.S. consumers, in various package sizes and formats.

Tim Cote, vice president of marketing for Beaverton, Ore.-based Plaid Pantry, which operates 110 stores in Oregon and Washington State, said certain meat snack brands earn prominent display space in most locations.

While some products are performing well, “Ball Park bags and Tillamook sticks are currently leading the way up,” Cote said.

On the military side, beef-based brands are first in order of march.

“Jack Link’s brand is king at AAFES in terms of sales and loyalty,” Demster said. “Our larger pack types are driving the business such as Jack Link’s 16-ounce, Old Trapper 10-ounce and Cattleman’s 10-ounce.”

Like the planning required in other successful categories, c-stores frequently strategize about the most effective in-store displays and promotions that will resonate with their meat snacks-buying customers. Plaid Pantry is no exception.

“In 2016, we had a couple coupon-based and pure price point-driven promotional events that drove significant volume,” Cote said. However, those events weren’t as numerous so far this year, resulting in a drop-off in related sales.

“We are down mid-single digits,” said Cote. “Bags are down a bit due to a weaker than prior year promotional plan, while sticks are doing quite well. The bag market in our area (Portland, Ore.) has gotten very price sensitive.”

More consumers are trying to eat more proteins, living healthfully and not surprisingly, their choices have never been more plentiful. As purchasing trends continue to evolve, the need for manufacturers and retailers to continue to innovate to remain on top of the evolving category is as pressing as ever.

“Half of all Americans say they eat protein in every meal. But, more consumers are also increasingly looking outside meats for their protein and Americans are eating more nuts, seeds, legumes/pulses and other plant-based varieties,” said Rost. “All of this choice has opened consumers’ palates, but also put pressure on meat snack companies to appeal to that growing sense of discovery.”