Sweet Snacks Roll Up Profits

From muffins to snack cakes, hand pies, cereal bars and more, sweet snacks, powered by strong brands, are enticing customers looking for on-the-go satisfaction, especially during the breakfast daypart.

By Howard Riell, Associate Editor

Some industry veterans expect a continued shift away from packaged sweet snacks in 2019 as consumers more fully embrace healthier and alternative snacks. Hostess products continue to be strong sellers, as do organic Clif Bars, Nature Valley items and others.

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Still, category growth continues, albeit modestly. According to data from IRI Worldwide, for the 52-week period ending Dec. 2, 2018, the convenience store channel saw sales of bakery snacks top $833 million, an increase of .4%. Brands like Hostess, McKee and Bon Appetit led the way, with private label spiking 4.7%.

Many point out that sweet snacks are not selling well because the consumer is making a shift to alternative snacks. Some c-store chains have seen the category in decline for several years in some locations, compared to strong gains in alternative snacks.

Some convenience stores have had temporary difficulty keeping the full line of Little Debbie items in stock at certain locations, as the parent company made a recent switch to a franchised route service. Some c-stores have been successful temporarily using their distributor to fill the gap on these products during the transition and it remains a highly sought after brand.

Executives at McLane Co. Inc. in Temple, Texas, anticipate seeing continued growth in the sweet snack category, fueled in part by more advertising and limited time offers.

COUPLING SALES
The top items are Hostess cupcakes, chocolate and powdered bag doughnuts, said Kirk Bailey, product director of grocery and snacks for McLane. Hostess is an iconic name, and after being out of the market for a while they have made a strong push the last five years.
C-stores can continue to market and advertise indoors and outdoors to drive sales, Bailey suggested, including bundling sales of sweet snacks with hot or cold beverages. “Promoting items in two-fers will also help drive sales in the category. We have seen energy drinks do this for a while, and it would also work in the sweet snack category,” Bailey said.

Retailers must also be sure to have good representation of core brands in the sweet goods set, and have take-home bag items on the bottom shelf.

According to Kevin Campbell, director of marketing for Beck Suppliers Inc., which operates 26 FriendShip c-stores, the sweet snacks category is slightly down across his chain, but management has a pretty good handle on why. “It is 100% because in our food-focused stores—17 of our 26 locations—we have switched to a David’s Cookies program, which our deli department bakes daily.”

Muffins are a big slice of the same program.

“We enhanced the fresh bakery and in all of those locations, and I know that David’s is being implemented—if not already, then very soon—in all but three of those stores,” Campbell said. “The big play for us was to go with this concept, a frozen cookie that we bake, and it has been extremely successful. If I was to factor in those deli sales for the sweet items, we would be up considerably. That’s definitely the trade-off you have with a higher-markup item, and supporting our deli program is always a good thing.”

He likened the growth of healthier-for-you snacks to the challenge faced four or five years ago with craft beer.

READINESS, RESILIENCY
“The shift toward healthier eating has affected the sweet snacks category,” said buyer Randy Demster for AAFES, or Army & Air Force Exchange Service. “Sales in bakery items declined 6.1% in 2018 over the previous year.”

Exchange shoppers, which include active-duty service members, their families and military retirees—are focused on readiness and resiliency, Demster added, and expect to find products that help them meet their nutrition goals.

AAFES expanded its “BE FIT” assortment by 21% in 2018, with plans to expand even more this year. All BE FIT items must meet a set listing of nutritional standards set by the staff dietitian. Sales for the BE FIT program are continuing to grow and now make up 20% of dollar sales in retail food. AAFES operates a total of 334 Express convenience stores.

AAFES’ Express locations devote four- to eight-foot sections to sweet snacks, depending on the size of the store. The products are displayed close to their Snack Avenue sections. Demster reported that doughnuts, both fresh and prepackaged, are among the bestsellers because of grab-and-go convenience. “However, the Exchange buying team has made a conscious effort to shift the assortment to reflect better-for-you options through its BE FIT program.”

Category management key: Beck’s management sees the sweet snack category continuing to grow through 2019, Campbell said.

“I see the healthier choices certainly continuing, as more products are flooding stores with more options and innovation,” Campbell said. “I see the category continuing to do well. Obviously, with the overall trend of people eating less more often, daily, I think it is just going to continue with sweet snacks straight through salty snacks.”

For consumers looking for something different, c-stores aid the category.

“We have seen good results on new items, and any product that we put bonus points on gets a nice lift,” Campbell noted. “Our everyday customers are tuned into looking for the items that feature additional points in order to increase their overall balance.”