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Munches for Bunches
Americans love to snack, and their choices grow more diverse all the time.
by Cecelia Blalock
George Crum was having a bad night back in 1853. Twice, one of the guests at the posh Moon Lake Lodge resort in Saratoga Springs, New York, sent back the popular French fries, complaining they were too thick. In retaliation, the Native American chef decided to make the potatoes too thin and too crisp to be skewered by a fork. To his chagrin, the guest loved them. Crum’s potato chips went on to become a house specialty and he eventually opened his own restaurant. Crum’s fit of pique also launched a snack sensation that continues to dominate the snack category 150 years later.
In the 52-week period ending November 3, 2002, potato chip sales were $2.8 billion dollars, according to Information Resources, Inc. (IRI), significantly ahead of tortilla/tostada chips, whose sales were $1.9 billion. A large portion of those sales occurred in convenience stores, where snacks in general and chips in particular are a staple. Promotions can boost sales significantly, according to the Snack Food Association, citing several potato chip c-store promotions that resulted in significant sales.
The history of potato chips wouldn’t be complete without mentioning the invention of the mechanical potato peeler in the 1920s, which allowed the tasty chips to be mass-produced, and Herman Lay, who popularized potato chips throughout the southern United States. Lay’s became the first successfully marketed national brand. A 1961 merger created Frito-Lay, the 800-lb. gorilla of the chip world. According to IRI, Frito-Lay brands accounted for $1.6 billion of the $2.8 billion potato chip sales cited above and $1.5 billion of the $1.9 billion in tortilla/tostada chip sales.
Still, there is plenty of room for competitors in the snack category. Few Americans go an entire day without at least one snack. We gobble down pretzels, corn chips, cheese snacks, and chips by the handful. As we become more ethnically diverse, more mobile, and more desirous of healthful eating, the range of snack options grows – and with it, sales. According to the Snack Food Association, snack sales for 2001 reached $21.8 billion, an increase of 5.1 percent over 2000. The volume was 6.47 billion pounds, a 1.4 percent increase. Included in these sales figures are potato chips, tortilla chips, popcorn, pretzels, snack nuts, meat snacks, pork rinds, cheese puffs, and sunflower/pumpkin seeds. Throw in snack crackers, cookies and snack bars, and sales reach approximately $37 billion.
Something Old, Something New
Despite its category dominance, not all is rosy for potato chips. For the first time sales are beginning to decline, reports Mark Lee, vice president of marketing for Wise Foods, Inc. of Kenesaw, GA. Price pressures from higher costs of oils, lower crop yields, and consumers choosing more healthful snacks have taken their toll. But there are bright spots. Sales of wavy and kettle varieties are up, as are flavored chips, says Lee.
Wise is experimenting with alternatives in oil to lower the amount of saturated fat and trans fat, but not at the expense of compromising taste.
"Eating more healthfully has put more pressure on our category as a whole, but we are not seeing a major swing in eating habits," says Lee. "Sales of baked chips and those made with Olestra are down. Potato chips are a comfort food. At a time when people are worried about war and staying closer to home, it’s nice to hang out and have a simple reward."
As part of its strategy, Wise is developing new products such as its white cheddar cheese doodles launched last April and expanding its distribution in c-stores.
"C-stores are a challenge," Lee explains. "Unless you can get to the level of $50 per week or more, the stop is not worth it to the driver. But we recognize this is an extremely important outlet. Consumers are on the go and using c-stores as a fill-in for grocery. It’s also a tremendous opportunity to get people familiar with your product. You can reach different consumers such as the blue collar male, whom you might not reach in grocery stores."
Wise designed an entire bag line for c-stores. They advertise their Big Munch 99 cent bag line as offering big value and big taste. They also are adding more variety to their potato chip line and more intense flavors. C-store customers tend to like more intense flavors, Lee says. Offering them in a smaller bag prompts people to try them.
Finding a Niche
A chip may be pretty much a chip, but add a hook, clever packaging, and a target market and you’ve got a winner. Rap Snacks is the brainchild of James Lindsey, a Philadelphia entrepreneur who aims his products at a group largely taken for granted – black urban youth. Teaming with a music company that represents rappers, Lindsey created a line of flavored chips and popcorn whose catchy names (Bar-B-Quin with my Honey, Back at the Ranch, Platinum Bar-B-Que) and edgy packages feature popular rappers such as L’il Romeo and Master P. Each of the bags also contains a positive message like "Respect your elders" or "Stay in school." Lindsey has focused on c-stores, primarily in cities, for his distribution. Rap Snacks can be found on the East Coast and is moving into the Midwest. It has universal appeal, Lindsey says.
"The bags have become collector’s items," he notes. "We get calls and e-mails all the time asking for specific bags. They also give us a lot of feedback about our products and what they’d like to see. I take it very seriously. I’m a grassroots marketing guy. I let the consumers drive the product."
Lindsey says he sees a lot of cannibalization in snack foods. "There are a lot of me-too products. We do not have a lot of thinkers; it’s more copy oriented. I wanted to extend the marketplace. I’m not competing against Frito-Lay. They are trying to get all types of customers. My customers come in and ask for them specifically. Consumers dictate the need for Rap Snacks."
Lindsey says he sells about two million bags of Rap Snacks a week, mostly in corner stores and c-stores. Though black urban youth remains his base, he is looking beyond that narrow market to the suburbs and beyond.
"Our strategy is that inner city kids dictate what’s cool and then it moves out to the suburban areas," Lindsey explains. "We market snacks from the streets on up."
Be Different
Americans are spoiled. While they consume plenty of the tried and true, they are always looking for something new, different, and more convenient, whether it be in taste or packaging. In response, Proctor & Gamble has introduced a line of Snack Stacks, smaller sized versions of its popular Pringles potato chips.
"They are great for lunch boxes," says P&G spokesperson Tonia Hyatt. "They offer portion control and have been a great success. The smaller size is good for c-stores."
P&G also has come out with two new flavors in its Torangos tortilla chips and has launched a new brand called Salsa. Torangos is the first tortilla chip to come in a canister, which won an award for innovative packaging.
Snak King Corp. looks for unique, spicy flavors that are a bit out of the mainstream, according to spokesperson Bruce Waterworth. "Everyone’s had nachos and Doritos forever."
Snak King used to include a small package of Tabasco sauce with its pork rinds and cracklins, but its new Tabasco-spiced pork rinds and cracklins save customers the trouble and mess. Its El Sabroso brand features Guacachips, guacamole-flavored tortilla chips; Salsitas, a spicy salsa tortilla round flavored with tomato and avocado; and Crispas, a unique white tortilla strip flavored with cinnamon and sugar.
"Consumers are changing all the time and are looking for new things," says Waterworth. "As a small company we try to create niche products. We’ve been successful in creating products that are a little outside the box. They are all very high quality."
The Pinah Co. of Waukesha, WI, sees things from both sides of the aisle. Its core business is producing bulk ingredients for large manufacturers, but it also markets its own private label Pinahs brand of rye chips. Its Pinahs Crispy Corn Chip comes in both cheddar cheese and jalapeno flavors, while its Festa Italiana chips have a sausage, tomato, and cheese taste. Curley rye chips are a thinner version of the regular rye chips and can be eaten without dip. Chips are fried in corn oil to reduce trans fat, notes Matt Walker, director of sales and marketing.
"Our chips have the look and feel of a potato chip, but it is a bread product, so it can be enriched," he says.
When it comes to c-stores, placement is key, according to Walker. Since Frito-Lay and other large manufacturers dominate the snack aisle, Pinahs decided there might be a niche in the bakery or deli area for its products. Walker also stressed the need for convenient size packages for c-stores. And with an ever-shrinking globe, the company is looking at adding seasonings that appeal to diverse cultures, such as curry and hot mustard that are popular in the Indian culture. Such products prove helpful in the export market as well.
Nuts to You
Word from the nutrition front that nuts can be a heart-healthy snack has been welcome news to companies like Energy Club of Pacoima, CA.
"The overall snack category is growing dramatically and we see nuts as a missed opportunity that Energy Club is taking advantage of," says Vincent Guiliano, national sales manager. "Snack nuts are emerging as a healthful alternative. More women are eating them, which fits nicely with c-store efforts to attract more women."
Energy Club offers a full line of nuts and mixes, as well as a salty snack line and a candy line. Sales in snacks since 1994 have shown double digit growth each year, according to Guiliano. Nut sales, in particular, are way up.
There is a definite trend in snacks toward larger bags, he says. The company’s Extra Value line offers three times the product for two times the price. A growing number of people are taking the larger bags to the office or to the movies.
In 2002, the Extra Value line accounted for 63.2 percent of sales while the smaller 99 cent bags accounted for 36.8 percent. That’s the reverse of what it was five or six years ago, observed company founder Miron Aviv.
When it comes to taste, bland is out, according to Aviv. "Savory" is the latest buzzword in the snack industry to describe the spicy, full-flavored products that consumers reach for.
Another trend is the growth of products aimed at the Hispanic market.
"We offer a salty snacks line and a candy line for the Hispanic market," says Guiliano. "Hispanics like a blend of lemon and chili on their snacks. It has to be just the right combination. It took us a while to get the right combo."
No matter how good the product, display is critical to sales, especially in c-stores, Guiliano says. "Snacks are impulse sales, which means your product should be upfront where the foot traffic is. You need racks where people can find it."
Healthy and Convenient
Trail mixes are another snack viewed as more healthful by many consumers. They come in a variety of combinations to suit nearly any taste. For example, PPJ trail mix by Golden Stream Quality Foods combines peanuts, raisins, and grape-flavored dried cranberries. Introduced late last year, it has been a big hit with children, says Marcia Moll, vice president of marketing.
"Mothers are always looking for healthy snacks for their children," she says.
Although snacking is frequently blamed for large numbers of tubby Americans, Moll believes snacks will continue to be popular. They can even fit in with the push to eat smaller meals, provided the snacks are healthful.
"I definitely think there will be more stringent guidelines in terms of what foods are offered in schools," Moll says. "It will put pressure on manufacturers to come up with healthier snacks."
But taste remains of paramount importance. No matter how healthy, no one eats snacks that don’t taste good.
"The trick is to come up with something that is healthy and tastes good," Moll says.
Bars are an increasingly popular form of healthful snack. There are bars of every variety, from breakfast bars, to granola bars to energy bars. According to ACNielsen figures, for the 52 weeks ending December 21, 2002, total sales of snack and supplement bars in food, drug, mass, and c-stores reached $1.8 billion, up 20 percent from the year before. The growth was more dramatic in c-stores where the sales of almost $180 million represented over 53 percent growth.
Kellogg’s has introduced its Kellogg’s Health Club‰ featuring its K Times cereal bars, including well known varieties such as Fruit N’Nut and NutraGrain.
"The alternate snack category is growing by leaps and bounds," says Chuck Lamkin, director of marketing for Kellogg’s snack division. "One reason it is growing is that cigarettes play less and less of part in c-stores margins. These products offer extremely high margins on recognized products and are priced to move."
Eye-catching shippers are another reason c-stores like these bars, Lamkin says. "They have great graphics, are pre-packaged, can be refilled, and we have a great rack program that lets our products be placed anywhere in the store. They can be used to create a center in the store around the Health Club‰. We also offer lots of merchandising ideas."
Naughty but Nice
People say they want healthier snacks, but as the continued popularity of potato chips shows, what they do is something else. Sometimes you just need a treat. Nestle’s ventured into the snack category for the first time with its Flipz chocolate-covered pretzels and found consumers liked the salty-sweet combination. Chocolate-covered graham crackers also proved popular.
No matter what the form, snacks remain an integral part of the diet, and there’s no sign that will change. Manufacturers continue to tempt our palates and even the iron-willed succumb sometimes. What the heck, pass the chips.
Cecelia Blalock is a food freelance writer based in Jessup, MD
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