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Healthful Foods Nudge Their Way onto C-Store Shelves
Growth pattern of better-for-you products is 'slow, but steady.'
By Joanne Friedrick
With an eye toward expanding its customer base to include female destination shoppers, yet still serving its existing young, active male clientele, convenience store operators and their distributors are carving out a small, but growing space in stores for health- and energy-oriented foods.
Howard Stroud, director of merchandising and purchasing for Grocery Supply Co., Sulphur Springs, TX, says, "As a general rule, growth is slow but steady in the (healthy foods) category," which includes items ranging from energy bars to vitamin-enhanced water and other non-carbonated beverages to alternative snacks.
He acknowledges very few c-stores have a dedicated healthy foods section now, but "to get growth, it has to become a destination category for the right shoppers."
Those "right shoppers," Stroud adds, are typically non-traditional c-store shoppers, such as women.
Cheryl Berens, marketing coordinator for Symrna, GA-based Head Distributing, concurs that younger, female customers are the target market for some items entering convenience stores such as Gatorade's Propel Fitness Water, a lightly flavored water with added vitamins, and Slim Fast products.
Yet it's not dieting these customer have in mind, Berens says, but rather healthier meal alternatives.
"I don't think most people use it (Slim Fast drinks and bars bought in c-stores) for weight control. They use it to supplement a meal."
The anti-diet attitude has marked the less-than-successful tenure for several fat-free products, Berens notes. "The [fat-free] market is declining quickly," she says. "It can't just be fat-free; it has to taste like something." She adds that Head recently discontinued some fat-free items such as Pringles and Fig Newtons.
Tim Cote, vice president-marketing for Plaid Pantry, Inc., a convenience store retailer in Beaverton, OR, agrees the key to being successful with healthier products is for manufacturers to emphasize product benefits beyond fat-free status.
"The stuff that's good for you...if it says so, it's the kiss of death," he notes.
Bars Are the Stars
Where Cote and others have seen the greatest growth and are experiencing on-going success is in the energy/nutrition bar category.
Cote says Plaid Pantry has a "well-developed energy bar section," featuring 60 SKUs and covering about 30 percent of the 16-ft. rack devoted to candy and energy bars.
"They're gaining space on the candy bar segment," he adds.
Berens concurs that triple-digit growth is coming from the nutrition bar arena, with sales for Pria, a woman's health food bar from Power Bar, growing at more than 300 percent over the past year.
Numbers supplied by ACNielsen, a market research firm based in Stamford, CT, echo Berens' findings. For the 12 weeks ended Jan. 19, snack and supplement bars registered an 87 percent sales gain over the same period a year earlier. And unit sales for the same tracking period were up more than 169 percent.
Makers of these products recognize the significance of the convenience store segment.
Mary Jane Kinkade, senior manager-communications for Kraft's Balance Bar products, Rye Brook, NY, says, "Convenience stores are extremely important to Balance Bar as more Americans are looking for healthy, on-the-go options."
The bars have been sold through the convenience channel for five years, she says, after debuting in supermarkets in 1995.
The c-store evolution, she says, includes more SKUs and separate sections for energy and nutrition bars. Balance Bar's most popular items within c-stores are its Balance Gold Caramel Nut Blast, Yogurt Honey Peanut and Honey Peanut flavors, she adds.
At Berkeley, CA-based Clif Bar, Inc., Corporate Accounts Manager Karin Thrift notes they are working with all of the major c-store distributors to gain greater distribution for its line, which features the Clif Bar all-natural energy bar; Clif Bar Ice, a caffeine-enhanced product; and Luna, a women's nutrition bar.
"In some ways, it has been challenging to gain distribution in the c-store segment," Thrift says, "mainly because the bar category is still very young. We know the convenience channel is far from being fully developed or mature.
"We've been able to educate the buyers about our products and when the buyers understand the growth potential, the increased distribution soon follows," she says.
Thrift says distributors and retailers carry a varying number of the 26 SKUs available.
Although energy bars have gained space and sales, some distributors have found price to be a barrier in the successful integration of these and other healthy products.
Travis Abney, director of marketing for J.J. Rogers & Sons, a distributor based in Tupelo, MS, says price has been an issue. "In our c-stores, customers are looking for a candy bar, not a health bar," he says, adding there is at least a 20-cent price differential between the two.
AMCON Distributing Co.'s director of corporate marketing, Dan Johnson, characterizes his Midwestern customers as "value shoppers" who aren't willing to pay the premium manufacturer's charge for the healthy foods.
"We cannot sell anything that is a 'good for you' type of product with any significant volume," says Johnson of the Omaha, NE-based company. "The general public likes to 'talk' healthy, they just don't like to 'eat' healthy."
Especially, he adds, "when they have so many good-tasting, high-sugar (and high-) fat temptations staring them in the face in the convenience store."
Healthy Snacks Make Inroads
Trying to put a dent in the high-fat category while still offering good taste is Tumaro's Gourmet Snacks, a Los Angeles producer of Krispy Crunchy Puffs, which are baked organic corn snacks.
Brian Jacobs, vice president at Tumaro's, says the convenience store "is a new marketing segment for us."
"We found an opportunity and a demand for alternative, healthier snacks," he explained.
The line, which is being picked up by Cote at Plaid Pantry, was presented to c-store operators at the National Association of Convenience Stores' trade show and at the American Wholesale Marketing Association's (AWMA) Real Deal Expo in Dallas in February. Sales for the products are primarily through gourmet shops and natural food stores.
Yet Jacobs says Tumaro's snacks, which have 50 percent less fat than regular potato chips, "have a mass market appeal for the truck driver and for moms looking for snacks for kids."
Cote says he selected the product as a "better-for-you" salty snack and as an alternative to some of the healthier Frito-Lay items he used to carry in
Plaid Pantry. He has also taken on a soy-based snack line and increased his SKUs of trail mixes and healthy snacks offered by Harmony.
"We needed something to fit that (healthy) customer," he says.
Liz Scatena, trade show coordinator for nSpired, a San Leandro, CA, health food manufacturer and marketer offering several natural and organic snack food lines, says the company has also actively solicited c-store retailers after making a name for itself in the health-food category.
Retailer 7-Eleven at one time carried nSpired's Pumpkorn, a line of all-natural, dry-roasted, seasoned pumpkin seeds.
"They were excited about it," Scatena says. Yet, she notes, the products were removed from 7-Eleven because of packaging and display issues. "We need to work on a few things," she says, explaining different channels require different product configurations.
The addition of healthy snacks is just part of 7-Eleven's move over the past years toward more nutrition-oriented products.
"The extraordinary trend in nutritional products caused us to expand our assortment about five years ago," says Steve Keane, product director for Dallas-based 7-Eleven, the nation's largest convenience store. "The way our customers eat is certainly changing and we believe there is a continued 'upside' opportunity with nutritional products."
Items 7-Eleven carries, he says, include nutrition and energy bars, yogurts, frozen sorbets and fruit-juice bars, soy-based products and low-fat and fat-free snacks.
Water, 'Non-Carbs' Pour on Sales
In a statement issued in late January, Mike Blair, product director for vault beverages at 7-Eleven, stated, "Non-carbs are big business at 7-Eleven and getting bigger." The retailer's non-carbonated beverage category includes meal replacement, high protein, energy and recovery beverages in addition to juice and water.
South Beach Beverage Co. in Norwalk, CT, producers of the SoBe line of non-carbonated juice blends and teas, sells all of its SKUs in the convenience channel, says Kristine Hinck, director of public relations.
The best seller in this segment, she adds, is SoBe's Adrenaline Rush, a passion fruit-flavored drink fortified with Vitamins B12, B6 and C as well as energy-producing elements such as Guarana to Ginseng.
Also doing well in c-stores, she says, are dairy-based Liz Blizz and Lizard Fuel and SoBe Energy and Power fruit beverages.
While the products have national distribution, the West Coast, from the Pacific Northwest to Southern California, have been the strongest geographic sales areas, she says.
Specialty beverages have had an up-and-down cycle over the past year within the convenience segment, according to ACNielsen data. Alternative non-carbonated beverages saw a nearly 29 percent decline in sales volume for the 12-week period ended Jan. 19 compared with a year ago. Yet bottled water, ready-to-drink iced tea and juice and juice drinks registered modest sales gains of 21.4 percent, 12.3 percent and 9.7 percent, respectively, over the same 12-week period from 2001 to 2002.
The growth in the bottled water category jives with Grocery Supply's Stroud's own observations. "Water is a health-conscious choice," he says, adding sales have skyrocketed over the past five to 10 years.
And while bottled water has relatively low profit margins, New Age-enhanced beverages, he says, are a more profitable "high-ticket item."
Joanne Friedrick is a freelance writer based in Portland, ME. She is former editor of Gourmet News, Grocery Marketing, and Grocery Equipment and Design.
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