Crunch Time

Americans love to snack, especially on salty, crunchy and savory stuff. But beyond the ordinary beef jerky and pretzels, the trend toward snacks with more exotic flavors continues -- applewood chip barbecue tortilla chips or chipotle and sour cream potato chips -- along with the push for snacks with greater portability.As a country, we buy and consume large quantities of salty and savory snacks. The Snack Food Association (SFA), together with Snack Food & Wholesale Bakery magazine, publishes a "State of the Industry" report each spring. The 2002 report reflects a decade of strong snack growth. In 1992, Americans spent $13.8 billion on their favorite munchies. Last year, retailers rang up $21.8 billion in sales, up 5.1% from 2000.But it's not volume growth that's driving up the dollar sales. Poundage rose a mere 1.4% to 6.5 billion in 2001. "A lot of the dollar growth in the past year comes from people buying more expensive package sizes," says Ann Wilkes, vice president, communications at Alexandria, Va.-based SFA. "A trend toward convenience packaging, smaller packages and variety packs drove up the rings at retail."Potato chips, tortilla chips and meat snacks remain the three top-selling categories, and the majority of snack sales occur in supermarkets, mostly in large-size or variety packages. The exception is meat snacks, which generate 45% of sales in convenience stores.New, Better, DifferentNew products, flavors and packages are the lifeblood of the category. Thousands of new snacks hit the market each year, although Prepared Foods magazine estimates that three-quarters of new launches ultimately fail. Spicy and extreme flavor profiles currently rule, so snack companies are vying for consumer dollars with new and sometimes strange flavor combinations designed to surprise and delight the taste buds.To satisfy consumer interest in on-the-go snacking, packaging options today go well beyond traditional bags. Resealable stand-up bags, plastic canisters (some that even fit in car cup holders), and combo trays that deliver chips and dip in one container are among the new configurations for busy snack aficionados.As more snack companies merge -- recent years have seen a PepsiCo/Frito-Lay and Quaker Oats merger, a Kraft Foods and Nabisco merger, and a Keebler and Kellogg's merger -- consumers are enjoying the combined expertise of these giants in product development, packaging and marketing."It's an exciting category for the consumer because there's always something new and the cost of trying something is fairly low," Wilkes says.In-store displays and other P-O-P collateral materials are a top priority in the marketing mix of virtually every snack brand.Hmmm ... What Do I Want?Almost 80% of snack sales in convenience stores are impulse buys, according to research conducted by Kraft Foods North America, Glenview, Ill. That means the consumer typically walks in without any particular snack purchase in mind."They don't know if they want salty, savory, sweet or something else," explains Mike Davis, senior manager of category development for convenience, drug and emerging channels at Kraft. "It makes sense to merchandise the way the customer shops, so we've taken a total packaged snack category approach when working with our retail partners."Kraft now views its packaged cookie, confection and salty brands as "total packaged snacks," rather than separate categories. "When the consumer walks in and is open to any snack, salty is competing with confection, which is competing with packaged cookies. For them, it's not about salty or sweet, it's about snacking," Davis explains.To court such indecisive consumers, Kraft created permanent front-end merchandisers for immediate consumption snacks. One version for c-stores measures 36 inches wide, while another for drugstores is 18 inches wide. The bodies of the merchandisers include wire shelving and pegs, with side options like additional pegs and merchandising strips to accommodate a range of boxes, bags and tins.The full array of Kraft packaged snacks can be displayed: salty and savory products like Planters Trail Mix, Ritz Bits, Corn Nuts, Cheese Nips and Planters Tube Nuts along with Oreos, Chips Ahoys, Fig Newtons, Life-Savers and Altoids. The merchandiser is most effective when placed in the vicinity of the checkout counter, says Davis."Five percent of c-store shoppers never go down the aisles, so leaving products like nuts in the aisle means lost sales," Davis explains. "You have to get the product into their faces if you're going to get that impulse sale. By moving snacks out of the aisle and onto an impactful display like our front-end merchandiser, we've documented total snack category sales increasing by 119%. That's compelling."Kraft also employs a "Double D" strategy regarding display placement by merchandising discretionary products near destination items such as those in the cold vault and foodservice area near the fountain and coffee station. The merchandiser that rolled out earlier this year is designed to entice shoppers at the fountain and coffee stations with a combination of snack products. The modular, flexible unit also accommodates a caddy on top to hold Planters Tube Nuts and trays to merchandise Ritz Bits products.Another display pairs Planters Party Packs with 12-packs of beer. Set to roll out in October, the goal-post design of this corrugated shipper allows two trays of the four flavors of Party Packs to be displayed above two stacks of 12-packs of beer.Showcasing Multiple Brands, CategoriesThe Keebler Co., a subsidiary of Kellogg Co., is leveraging the two company's brands together within its supermarket merchandising strategy. A permanent endcap merchandises Town House crackers with Chips Deluxe and Fudge Shoppe cookies. The unit features adjustable metal shelves, and is available with casters and interchangeable header cards. Fifteen hundred endcaps have been distributed to supermarkets, mass merchants and c-stores since the beginning of the year.For the back-to-school season, a "Toon Up for School" promotion will team Keebler and Kellogg snack products, as well as morning foods, with Cartoon Network on a corrugated school bus display complete with flashing lights."Merchandising the brands together and offering a timely, high-impact piece gives us more storewide merchandising opportunities," says Mike Jurgensen, vice president-marketing services for Elmhurst, Ill.-based Keebler. "Something like the bus display creates a bigger event, delivers 'in-store theater' for our retailers, and enables our brands to break through the clutter."A four-sided display on wheels for Cheez-It crackers is one of the company's latest P-O-P efforts. Introduced earlier this year, it features branded side panels that can be replaced with seasonal or special promotion cards. A header shows the Cheez-It logo, and graphics include large photos of individual crackers. The header can also be replaced with an accessory rack to hold soft drinks or other complementary products."Ideally this is placed in the front of the store where it will immediately get the customer's attention and can be shopped from all sides," says Jurgensen.Taking a cue from retailers, Keebler is producing more permanent displays. "More and more stores are looking for high-quality display pieces," says Jurgensen. "The lion's share of displays are still corrugated shippers. But we're seeing greater interest in permanent units, which comes from willingness on both sides to make a long-term commitment. As an organization, we're making the investment in display pieces to drive volume for the stores in exchange for commitments from our retail customers."Channel SurfingJust as snacks seem to be crossing category barriers, some retailers are exploring non-traditional display formats for merchandising snacks. Frito-Lay Inc. is addressing the much-touted "blurring" of channel lines by developing a variety of merchandising units for each of its promotions and brands, and inviting retail partners to select the ones that fit their needs.Frito-Lay's line of Go Snacks -- portable versions of Doritos, Cheetos and Fritos brand snacks packaged in eight-ounce canisters designed to fit in car cup holders -- can be found in gravity-feed racks attached to Frito-Lay gondolas in supermarkets or larger c-stores. A spinner rack for Go Snacks works in c-stores and drugstores, or along the perimeter of supermarkets."We try to find a few good units that do the job best from a consumer standpoint and make sure they go into the right locations based on the size of inventory that's appropriate to that particular retail outlet," says Lora DeVuono, vice president of retail and corporate marketing at the Plano, Texas-based snack marketing giant.That's not to say Frito-Lay doesn't create programs for specific channels. This summer is the third "Summer of Cash" promotion for Doritos, Lay's, Ruffles and Tostitos brands. Through September, select bags will include actual cash -- $1, $20 or $50 bills for a total of $1 million being given away. Consumers can also receive online cash prizes or coupons for their next purchase. The program is designed for large-format stores such as supermarket or mass merchant outlets."We have knock-out merchandising cases, which are essentially cubes that our sales personnel can assemble in different configurations to create a big presence in the lobby," explains DeVuono. "Most of our summer sales volume is derived from lobby displays, so we go with a big program to create excitement for the consumer that will entice the retailer as well."In smaller outlets, Frito-Lay is focusing on summer imagery and its "Lay's Tastes of America" campaign. The program invites consumers to log onto a Web site to select their favorite flavors from a line-up that includes California Dill and Memphis BBQ. Flavors will be rotated throughout the summer. In August, Miss America 2002 Katie Harman will announce the winner and runner-up. Corrugated 'weekender' displays will tout the program in c-stores and drugstores, while large perimeter displays will gain attention in supermarkets and mass merchants."In-store is an extremely important part of our marketing mix," DeVuono says. "Our numbers show that 80% of salty snack sales across all retail channels are impulse purchases. A display influences that final decision of what to purchase, so it's a very important growth driver. You have to have the right message presented in a very vibrant, visible format."Get to the PointFrito-Lay often lets its packaging star in its display presentations, utilizing minimal copy and graphics to convey a product benefit or program feature. In club stores, the packaging and shippers do all the talking on pallet presentations. For Go Snacks, the "Go Anywhere but Hungry" tagline succinctly delivers the product's profile and echoes the overall campaign for the brand."We have to take our advertising message in-store and do so quickly," says DeVuono, who adds that the company has moved away from sweepstakes and other complex consumer offers. "We're shifting toward immediate reward through programs like 'Summer of Cash' and the value element of the 99-cent line merchandised on our permanent front-end merchandiser. Consumers today want immediate gratification."Kraft's Davis agrees that consumers are looking for a quick hit. "Sweepstakes are very expensive to run and consumers tell us they don't drive purchases for them," he explains. "Instantly redeemable offers do, especially for the c-store shopper who is looking for gratification now." In that spirit, Kraft is continuing its association between Corn Nuts and Six Flags amusement parks with an on-pack offer for $4 off weekend admission and $6 off weekday admission. A prepacked shipper with a header announcing the Six Flags offer is being distributed throughout the summer.Where's the Beef?Not all snack consumers are quite so impatient, however. Meat snack lovers, whose spending on the category rose 15.6% in 2000 to reach $2 billion, are hot for sweepstakes that involve their passions, such as car racing. Link Snacks Inc., Minong, Wis., is offering the "Ultimate Driving Sweepstakes" to promote its Jack Link's Beefsteak Nuggets."The sweepstakes draws the customer's eye to the display because we promote it with graphics involving checkered flags and the image of Rusty Wallace," explains Cathy Sturm, senior marketing manager. The grand prize is an opportunity to ride with Wallace and drive a racecar. More than 3,500 countertop displays and 6,500 floorstands have been produced since the program's inception earlier this year. Sturm says 15,000 more are in the works because "it's a fun, colorful display that offers the consumer something exciting."The sweepstakes displays are distributed primarily to c-stores, which are the largest distribution channel for meat snacks, but are also placed in supermarkets. Pallet displays are typical for warehouse clubs and mass merchants.Link Snacks also offers power panels for merchandising its small packages on the side grids of endcaps or other displays. "We work with the retailer on a merchandising strategy and often look for multiple placements in the store to drive up the impulse sale," says Sturm. "It's great to have a designated section in the store for beef jerky and meat snacks, but it's a high impulse item, so two or three locations is best."A newcomer to the meat snack category is Jimmy Dean, a division of Sara Lee Foods based in Newbern, Tenn. A sweepstakes program offering a grand prize 2002 Polaris ATV 4x4 will be the highlight of the fall promotion for Jimmy Dean Beef Jerky. The program will feature a corrugated floorstand and a cooler with a display stand, according to Marianne Quinlan, marketing manager for Jimmy Dean meat snacks."The promotion features several display options for our 4-ounce bags. The floorstand will be targeted to convenience stores, which are the primary outlets for our products," she says. The unit will also be available to supermarkets and mass merchants. The company estimates that 2,500 displays will be produced for the sweepstakes program.More than a quarter of the displays for Jimmy Dean meat snacks in c-stores are permanent racks. Ideally, the company seeks placement at the checkout to drive impulse sales, according to Quinlan.Special OrdersWhile retailers like Wal-Mart and 7-Eleven have long requested displays that meet their specifications on size, color palette, graphic style and incorporation of their retail logos, others are now jumping on the custom display bandwagon."We're seeing increased requests for customized displays across all channels," says Frito-Lay's DeVuono. "They want something 'ownable' that suits their needs and those of their shoppers. Most commonly, it's a co-branding presentation that links our brands to their positioning strategy, and we support their requests as much as possible."Keebler is also receiving more requests for customized displays. "We're getting a similar number of requests from grocery as we do from mass merchants," says Jurgensen.Kraft has seen custom display requests from the drugstore channel increase in recent months. "Since we presented our consumer insights into the channel earlier this year, they're coming back with requests for customized pieces based on that information," explains Davis.Meat snack marketers are not experiencing the trend quite as much, however. "Convenience stores tend to be more flexible," observes Jimmy Dean's Quinlan. "The grocery channel requires the highest level of customization, often requiring pieces specifically configured to fit their store requirements."While the number of brands, flavors and line extensions for salty and savory snacks seems to grow exponentially every day, marketers don't seem to find the competition for display space any tougher than they did 10 years ago. Retailers apparently understand the need to constantly showcase what's new and exciting in the category, so new brands can gain entry, as long as their story is compelling."I don't think it's the most difficult it's ever been," says Jurgensen. "Bring the retailer a flexible, quality piece with a good message -- a display that promotes volume -- and they'll listen and give you a chance."

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