Feature: Snack Time!

For a category that's fundamentally built on impulse, salty snacks manufacturers have been anything but impulsive when it comes to new product introductions and go-to-market strategies -- especially as of late.They know that consumers' penchant for snacking continues to rise, for both in-the-home and on-the-go occasions. Snacks in all their forms have become an important part of a healthy eating plan throughout the day for 32% of consumers, while 60% claim they often eat snacks simply for the enjoyment, not hunger, according to a Snack Food State of the Industry report from SymphonyIRI, Chicago. (These and other findings were presented at the Snack Food Association's recent annual convention, SNAXPO 2010, in Fort Worth, Texas.)"Snack foods...continue to form an integral part of the American diet as harried lifestyles reduce opportunities for sit-down dining, as the boundaries between meals and snacks grow ever blurrier, and as consumers shift from foodservice to packaged foods in response to the economic downturn," according to a September 2009 Sweet & Salty/Savory Snacks in the U.S. report from Rockville, Md.-based Packaged Facts.The news is especially good for the subjects of this report: SymphonyIRI-tracked sales of salty snacks (not including meat snacks or nuts) grew from $7.2 billion in 2004 to $8.1 billion in 2008, compared with a $6.6 billion to $7.1 billion growth for candy, "the cross-the-aisle archrival of salty snacks," the report says.More recent numbers from The Nielsen Co., Schaumburg, Ill., show further optimism for the category. During the 52 weeks ending Jan. 23, snack sales in the food, drug and mass channels (including Walmart) were up 5.4% to $15.8 billion, sales of nuts were up 2.6% to $3 billion, and sales of crackers were up 2.4% to $4.3 billion.To capitalize on this momentum, CPG companies are diving deeper into shopper insights and other targeted research to know their consumers better, bring products to the shelves that fulfill their needs, and create meaningful connections both inside the store and out.Shopper/Consumer OverlapFor most food categories, the shopper and consumer are not necessarily the same person -- i.e., mom buys bread and lunchmeat for the kids. But, Craig Tokusato, vice president of marketing at Diamond Foods Inc., San Francisco, says since snacking is such an American pastime, there's often a high degree of overlap where the shopper is also the consumer. "Ultimately, the shopper is controlling the transaction, but the consumer is who we want to win the heart and stomach of and who influences the shopper back, so it becomes this continuous loop," he says. The company recently acquired Kettle Foods, bringing potato chips under its umbrella.In the on-the-go snacks world, notes Eric Johnson, senior director of marketing, immediate consumption for Kraft Foods, Northfield, Ill., the consumer and shopper are usually the same person. That said, he believes the salty snacks consumer has a number of different dimensions, and Kraft breaks it down by gender. "In the male-skewed channels such as c-stores, salty snacks fulfill a number of different roles," he says. It could be the traditional afternoon snack with a beverage, a natural meal accompaniment or a "meal bridge." "Women aren't unlike men, but their focus -- and our focus for them -- is really providing these away-from-home treats or small pick-me-up types of snacks," Johnson says. Typically she shops in drugstores or supermarkets for snacks, is the gatekeeper to the house, "and is focused on convenience, taste and what she feels good about feeding to her family."Dana Rohde, brand manager, Oberto Beef Jerky, says the Kent, Wash.-based company has a reinstated focus on men between the ages of 18 and 45. "Further research has shown that this target demographic is the leading consumer of meat snacks. Therefore, we've tailored our marketing campaigns toward messaging that resonates with men."Justin Havlick, president of Boulder, Colo.-based Thanasi Foods, says he would have agreed -- up until recently. Based on changes it has seen in recent years, the company is rethinking its strategy. "The amount of requests we get from female consumers for our products really has encouraged us and frankly made us think that our shopper isn't just that traditional male consumer who's going out and looking for sunflower seeds and beef jerky for a road trip," he says. It can also be a health-conscious female consumer who isn't just shopping for her family, but in many cases for herself as well."Although the core of the meat snacks category continues to be millions of outdoorsmen and 20-something males, emerging consumers are important when looking at overall category growth," says Jeff LeFever, marketing director for Jack Link's Beef Jerky, Minong, Wis."We've been tracking teens' perceptions of Jack Link's and meat snacks for a number of years, and the data there is very positive. But, frankly, that's one segment of the market where we have underperformed as a company," LeFever adds. As a result, the company launched its teen-targeted Matador brand to connect with that particular segment.Smarter MarketersLos Angeles-based Paramount Farms uses third-party research vendors including SymphonyIRI, Nielsen and Euromonitor to track snacking trends. The nut-maker also conducts surveys and focus groups to test new flavors. "We find that small, targeted tests coupled with large-scale surveying and third-party data helps us keep a pulse on the changing trends and consumers' tastes," says Dominic Engels, vice president, global marketing.For Diamond Foods, "Shopper insights are a key thing that we use to really make the categories that we're in better," says Tokusato. The company "spent quite a bit of time, financial and people resources over the past year doing some significant work on the shopper side." He adds that the company thinks of its targets in a holistic way and focuses on multi-channel research.At press time, the company was finishing what Tokusato calls "a significant snack nut category shopping study." Working with a leading shopper insights company and talking to 1,200 shoppers across the country "has given us a very good national sample to understand both behavioral and attitudinal insights as it pertains to snack nut shopping in the aisle."Tokusato says the company has discussed the study with many of its retailers and has a list of what they want Diamond to share with them. "This gives us a fresh foundational study to bring forward that's timely and we think will make us very well positioned to partner with them as we move forward."He continues, "I have to prove the viability of my business and that what I'm doing is going to be additive to the category. Sometimes this research is more powerful than anything I can say or do because it's based on 1,200 real people and a well-thought-through design, and that's something that a lot of people are waiting for."Oberto invests in custom quantitative consumer research for all of its innovation and continuous improvement projects, says Rohde. Targeted focus group research is also used to ensure that Oberto's marketing efforts resonate with its consumers in a meaningful way. "Focus groups comprised of our target demographic teach us how our consumers speak about our products and snacking in general. We then integrate our findings into our marketing messaging."The company recently learned through custom research that its target consumer responds to bold packaging and shops for beef jerky by flavor. "Oberto packaging has always had the signature bold red color, but now it has a rugged logo and more prominent flavor banner."Laura Moser, executive director of retail marketing at G2, Chicago, notes that many retailers have segmented their shoppers across the total store, but not necessarily by category, so they don't have an in-depth knowledge of what the shopper looks like as it specifically relates to the snack aisle. "When a manufacturer can bring that understanding to retailers, that's going to be their biggest advantage, because most retailers don't have the resources to do that level of work yet," Moser says. In addition, retailers are frequently requesting that manufacturers offer total category solutions, beyond just their brands.Display ImportanceG2's Moser reminds clients that specific brands within the salty snacks category aren't typically captured on shopping lists, and the trigger for replenishment can often be what is most visible in the cupboard at home. "Therefore, packaging plays a key role in triggering that memory as part of the shopping process."Furthermore, with 67% of consumers not shopping the snack aisles on their regular shopping trip and 70% of the category volume purchased outside of the aisle, "gaining incremental display and visibility are also key," Moser adds.For Dallas-based 7-Eleven, seasonal or "big occasion" displays -- both supplied by the CPG companies as well as created in-house -- have helped the retailer capitalize on consumers' desires to keep snacking. "Those will always be top merchandising opportunities, especially with the national brands," says Sandra Colvin, category manager, snacks. "They're so savvy on the trends that when they come out with a new item, we want to authorize it and take it in because they're doing as much research as anyone to know what consumers want.""We can't count on consumers having our snacks on their list, so we need to 'interrupt' the shopper," says Steve Lauring, senior director, shopper insights at Omaha, Neb.-based ConAgra, "along with making sure our products are available when consumers want a snack."Maria Brous, spokesperson for Publix Super Markets, Lakeland, Fla., says one of the retailer's requirements of its DSD (direct-store delivery) suppliers is to keep them in business 24/7. "We want the vendors to be able to prepare for our business needs and to support their promotions, to have product available, have adequate stock, and to really be cognizant of their areas in the store so that we're able to take care of our customers."Brous says the retailer receives great display support for salty snacks that continue to drive incremental sales. "Our customers continue to look for products that are on some type of promotion, and this includes increased usage of coupons."According to LeFever of Jack Link's, "The challenge for retailers is to support the changing demands of today's meat snack consumer without allowing their stores to be overrun with a large and confusing number of brands," he says. "This glut of offerings leads to inventory issues in-store, and may even place pressure on a buyer or store manager to reject new products or new merchandising opportunities that have real value. Retailers need to align themselves with the best brands and the best products that will continue to drive growth in the category."The company uses a variety of P-O-S materials, including endcap displays, counter units, front-end merchandising at checkout and temporary shippers to attract shoppers' attention and increase impulse sales.What They Really WantWhether it's convenience, taste, quality or value that tops the list for consumers, the fact remains that the bar has been raised for salty snacks manufacturers.Kraft's Johnson says his team is working to bring convenience to a new level, with one-serving packages, resealability and other packaging changes. For the company's Flavor Grove skinless almond product, Kraft capitalized on the growth of almonds as a healthy snack, but it also created "convenient pouch-like" packaging to sell them in. Meanwhile, Paramount Farms launched single-serve portions of its Wonderful Pistachios brand and 8-oz. bags of Everybody's Nuts! Salt & Pepper flavor to reach consumers seeking convenience and portion control, Engels says."The notion of snacks being this junk food, empty calories thing has really gone away, and the whole snack food category is functioning in much more important ways for consumers today," says Kara Nielsen, trendologist for the Center for Culinary Development, San Francisco, which, in conjunction with Packaged Facts, published a Snack Foods Culinary Trend Mapping report in April 2009. "Consumers expect more from their snacks, whether it's a better-for-you nutrition hit, a more interesting flavor adventure, or there's a new value."According to SymphonyIRI's report, 80% of consumers are looking for the best value when buying snacks, encompassing price as well as factors such as trust in the brand, taste and convenience. And while some say that means consumers are staying with what they know and like and not taking risks on new flavors, for example, Nielsen and others believe there is a segment of consumers who want a bigger taste adventure."There are so many flavors going on in the snack food aisle that the manufacturers have to keep upping the ante to get a bigger flavor profile or a bigger punch, especially if they're targeting Gen Y," she says. "We'll have this niche marketing happening more and more with the big guys as it already is with the small guys."One such company is 479° Popcorn, a San Francisco-based manufacturer of gourmet popcorn. With flavors such as black truffle and white cheddar cheese, and Madras coconut curry and cashews, Nielsen says these products are a prime example of "premium snacks that are calling out geographically specific ingredients in a way that you would see on a fine-dining menu and adding them to a snack place.""Consumers want high quality that's worth the calories and worthy of your palate," says Jean Arnold, founder. "And people are willing to take risks on $5 popcorn where they can try new flavors they haven't seen before." The young company is working to further its distribution with individual buyers.7-Eleven added chips to its 7-Select private-label line in 2008, tripling the number of snack SKUs the retailer carried in 2009. "Merchandising for that has been all over the store," Colvin says. "We're just delivering what the consumer wants."Colvin says bringing value and quality were the main inspirations for adding snacks to its arsenal of store-branded offerings. 7-Select chips are 10% to 20% less expensive than the brand names of the same items in its stores, and "the quality has to be every bit as good if not better."That being said, she stresses that there needs to be a balance in its stores with the national brands. "We have coached our field teams and our franchisees to coexist with the national brands," she says. "We know that store brands don't need to replace the national brands, which have too much equity. But, we want to coexist on the shelf because we want to give the customer the choice."