The biggest names in the cracker business are thinning out, and the results are looking good to retailers.
Supermarket buyers and merchandisers say the new crop of crackers -- which typically have had a third to a half of their fat content removed -- are tastier than previous mainstream attempts. And they carry well known brand names to boot.
They are attracting enough immediate consumer interest -- and getting enough vendor support -- for chains to slip them comfortably into the cookie and cracker aisle, said merchandisers. Some told SN that they've quickly cut the reduced-fat offerings into as much as 20% of existing cracker space in their stores.
"[Low fat] is going to be 40% in another year, twice what we
have now," said Mark Polsky, senior vice president at Magruder Markets in Rockville, Md., one of the retailers most enthusiastic when asked about the subsegment.
The new health-oriented cracker roster bears such names as Ritz, Wheat Thins, Triscuit Whole Wheat Wafers and Better Cheddar from cracker leader Nabisco; Toasted Complements, Wheatables and Classic Town House from Keebler; and Cheez-It, Hi Ho, Golden Fruit Biscuits and Krispy saltines from Sunshine.
Interviewed as the big holiday selling season approached, retailers said the new crop holds out far greater promise for mainstream acceptance than the sodium-free, low-cholesterol or dietetic sugar-free crackers usually linked to healthy snacking. For one thing, the names are so established that promotional pushes haven't had to build brand identity.
Introductory couponing, cross-merchandising with other low-fat products and heavy taste sampling have boosted awareness, said retailers.
"We'll see increases as people get into the party-time season," said David Dunn, direct store delivery merchandiser at Homeland Stores, Oklahoma City. However, "what really makes them fly is just the words, 'reduced fat,' on the package."
Fueled by new items, the reduced-fat cracker segment grew by one-third last year, according to research from Keebler Co. "In fact, without the growth of the fat-reduced cracker segment, total crackers would have declined by 1.7%," the vendor's study of the market claimed.
Keebler projects a doubling of market share by next year to 15% for low-fat crackers, which would be equivalent roughly to $350 million at retail.
Supermarkets very much dominate distribution for the cracker category, with 67.4% of pound volume, according to the Snack Food Association. But they are not alone. The association also noted that warehouse clubs and mass merchandisers last year grabbed 8.0% and 4.4% of pound volume, respectively.
As a whole, the cracker category is relatively mature. Scanning data collected by Nielsen North America, Northbrook, Ill., showed that dollar sales of crackers have advanced somewhat less than 1% a year in the 1990s, while unit sales averaged 1.4% in annual declines.
"We look at the whole category, cookies and crackers together, and both our sales there have been flat over the past several years," said Bob Costello, director of grocery operations for D'Agostino Supermarkets, Larchmont, N.Y.
But reduced-fat entries are brightening up the section. Since their introductions, retailers report they are experiencing widespread switching from traditional versions to lower-fat alternatives. Perhaps more significantly for the mature category, they said they are also seeing fresh faces shopping in the snack aisle.
"A certain percentage of our increases is coming from customers who are new to the market," said Jeff Savage, category manager at Randalls Food Markets, Houston.
"Low-fat is appealing to a lot more people," agreed Carl Gennaro, direct store delivery buyer for Riser Foods, Bedford Heights, Ohio. "Low-fat has expanded the whole category."
"I look for low-fat stuff no matter what it is, because I have cholesterol problems," explained a buyer for a Northeastern supermarket chain. "Before SnackWells, if you had a problem like mine you just didn't eat cookies or crackers."
The Nabisco SnackWell lines are generally credited with paving the way for the current explosion of the low-fat cookies and crackers. Introduced only in 1992, SnackWell was expected by Nabisco to rack up sales of close to $400 million this year. Close to a fifth of that is in crackers.
Given reduced fat's growing popularity, retailers predicted that vendors will stampede the subsegment with new entries, including private-label lines. In addition, they said they expected specialty suppliers to try harder for a piece of the action.
"There's going to be more brands of crackers with low fat. Right now, basically, only the Big Three have come out with them and will probably continue to extend their other lines. The smaller companies will have to follow suit, if they want to stay competitive," said Bob Kopplin, buyer for Dan's Supreme Supermarkets, a Hempstead, N.Y.-based Key Food franchise.
"We've incorporated line extensions of fat-free crackers from our specialty foods wholesaler in Chicago into our sections to enhance the varieties we offer," said Mort McKillop, frozens/grocery/dairy merchandiser at G&R Felpausch Co., Hastings, Mich., a member of Spartan Stores in Grand Rapids, Mich. Felpausch was one of several retailers contacted that is expanding more aggressively into health food lines.
Big V Supermarkets, Florida, N.Y., a Wakefern-supplied ShopRite member, has so far taken on 50 stockkeeping units in this category, which "is a constantly growing number," said Jim Casey, manager of corporate communications.
To make room, Big V is carving out a separate nonfat 12-foot section from existing space in the set. "It's dedicated to nontraditional snack vendors and does not include Nabisco, Keebler, Stella d'Oro and so on," Casey said.
On the other hand, Minyard Food Stores in the Dallas market pretty much leaves it up to the largest vendors to manage their own category.
"We tell Nabisco they've got 40% of that cookie and cracker space and can decide whatever they want to do with it. Similarly, we give Keebler 12%," said Bob Caperton, direct store delivery buyer for Minyard.
Either way, the reduced-fat crackers are much more a fixture than they were about a year ago. Retailers emphasized, however, that they would stick with their present overall space allocation for crackers.
Said Polsky at Magruder: "We're doing resets as the new items come out, not enlarging the section, but reducing facings and knocking out older traditional snack lines."
For his part, Randalls' Jeff Savage plans to stay with a single facing in a well for each of the new reduced-fat SKUs, even after he reviews the cracker assortment.
"None of those SKUs requires more holding power. With the volume they're doing, and our ability to replenish them, the space is adequate," he said.
Retailers pointed to Graham crackers, long known for their very low-fat content, as another part of this segment expansion. In fact, Grahams are put in a classification of their own by some retailers. "They're more of a cookie than a cracker," observed Peter Dudis, director of grocery operations for Big Y Foods, Springfield, Mass.
Adults may be buying Grahams for the kids, to give them a snack that is healthier than a cookie. A number of kid-pleasing flavors that have been introduced have helped drive the category recently. Also, many a box of Grahams is crunched up into crumbs to make pie shells, retailers said.
A recent Snack Food Association report stated that Grahams, representing nearly one-quarter of snack cracker pound volume, "sparked much of the growth" in poundage for the category in 1993.
The majority of retailers contacted believe the low-fat cracker business has excellent potential as a category mainstay, and not just a fad.