Skip navigation

SALTY SNACKS STAY STRONG

Supermarket retailers continue to hold the advantage in the salty snack-foods category, since they can merchandise a greater variety of sizes and flavors than their competitors in mass and club channels.According to Information Resources Inc., Chicago, total sales of salty snacks in food, drug and mass channels for the 52-week period ended March 28, 1999 were $7.4 billion, up 6% from last year. Sales

Supermarket retailers continue to hold the advantage in the salty snack-foods category, since they can merchandise a greater variety of sizes and flavors than their competitors in mass and club channels.

According to Information Resources Inc., Chicago, total sales of salty snacks in food, drug and mass channels for the 52-week period ended March 28, 1999 were $7.4 billion, up 6% from last year. Sales of salty snacks were $987 million in the mass channel and $214 million in the drug channel, while the supermarket channel accounted for $6.2 billion of sales, up 4.5%. Clearly, supermarkets, with 87% of snack sales, had the lion's share of the business.

Items in the salty-snack category include pretzels, potato chips, tortilla/tostada chips, corn snacks, cheese snacks, ready-to-eat popcorn/caramel corn, dry dip mixes and toasted corn nut snacks. Potato chips saw the biggest jump in supermarkets -- 10.3%, to $2 billion in sales -- while pretzels saw a 5.7% decrease in sales, to $507 million. Corn snacks also fared well, accounting for $381 million in sales, up 9.3%, while tortilla and tostada chips came in at $1.8 billion, up 4.7%.

The Snack Food Association, Alexandria, Va. expects the snack category to increase far into the millennium. The SFA will soon publish its 1999 snack-food report, which will not show too much change from last year's trends, according to Marc Birtel, manager of communications.

"We're in a transition time now. The industry grew a little in 1998, but we're not going to see a dramatic change," Birtel said. "We wouldn't anticipate tortilla chips taking over potato chips. Last year [the news] was WOW! potato chips and products with Olean. There is always growth in the industry."

According to Birtel, the supermarket share of the snack industry has decreased, while wholesale and club stores continue to flourish and increase their share. Still, IRI statistics show that the grocery store continues to be the chief destination for buying snacks. Retailers SN spoke with confirmed that the category was strong, and that alternative channels do not pose a major threat to their business.

"I don't think that mass merchants take away from our business. Snack food is one of their weakest areas and one of our strongest," said Gary Graham, merchandising manager for the Shawnee, Okla.-based Pratt Foods. "People would rather go to the supermarket because of convenience and variety.

"People would also rather come to us because of the selection we can offer them compared to a club store," he continued. "We can give them 10 different flavors of tortilla chips and 10 different flavors of potato chips. Customers like to try different things, and we have a lot more to offer," added Graham.

According to Graham, the salty snack foods in his stores are doing very well. Tortilla chips are the most heavily promoted items right now. According to Graham, the baked, low-fat tortilla chips are being promoted 25% more than they were last year. "That seems to be the trend in snack food," said Graham. "Everyone nowadays is looking for a healthier lifestyle by eating properly. Those baked products are going upward."

The snack-food aisle at Pratt Foods ranges in size from 48 feet to 72 feet. Endcaps display two major brands, Frito-Lay and Borden's. Snack foods are promoted in newspaper ads weekly, and Graham insists that a complementary endcap display be set up at all times. Pratt also cross merchandises snacks with soda. Currently he is running a Frito-Lay and Pepsi promotion.

Graham has also noticed that sales of WOW! fat-free potato chips made with Olean are picking up after a slow start. "I don't think it was promoted properly so it didn't get off to a good start," noted Graham.

A buyer for a big Midwestern chain who did not wish to be identified said that by increasing the size of the snack aisle, retailers have also increased sales.

"The snack aisle was increased to 152 feet [in our stores], and that really helped the category grow. There are 12 feet of popcorn and 8 feet of nuts. The other 132 feet are for chips, pretzels and other snack-food items," said the buyer. "It takes up a whole wall of our store."

According to the buyer, an endcap display with a salty snack food is always up in his stores. "The endcap usually has a chip on it, and we might merchandise it with a pretzel in the same display. Pretzels have been doing very well in our stores. We always have snacks on display 52 weeks in the year," the buyer said.

Multiple pricing seems to be working well for this chain. "We'll run sales with chips or other items and have them priced at two for $3, as opposed to one bag for $1.59. This has helped us out a lot," said the buyer. The buyer also credits better promotion prices from vendors as a key to sales increases.

Darrell Dyer, coordinator for direct store delivery at John C. Groub Co., Seymour, Ind., told SN that some new items in the snack category do well when they first come out, but then peter out. "Naturally, all items do well in the first four weeks, but then they die out," said Dyer. "If the company advertises well and continues to advertise, the product will do well."

The salty-snack aisle in Groub stores ranges from 14 to 16 feet in length and up to 40 feet in the biggest stores. According to Dyer, potato chips naturally take up the most space. Dyer also pointed out that club stores and mass merchants are very competitive with salty snacks, but agreed that supermarkets do have an advantage.

"[Club stores and mass merchants] have an impact on the supermarket retailer," said Dyer. "They sell in bulk, but they don't handle a large variety of salty snacks like supermarkets do. Overall, salty snacks are increasing slowly, but that's what we expect."

Ralph Wheeler, a category merchandiser for salty snacks at Ro-Jack's Food Stores, Mansfield, Mass., has also experienced sales increases. "The category is definitely up, and that lends itself to promotions," said Wheeler, "which are done frequently with salty snacks."

Much of the promotion done with salty snacks involves cross merchandising with soft drinks, Wheeler said.

"We do a lot with Pepsi and the Frito-Lay line. Right now there's a Star Wars promotion with Pepsi and Frito-Lay," Wheeler continued. "Plus, we tie in salty snacks with other sodas. It's easy to build an outdoor barbecue theme with salty snacks, and the profit is sufficient. That's the purpose of the tie-in."

Wheeler said retailers could get incremental sales with properly executed displays and promotions. Wheeler also told SN that he has seen mixed reactions to the fat-free WOW! snacks, which contain Olean. "Some people find it good and others won't go near it. Even if I put it on sale for a dime, they just won't go near it," said Wheeler.

Like Dyer at Groub, Wheeler agrees club stores and mass merchants do have an effect on supermarkets in the snack category. "I'm sure that they've eaten from the category," he said. "I was in a B.J.'s, and the merchandiser had the salty snacks stacked against the wall with the bottled water. It's usually loaded to the gills, but it wasn't," said Wheeler. "I'd have to definitely say that the grocery industry has taken a hit from the club stores."

But Wheeler also agreed that supermarkets still have the advantage. "I can display and advertise a little better with a wider variety of products," he said.

Other retailers also report that the salty-snack category is flourishing. Donna Fry, a category manager at Dillon Food Stores, Hutchinson, Kan., a division of Kroger Co., said that the category is "doing fine" but couldn't comment further.

Martin Lev, director of general merchandise and DSD at Key Food Stores Cooperative, Brooklyn, N.Y., feels that "based on the feedback from our vendors, snack foods seem to be doing very well."