RAISING THE BAR 2004-03-01 (1)

CAROL ANGRISANI

Retailers are enjoying a life behind bars. Food bars, that is.

There's good reason: The category, already earning $3 billion, is expected to more than double by 2007, according to Packaged Facts, the New York-based food and lifestyle tracking firm.

The popularity of food bars -- which are classified as everything from cereal and nutrition to diet and athletic -- is a direct result of their promise of variety, portability and nutrition, retailers told SN.

"The category is for people who are on the run and don't have time to eat," said Paul Weiner, natural food buyer, Fairway Market, New York, a three-store operator whose food bar sales are up about 20% over last year. "Food bars have become a meal replacement."

Demand for this type of convenience item has led to double-digit sales increases. Dollar sales of the Top 20 snack bars, which includes granola, cereal and nutrition bars, generated $1.6 billion in food stores for the 52 weeks ending Jan. 25, 2004, a 13% increase, according to Information Resources Inc., Chicago.

Sales are up 30% at Lund Food Holdings, Edina, Minn., according to Bea James, corporate natural and organic manager. Lund operates 20 stores under the Lunds and Byerly's banners.

Much of the growth in the food bar market is due to purchases by women, who are 12% to 15% more likely to eat food bars than men, according to Packaged Facts. Crunching the numbers indicates that their primary motivation is a desire to follow the tenets of good nutrition, as research shows that most American women are getting less than two-thirds of the vitamins and minerals they need.

Marketers are appealing to this deficit by focusing on the portability and wholesome ingredients in their bars, according to Packaged Facts. Some brands -- including the Luna bar from Clif Bar and the PowerBar Pria from PowerBar -- are even marketed directly to women.

Retailers SN contacted agree that the category is benefiting from sales to this demographic.

"Women come in and buy full boxes of nutrition bars," said Weiner of Fairway. "I guess they figure it's better than eating a candy bar."

Greg Stille, vice president, Nugget Markets, Woodland, Calif., concurred that it's a female-dominated category. He attributes this to the fact that food bars meet their demands for a food that will satisfy their hunger quickly and nutritiously.

"Women want something other than the same old bag of chips," Stille said.

Food bars not only offer health and convenience, but also flavor. Marketers are appealing to women's taste buds by introducing flavors like black cherry almond, caramel sundae and peanut toffee.

"There's a lot of variety in food bar flavors," Stille said.

Nugget Market's six stores stock anywhere between 64 and 130 stockkeeping units. Since there are so many new items hitting the market, Nugget rotates the assortment every six months.

"If a bar is not in the top 25%, we'll take it out and put in a new one so that our [customers] can get the latest new item," Stille said.

Nugget promotes the category through endcaps and power wings, Stille added.

The greatest category challenge is keeping up with the many new product introductions, said Weiner of Fairway, which cuts in new SKUs practically every week.

"We're constantly reinventing the section by bringing in the latest and hottest bar," said Weiner.

Because of the trendiness of the category, one brand may go up in sales for a short period of time, but then slip when a new brand enters the market, said Weiner.

The low-carb craze is a big reason why retailers need to frequently reset the category. Along with offerings from specialty low-carb food manufacturers like Atkins, mainstream food bar companies are rolling out low-carb versions of their most popular products.

PowerBar, Berkeley, Calif., has introduced PowerBar Carb Select, a line of "carbohydrate control" bars. Carb Select bars contain 2 grams of "impact" carbs, which are calculated by subtracting fiber and sugar alcohol from the total carbohydrates. And Clif Bar, also in Berkeley, Calif, has rolled out Luna Glow, a low-carb snack bar created just for women. Luna Glow has 2 to 3 grams of net carbs and 140 calories.

Talk about brand extensions.

Everlast, the makers of boxing equipment, have lent its name to a new line of bars manufactured and distributed by New York-based Vitamin Branding Corp. The 33-item assortment, which consists of energy bars, liquid meal replacements, energy gels, protein powders and everyday nutritional sports supplements, will be sold in various channels of distribution including supermarkets, natural health food and vitamin stores, convenience stores and gyms, among other venues.

"We believe the current category is largely unbranded," said Seth Ratner, the company's vice president of sales and marketing. "Therefore, introducing a brand with longevity, quality and a winning tradition would not cannibalize existing brands; rather [it should] bring new customers to the counter and create incremental business."

The explosion of low-carb products has created several merchandising challenges for retailers. Chains must decide if they'll put the low-carb offerings in a designated low-carb section, if they have one, or integrate them with other food bars in the regular in-line set. Fairway has opted not to separate low-carb food bars from their traditional counterparts, which are stocked in the same aisle as supplements. The reason for this is that space is limited in its low-carb sections. Low-carb items account for 20% of Fairway's nutrition bar set, which currently contains about 120 SKUs merchandised in about 20 linear feet.

Occasionally, though, it cross merchandises low-carb bars in the low-carb section. Due to the influx of low-carb products in other categories, there isn't sufficient space to do this on a permanent basis, said Weiner.

Fairway does, however, put signage in the low-carb section to alert its shoppers that low-carb nutrition bars are available in the supplements aisle.

Schnuck Markets, St. Louis, takes a different approach.

Rather than group all food bars together, it segregates them in three sections. Energy and natural/organic are in its "nutrition" areas; low-carb bars are in low-carb sections; and diet bars like SlimFast are kept in the health and beauty care/general merchandise section.

Schucks currently isn't trying to woo shoppers back to bars in the "nutrition" areas, confident that consumers will once again go back to buying mainstream bars, said Julie Dean, the 100-store retailer's category manager, natural and organic.

"We are trying to capitalize on the low-carb craze right now with the assumption that some of it is trial and experimentation, and that some customers will gravitate back to their old eating/purchasing habits," Dean said.

Lunds/Byerly's devotes 4 feet to what it calls "nutrition" bars. Any bar that contains all-natural ingredients is merchandised in this area.

"As long as they have no artificial ingredients, they go into the bar set," James told SN.

Since most bars are all natural, the section accommodates most of the big brands. Category leaders include Luna, Clif, Balance, Genisoy and Kashi, according to James.

BAR NONE

Consumers who are counting their carbs are turning to their favorite food bar brands for a quick, nutritious snack and, in some cases, even a meal replacement.

Indeed, like numerous other areas of the supermarket, the food bar category has been heavily affected by the low-carb craze. Along with offerings from specialty low-carb brands like Atkins and Carb Solutions, the market has grown to include plenty of low-carb selections from mainstream manufacturers.

"There's been a lot of growth in the low-carb segment," said Paul Weiner, natural food buyer, Fairway Market, New York.

Schnuck Markets, St. Louis, which merchandises low-carb bars in designated sections, has noticed a big increase in sales of such products, according to Julie Dean, category manager, natural and organic.

While sales of traditional bars previously experienced double-digit growth each year, the low-carb bars have cannibalized some numbers, according to Dean.

"Sales have transferred to [the low-carb] sections," Dean said.

Among new low-carb bars is the Luna Glow from Clif Bar, Berkeley, Calif., a snack bar marketed to women. Luna Glow contains 2 to 3 grams of net carbs, 140 calories, and 23 vitamins and minerals.

"The explosive growth of the low-carb lifestyle has consumers and retailers hungry for new alternatives that deliver on taste, nutrition and fewer calories," said Yana Kushner, Luna brand director.

Luna Glow comes in three flavors: Chocolate Peanut Crunch, Fudge Almond Brownie and Strawberry Caramel Sundae. Each carries a suggested retail price of $1.39 to $1.49.

Also new is the Carb Select line from PowerBar, also in Berkeley, Calif.

The line includes the PowerBar Pria Carb Select for women and the PowerBar ProteinPlus Carb Select for men.

"Carb Select bars are a tasty, vitamin-packed new option that help carb-conscious consumers succeed in reaching their weight management goals without feeling deprived," said Christine Dahm, marketing director, PowerBar.

Pria Carb Select contains 2 grams of impact carbs, 170 calories, 10 grams of protein, and 23 vitamins and minerals, including calcium, folic acid and antioxidants C and E. Flavors include Cookies N' Caramel, Peanut Butter Caramel Nut and Caramel Nut Brownie. The SRP is $1.89 to $1.99.

PowerBar ProteinPlus Carb Select contains 22 grams of protein and 2 grams of impact carbs. Flavors include Chocolate Peanut Butter and Double Chocolate. The SRP is $2.49 to $2.59.