battle of the bulge

While manufacturers race to remove trans-fats from snacks, c-store staples with a twist are earning some retailers robust sales.

The salty snack category, with its fat-laddened chips and processed flavors, has never conjured ideas of healthy eating. The category took a hit when the Atkins diet burst on the scene, but consumers have since returned to the full-flavor, full-fat chips, while staying aware of the nutritional contents of foods.

Now trans-fats are on the chopping block as the “panic dujour,” but are consumers buying into the hype enough for retailers to alter their game plans? Not really.

“Manufacturers started pushing low-fat, baked and trans-fatfree snacks, but salty snack sales have nothing to do with health,”said Tim Grossi, category manager for LaPlata, Md.-based DashIn Food Stores, which operates 35 Mid-Atlantic units. “I think thetraditional snack customer will buy a salty product if that’s whatthey want—trans-fats don’t effect their purchases. Manufacturersare using it as a selling point rather than making products healthier. If I want a salty snack, trans-fats won’t stop me from buying atraditional meat or salty snack.”

Manufacturers could do a better job introducing wholesome snack foods, Grossi said. “In my opinion, there are not enough healthy snack alternatives,” he said. “By reducing saturated fat and trans-fats, there are still a lot of calories associated with the traditional snack. We still have a lot of room to grow (or slim down).”

AN ALTERNATIVE TO THE ALTERNATIVES
Twelve million people drive the Massachusetts Turnpike a year, and with 11 franchised Exxon Tiger Marts peppered along the stretch of highway, Gulf Oil is perfectly placed to serve every one of them. The company stocks a wide array of salty snacks to satisfy almost any craving.

“Pretzels were a big portion of healthy snacking because they’re low-fat. Then you watched Frito-Lay introduce Baked Lays. Now it’s the elimination of trans-fats,” said Terri Murray, general manager for Gulf Oil. “We serve such a wide array of customers everyday—from vacationers looking for indulgence to business commuters that want something quick but not necessarily ‘bad for them’—that we have to offer it all. We want to make everyone happy and still grow our business.”

The company doesn’t devote a ton of attention to stocking the”healthiest” salty snacks, but with its focus on variety, it’s beenfeeding hungry customers a better-for-them treat, and the customers probably didn’t even realize it.

About a year ago, Murray received a call from LesserEvil BrandSnack Co., a gourmet snack manufacturer that produces all-natural product lines of potato snacks and popcorn. The potato snacks,called Krinkle Sticks, come in flavors like Classic Sea Salt, SourCream & Onion, Old School Bar-B-Que and Cajun KaBOOM!,while the flavored popcorn, called All Natural Kettle Korn, comesin Classic KettleCorn, Black & White, SinNamon, Peanut Butter &Choco and MaplePecan.

Even though the names stir up decadent ideas, according toLesserEvil Founder and CEO Michael Sands, the products deliverfull-flavor taste at only a portion of the fat of their traditionalcounterparts.

“We’re trying to take popular, common foods from their fullfat form and offer them healthier,” said Sands. “Popcorn has98% household penetration. Where Poppy Cock has eight gramsof fat, our popcorn has just two grams of fat. Potato chips have99% household penetration and have upwards of 11 grams of fat,while our new Krinkle Sticks have just 2.5 grams.”

Not only does the product carry a higher price point than mostgrab-and-go snacks—$3.49 for 2.5-oz. bag—but the bags come ina tapered box unlike most snack products on the market, requiring Murray to market them in shippers rather than on clip stripsor typical shelf space. But the packaging and use of shippers werepart of the allure for Gulf Oil.

“We started carrying LesserEvil because it was something different. It’s a different package than the classic hanging bag on a hook or shelf,” Murray said. “LesserEvil has been a wonderful seller in my stores. The product first came in on shippers and in two weeks we needed to reorder the shippers all over again. It’s been a continuous seller ever since. It looks like a gourmet product so people looking for a treat don’t mind paying more for an indulgence. Little do they know, it’s actually good for them.”

FEEDING THE SEED NEED
For Carmi, Ill.-based Huck’s Food and Fuel, sunflower seeds have always been a big seller. When the chain began some 30 years ago, the stores were anchored in mining towns. Because the miners couldn’t smoke underground, they crafted quite a sunflower seed habit that is still prominent with Huck’s customers today.

The chain dedicates eight feet to itssalty snacks and an additional four feetto nuts and seeds. David’s Sunflowerseeds are overwhelmingly the company’stop seed seller. Andy Capp Fries and the10 TGIFriday’s SKUs it carries are consistently strong, but baked, low-fat andtrans-fat free items barely rank.

“Healthier snacks are still outsold bya huge margin by regular snacks,” saidRandy Adams, buyer for the 111-storechain. “When you look at our total saltycategory including seeds, the highest baked item is the 44th item in thiscategory. Our stores are primarily inrural areas, but we just don’t see a lot ofdemand in our stores or supermarkets forthese products.”

The company, however, is riding highon the sunflower seed craze. It wanted tofind a product to complement the David’sSunflower Seed success it had been experiencing, but Adams was having a hard timefinding a good match with the productsbeing offered. Then he found a profitableaddition for his mix.

“Every company came out of the woodwork with an alternative sunflower seed,but it wasn’t until we found Zotes that wehad a fit,” said Adams. “Other productscame in the same packaging and the sameflavors. This was the first product thatstruck us as unique to the category.”

Like LesserEvil, Zotes Sunflower Seeds is capitalizing on new flavor profiles and packaging to separate itself from other brands. Zotes come in 5-oz. canister dispensers with flip-top lids, in flavors like Salt & Pepper, Beer Baked, Dill Pickle, Hot Wings and Tequila Lime.

“We’ve taken an ordinary product andhave made it fun and edgy,” said JasonFry, founder and CEO of Zotes. “Andsunflower seeds were a natural fit forthe packaging. Everyone jumped on theconvenience packaging trend, but noteverything is meant to be eaten out of acanister.”

Huck’s took on the Zotes productabout a year ago,which coincided withthe multi-vendor endcaps (MVE) it beganadding to its stores. The top two shelveswere intended for Pringles, but Adamsdedicated one shelf the perfect-fit Zotes.

Even though the price is comparativelyhigher—a 5.7-oz. pack of David’s packretails for .99 cents,while the same sizeZotes sells for $1.79—the company tookon four SKUs as a trial. The results havebeen really strong and the margins evenstronger—making 40% gross margin.

“Zotes is outselling staple items like some SKUs of Beer Nuts, Rold Gold Pretzels and Frito-Lay snacks,” Adams said. “The nice thing is it hasn’t hurt the David’s sales; it’s just created new customers. They’re buying both because of the different flavors, but also, the quality has to be there. Customers may pick up an item out of curiosity, but if the quality isn’t there they won’t buy it again. We’re seeing sales steadily increase.”

HEALTHY SNACKS DON’T NECESSARILY FALL IN SNACK AISLES

LAPLATA, MD.-BASED DASH IN
Food Stores doesn’t put a lot of stock in its salty snack category to offer customers healthy options.

Rather than focusing on salty snacks touting low-fat or no trans-fats, Dash In Food Stores is working to expand its fresh food offer to include real healthy snacks like fruits, vegetables and yogurts. The company carries roughly 20 healthy products at this time, which are mainly fruit and vegetable offerings, and it views mixed salads as snacks, too.

The chain is reworking its 35 stores to include open-air cases that will incorporate fresh snacks as part of its foodservice offer.

It’s invested in aisle open-air cases, and will keep the new, fresh offer separate from its salty snack counterparts.

“We specifically put fresh snacks into fresh food and kept salty snacks in the traditional snack category,” said Tim Grossi, category manager for the chain. “This is the same snacking incident with two entirely different customers. The fresh food snack customer is still growing and has a long way to go to equal the traditional salty snack customer.

“You have two extremes of customers: Bubba, with his beef jerky and soda, and the female shopper looking to grab-and-go non-traditional items,” Grossi said. “If you put more healthy items in front of customers, their buying habits will change and so will their perception of cstores. Behavior won’t change without presenting something different. One package of carrot sticks won’t sell the concept.”

Dash In is making a concerted effort to change the face of convenience. Aside from offering healthier options, it wants to differentiate itself from the fast feeders and QSRs that it’s been trying to emulate with its foodservice program. Going forward, Grossi admits that his stores will be more inline with grocery stores than they will with QSRs. He acknowledges it will take time to change the perception, but with 10% of its snack space going to fresh items, it’s something Dash In is fully committed to.

“You can’t use a dollar sale to gauge the growth of healthy snacks. Salty snacks always win out as huge sellers, but five years ago you wouldn’t think of selling fruit in a c-store. Now, I can’t stock it fast enough,” said Grossi. “Growth sometimes will not be profitable, but if it’s large enough, you can eventually sharpen your pencil. You need to get it in front of people to change their perception of what you are.”

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