Strong Outlook for Meat Snacks

Meat snacks—beef jerky, meat sticks, pork rinds and more—are right at home at U.S. convenience stores. And, despite the rough economy and some sales slippage, new products and popular brands continue to excite customers.

Paul Lyons, president and owner of Up North Jerky in Troy, Mich., and a partner, with Sam Kassem and Mike Abdullah, in the Dundee Jerky Outlet & Marathon gas station in Dundee, Mich., sees meat snacks as a growth category in which he is “very entrenched.” He explained the category’s popularity by noting that smoked meats in general have some characteristics about them that consumers love.

“They are kind of saturated in flavor. There is a salt component, obviously, and there is just a certain group of people, a percentage of people you might say, who just have an affinity for that,” Lyons said.

A meat snacks report by Mintel, the market research firm in Chicago, confirmed Lyons’ analysis. “American consumers have a decided preference for spicy, barbecue, teriyaki and smoke flavor profiles,” the report concluded, adding that the outlook for the category is strong.

Placement Matters
Driving category sales is aided heavily by product placement in the store, said Mark Stepp, retail general manager for Beach Oil Co. in Clarksville, Tenn., which operates 15 BP Shop and ExxonMobil On the Run stores. “The category has been holding its own, but customers of these products tend to be very loyal. That helps boost the category’s overall value.”

Beach Oil advertises the category and runs occasional brand specials. Each store merchandises the three brands they carry: Slim Jim, Jack Link’s and Frito-Lay—on one of its main end caps, Stepp said. His strategy with the category is relatively simple: “Just keep it looking good, maintain stock levels, and it will sell,” he said. Accordingly, no changes are planned. “I think we’re in pretty good shape like it is. We’ll evaluate new products as they become available, but it’s a solid category as is,” he added.

For the Dundee Jerky Outlet & Marathon gas station, on the other hand, the category has achieved cult status. “We have taken meat snacks to a whole other level,” Lyons said. “If you had gone into that store a year ago, you would have walked into a lightly inventoried, everyday, ordinary c-store-gas station—although fairly recently built and a very nice environment.”

Lyon had sold some product into that store through his distribution business, “and it was doing pretty well despite not being marketed and brought to the customers’ attention enough,” he recalled. “I could see the potential for what should be done there, and, over time, I met with (Kassem and Abdullah), who owned it. At the end of the day we decided to partner up on it, so I am now a full partner in everything down there.”

The unit, formerly owned by Prestige Oil with a Marathon fuel offering and 3,000-square-foot store, was transformed into the Dundee Jerky Outlet, part of a 25-unit regional and loosely-knit collection of independently-owned retail locations that Lyons supplies. It stocks between 350-500 meat snack SKUs, representing 20-25 different manufacturers.

The offering at each of the stores “doesn’t just highlight meat snacks, we took everything else, all the regular c-store products, out,” Lyons explained. The store still carries potato chips, beverages and such, but that is minimal. “We took it and kind of blew it up, started over from scratch. We pulled everything out of one side and put in new fixtures and all new products—jerky, sausages, cheeses and that sort of thing.”

The change proved “dramatically successful,” Lyons said. “We pulled all the garbage out of there and started with a fresh offering to attract a loyal base of customers.”

In addition to meat snacks, the store stocks what he and his partners call premium snacks—specialty popcorn, candy and other items they consider “unique and different that you just can’t find anywhere else. Now the whole story is a shopping experience to go into. It’s not a true c-store anymore,” Lyons said.

So dramatic has been the change at the location, that sales comparisons are difficult. When the first half of the store was changed, sales of meat snacks went from $300-$500 a week to as much as $7,000 a month. Once the second half of the store was reconfigured and restocked, “the jerky part itself, not counting all the premium snacks and products, like cigarettes and beverages, that sold is going to do between $40,000 and $70,000 a month,” Lyons said.

The Dundee store has put in place what Lyons describes as “a proprietary kind of system that we put together. It’s not rocket science; it’s based on grid-work-type units. It uses wire racking in a square grid pattern and you uses hooks to hang product on.” There are also lots of wooden barrels for fresh product. The outlet also does extensive sampling of both fresh and packaged product.

“The most important thing we have learned is to treat the meat snacks section like a display area and hand out as many samples as we can,” Lyons said. “That’s what sells meat products, sampling. Open up packaged products, too, if you want to sell them. That’s how you do it.” CSD

Brands Boost Meat Snack Sales

According to NACS’ 2009 State of the Industry report, the meat snacks category thrives in convenience stores. The industry recorded sales of $836 million in the industry last year. It was the leading subcategory in alternative snacks last year, accounting for 65% of sales in the category.

The Snack Food Association’s (SFA) 2009 State of the Industry report found that the Jack Links brand outpaced all others with total retail sales of $65.9 million, a gain of 6.7% over the previous year. Sales of Frito Lay’s Oh Boy! Oberto were $49.1 million, and Slim Jim sales totaled $44.2 million. Private label meat snack sales dipped 1.8% to $29.2 million.

Pork rinds continued to grow steadily last year, SFA reported, with increases in both sales (4.6%) and volume (3.4%). Frito Lay leads the segment with its Baken Ets line, which totaled $20.6 million in sales. Private label finished second with sales up 3.1%, to $12.6 million. Other leading brands include Golden Flake, Guerrero, Macs, Mission and Hogs Heaven.

The category will experience a bit of shakeup this month following an agreement by Frito-Lay North America and the Oberto Sausage Co. to sever their partnership of 10 years for the distribution and sales of the Oh Boy! Oberto brand in the U.S. and Canada. The deal expires on August 15, at which time Oberto will begin operating a direct-store distribution (DSD) model.

Oberto hopes the new distribution model will allow it to expand to new convenience stores. The company claimed it only had about 40% market penetration, while other leading brands like ConAgra’s Slim Jims and Jack Link’s are available to 90% of the market.

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