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By Renee M Covino
The typical c-store "Bubba" consumer may live on chips and cookies, but chances are his wife, kids and even his ethnic neighbor across the street might be more inclined to buy alternative snacks such as cereal bars, granola bars, meat snacks and trail mix.
While these items are clearly not the bread and butter of a c-store's snack assortment, some chains are looking at these options as a way to expand beyond their core customer base. Grocery stores, club stores, fast food restaurants and even vending machines have recently taken this path, and c-stores are now beginning to open up to a more well-rounded assortment as well.
However, the sales numbers don't back up this trend in the channel quite yet, since as a whole, the alternative snacks category was up only 2.6 percent in c-store dollar sales, and down 2.8 percent in c-store unit sales for the 52 weeks ended Dec. 27, 2008, according to The Nielsen Co.'s Scantrack Convenience data. And individually, subcategories such as meat snacks, granola yogurt bars, health/energy bars and other alternative snacks were all flat or down in unit sales (-4.3 percent; 1.0 percent; -3.2 percent; and -6.0 percent, respectively) for the same time period.
Only meat snacks and granola yogurt bars were up in dollar sales (2.8 percent and 5.6 percent, respectively), but many speculate given the drop in unit sales, the rise in dollar sales is due to rising price points.
Nevertheless, alternative snacks still have a rising appeal to some c-store retailers.
"This is absolutely a big deal here -- what we call the breakfast cookie set, which is eight to 12 feet, depending on the store," said Jerry Goff, director of operations and general buyer for Minit Mart, based in Bowling Green, Ky., with 33 stores. While this fairly new set was expanded from four feet last spring to incorporate what Goff called "healthier" items, such as chewy granola bars, diet bars and power bars, he said it also features more individual sweet items such as pastry tarts and cookies.
"We are trying to bring in more of the 30-something females who would typically buy the bars and such, but we know our core customers and kids still want their cookies too," Goff said, adding his "personal feeling is people's overall palates are changing" to be "less sweet-toothed," as he referred to it. "This isn't really scientific, but I've been somewhat influenced to buy some of these items from my own three kids who eat things I would have never touched as a kid, like the Kashi bars we carry."
Goff admitted there is more evidence of alternative snack trends set in grocery stores lately, but "it's starting to trickle down to convenience store customers," he said.
A 25-store chain in the East could attest to that. According to the snack buyer who wished to remain anonymous, almost all of his stores now have a dedicated three-foot "healthy alternative" section, typically featured as an end-cap in the coffee section, which holds roughly 40 different SKUs.
"There's the protein bars, the yogurt bars, the snack bars, the healthy packs -- we've actually had this for two to three years," he said. "The products come and go -- we change them out about once a year -- but it's a growth area for us, with different consumers gravitating towards it than we used to see before we put it in. We definitely see that it's here to stay -- it's not a passing fad at all."
He said the price points are mostly in the $2.30 to $2.60 range, with some going as high as $4.99 to $5.99. But the category's attraction for this retailer is purely in satisfying a growing consumer demand, and not in the margins, which he said "are right around our average snack target of 30 percent." The margins aren't the draw here -- "because the costs are just as bad as the retails," he maintained.
Li'L Cricket Food Stores Inc., with 88 stores in Spartanburg, S.C., isn't quite as bullish on alternative snacks just yet, but John Zuber, vice president of marketing and general buyer, admited he is "looking at it," especially with all the hype surrounding the category in other channels and from vendors pushing it more aggressively.
"We have been thinking about [expanding] it with a coffee bar concept," Zuber said.
Mountain Empire Oil Co., with 51 stores in Johnson City, Tenn., is carefully mixing in some alternative snack bar items in its regular snack set, according to John Kelly, vice president of operations and the chain's general buyer. While he said he will "never say never" to a dedicated "healthier snack" section, the chain is "not going to expose ourselves too much to it at this point."
However, what he his considering is replacing some of the holes created by the peanut product recalls with some single-snack bars.
"We skew higher to females than most in the channel," Kelly said, recognizing this could be a good opportunity for more sales in the alternative snacks category.
Besides the female snack bar attraction, Mintel International Group Ltd., a leading market research company in Chicago, also identified Asians and Hispanics as ranking high in cereal bar consumption.
By 2012, Mintel forecasts the U.S. snack bar market to reach $2.4 billion, representing a compounded annual growth rate (CAGR) of 4.4 percent since 2008.
Beyond the attention to snack bars, meat snacks could see some future convenience store channel growth in smaller packages.
"Meat snacks seemed to be going downward in sales for the second-half of last year, so we're going to smaller bags to get the retails below the $4.99 and $5.99 price points," Goff explained. "They have always been 4-ounce bags in convenience stores, but now with the economy that's a big-ticket item for a snack. The manufacturers have recognized this and responded to our requests -- both ConAgra and [Jack] Link's are going with 3-ounce bags to cut the price by about a buck to a buck-and-a-half, to get it hopefully more in line with what our customers want to pay. We won't change the size of the section, just the size of the bags."