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Energy and nutrition bars are perhaps the most ambiguous category on the c-store shelf. The category is diverse and segmented, encompassing everything from diet and low-carb bars to protein-packed athletic bars — and pretty much every soy- and granola-based item in between.
Some retailers include these items in their snack set, others in special "healthy eating" sections and still more in special endcap and countertop candy displays. There are good learnings from each placement, and retailers have had success in many different forms.
Karl Krivanec, category manager for North Salt Lake, Utah-based Maverik Country Stores Inc., said he's seen an impressive 30 percent growth in the energy and nutrition bars category at the company's 175 c-store locations in the last few years. At Maverik stores, energy and nutrition bars are merchandised with snacks, near the breakfast bars and cookies, Krivanec said. Promotional racks are sometimes used for individual brands, but products are mostly kept together for the consumer. "We look at profit as a success indicator," he said, adding that the company's top energy bar sellers vary regularly. "We have a model that if the product fits all the criteria, then we consider it for our shelves."
On the other hand, the category's steep price tag and niche-targeted customer group have kept sales extremely varied from market to market. While retailers in some markets report tremendous growth year after year in this category, others say their customers just aren't interested in the idea of healthy convenience snacking.
"I wish I could get excited about energy bars, but I'm not," said Adam Coleman, vice president and COO of Ahoskie, N.C.-based Beasley Enterprises, which operates 42 Red Apple Markets in northern North Carolina and southern Virginia. "In our market they are slow-moving and a little overpriced."
Total retail bar sales more than doubled from 1999 to 2003, but leveled off in 2004, according to a new report from Chicago-based Mintel International Group Ltd. The consumer market for nutrition and energy bars in the United States grew 169 percent between 1999 and 2004, reaching $838 million in sales (excluding sales through Wal-Mart). But the hot product of the last few years has cooled off of late, largely due to America's love-hate relationship with dieting and the recent drop-off in the low-carb subsegment.
"If you talk to a whole bunch of different retailers, you'll get totally different responses to how the category is doing," said David Lockwood, head of U.S. reports for Mintel. "The market had an explosive growth phase from 1997 to 2003 — that whole period was astounding. The category slowed down from growing 20 percent-plus every year to just over 2 percent in 2004, but we feel like it will bounce back again to the 5 to 9 percent range. In general, it's still going to be an expanding market."
While supermarkets continue to lose market share to the Wal-Marts and other mass merchants of the retail world, c-store market share is shifting above trend for the category, according to Mintel. "For 2003 and 2004, we had convenience stores going from 9.5 percent market share to 12.3 percent," Lockwood said. "We were pretty aggressive, but it's definitely outpacing the market because it is such a perfect convenience store item."
How to Sell Nutrition
Michael Zielinski, president and CEO of Hinsdale, Ill.-based Royal Buying Group Inc., which selects, negotiates, implements and tracks vendor programs on behalf of some 5,000 convenience stores, attributes the growth he has seen in the nutrition and energy bars category over the last few years to flexible merchandising tactics.
"In smaller locations, it is treated as a subcategory of snacks, while some of our larger retailers have chosen to provide a 'Healthier for You' section that would include a number of healthy options" including energy and nutrition bars, Zielinski said. "We are flexible to our members' opinions on the placement. Different market — different strategy."
Some of the new crossover energy bars like Snickers Marathon bar and Hershey's SmartZone can provide a challenge when it comes to merchandising — are these products better off with their brethren candy items or in the nutrition and energy section? Royal Buying merchandises these items with the other nutrition bars, and has seen success with that. Zielinski even ranked Snickers Marathon as one of its top sellers in the category, in addition to PowerBar and U.S. Nutrition products.
Energy and health bars are more of a destination than an impulse item, so keeping that loyal customer base coming for more is tricky. While health-conscious consumers will seek out nutrition bar products, Zielinski emphasizes that they continually have to educate these consumers that they are providing new options.
"We continually seek out new products, gather manufacturer information and listen to what consumers are asking for as we refine this category," Zielinski said. He added that obscure products from smaller suppliers have a harder time finding their way onto the store shelf because of the strict space constraints in this category.
The influx of new products in the health bar category can sometimes be burdensome for the c-store category manager, given the amount of space available. "I do think retailers would prefer to have more flavors and varieties if they could, but I think just like everything else they have to be on the ball with which ones are selling and which ones aren't and change them more quickly," Zielinski said.
Promotions appear to be an effective way to get consumers interested in the category. While Zielinski hasn't had success with year-round promotions for the nutrition and energy bar set, he did say that January promotions are very effective for this type of product line. When New Year's resolutions roll around, it's not uncommon to find a buy-one-get-one deal in this section.
"We do promote secondary placements, shippers and counter displays to increase awareness of these products," Zielinski said. "Every store should be able to recognize those consumers they are serving by asking questions or taking requests." n