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Convenience is the number-one barrier to healthy eating for American shoppers, followed by cost and confusion, according to the Food Marketing Institute (Shopping for Health 2003: Whole Health for the Whole Family). What this means for c-store operators is that adding healthier, on-the-go food options might be a profitable way to capture more health-oriented consumers. When foodservice cost limitations are a factor, energy bars are a quick, convenient meal replacement addition that can add dollars to a retailer's bottom line.
Energy first emerged as a cohesive mainstream market in 1997 after many years of running independently in niche markets. "Energy bars existed in the 1970s, but they didn't really get sizable until the mid-1990s," said David Lockwood, senior market analyst at Chicago-based research firm Mintel International Group Ltd. "They started to move away from the strict athlete positioning to a broader market. And then by 1999 or 2000, the energy bar segment just exploded."
The energy supplements category (which includes energy bars, energy drinks and liquid/powdered protein drinks) is forecasted to reach $8 billion by 2008. From 1998 to 2003, the energy market grew from $2 billion to $5 billion, and Mintel predicts the same dollar growth for the next five years, despite a slowdown in growth rate. "That's actually a pretty aggressive forecast, because once something gets to be the size of this market it tends to slow down a lot," Lockwood said. "It looks to us, however, like the category is still expanding so rapidly that the dollar growth will continue just as fast as it was."
According to Mintel consumer research, energy products appeal to a growing number of consumers, with consumption reaching 36 percent in January 2004, compared to 28 percent in December 2001. This is a major factor contributing to the category's seismic growth on the store aisle. "Energy bars have been around for a long, long time but it was sort of a niche business. There were always energy bars out there but they were targeted toward more of the health food crowd, not so much as 'good for you' products," said Paul Crnkovich, partner, Cannondale Associates Inc., Wilton, Conn.
"Energy came in compact, portable packs and fit a broader need as time went on."
According to Mintel, energy bars do not experience a huge difference in age group usage. It's a little higher among younger adults, but even up through the Baby Boomers group has a pretty healthy rate of consumption, though it generally drops off after age 65, Lockwood said. "Energy bars, I think, have the biggest future, simply because they have the widest acceptance across age groups," he said. "There's also no heavy difference of consumption of energy bars by gender."
Big Players Equal Big Dollars
With the mounting concern around health, wellness and obesity, many snack food makers have come to the realization that having a healthy snack alternative for your brands is a must. New products have been key to the energy bar category's explosive mainstay, with big food manufacturers coming into the category with an offering of better-for-you foods. Acquisitions, with big players buying up the smaller energy brands, have brought companies like Nestle (PowerBar) and Kraft (Balance) into the mix and made a huge impact on distribution networks to get them into more mainstream outlets.
"Atkins is making big inroads into the bar category with its Endulge and Advantage bars, but certainly the bigger manufacturers — Pepsi Co., Nestle, Unilever, Kraft, Kellogg, General Mills — they're all in the bar category now and they're all big players there," said Ginny Valkenburgh, vice president of research for Cannondale Associates.
In January of this year, Mars Inc., a McLean, Va.-based division of Masterfoods USA, launched the Snickers Marathon bar, a new long-lasting energy bar set to give the energy bar category a run for their money. "The Marathon bar was a logical extension of the brand that was based on five or seven years of research and development asking the question, 'Where do we go next?'" said Jeffrey Moran, spokesman for Masterfoods USA. "We've seen continued focus on everyday energy, and Snickers has always had an underlying focus on endurance and sustainability. These energy bar companies are beginning to act like candy companies with all these crazy flavor varieties and options. The taste of Snickers has always been our point of differentiation, and we can bring our history and background of how to make things taste good into the energy bar category."
The company has also launched low-carb and protein-plus varieties as brand extensions of the new Marathon bar. "You'll hear a lot of people's criticism that this is just a better-for-you Snickers. It's not. Snickers is an indulgent candy bar and will remain an indulgent product. We took our expertise there and extended it to the tried-and-true energy bar category for a healthy snack alternative," Moran said, adding that the new product targets active people ages 18 to 45, a distinct divergence from the 18-to-25, heavily male classic Snickers bar customer.
To spread that message to its consumers, the Snickers Marathon media plan's goal is to be the number-one advertised brand in the energy bar category during the product's launch, with 1.2 billion media impressions through aggressive television, Internet and print advertising.
Berkeley, Calif.-based Clif Bar Inc., one of the original founders of the energy bar category, continuously develops new varieties of its classic CLIF BAR brand to give customers more healthy choices. Their newest debut, CLIF Builder's, is a soft and crunchy protein bar made from wholesome soy and nuts. "Protein bars were once mostly the domain of bodybuilders, but CLIF Builder's recognizes that workouts don't only take place in the gym," said Steve Grossman, senior director of brands for Clif Bar Inc. "Work and play can be just as physical, and your body needs a protein boost for healthy muscles and muscle recovery."
PowerBar, another Berkeley-based energy bar brand now owned by Nestle, has reacted to the current low-carb craze by expanding its energy brand to reach the carb-counting consumer. "Weight management bars (calorie and carbohydrate management) have grown over 85 percent in c-stores over the past year," said Chris Cole, PowerBar customer development manager. The company introduced its new Carb Select line this year, which is a low-carb alternative energy bar that divides into sub-segments for men (ProteinPlus Carb Select) and women (Pria Carb Select).
The influx of low-carb bars has certainly had an impact on the energy bar category. Atkins, Carb Solutions, CarboRite, Z-Carb and Carb Options are all bar brands that have made their way onto the energy bar shelf. "Low-carb, certainly by our definition, is expanding the category," Lockwood said. "Whether they're adding to sales or partly cannibalizing sales, I would say it's adding to the category simply because it's expanding it either way. It's just one more incremental gain."
On the C-Store Floor
The portability and meal replacement nature of energy bars obviously makes them conducive to c-stores in terms of being a convenient solution for on-the-go snacking. "Energy bars should definitely grow faster in the c-stores, because the younger demographic that shops there is more likely to be drawn to the energy benefit," Lockwood said. "Not exclusively, but I just think that's where it will grow a little faster."
A West Coast retailer with more than 100 stores said, "I think the category is here to stay. When these products first came out they tasted like hay, and they're desperately trying to taste a little better and get more people involved. And I definitely think the tremendous media and the press going after the obesity issue is pushing it too. The guilt factor is taking over."
The problem, the retailer continued, is that the category on the store shelf needs to be an easy read for the customer. "They need to understand whether it's high-protein, low-carb, energy, nutrition — there needs to be some identification because you only have a few minutes of their time. A minute and a half if we're lucky. The category is so dynamic and it keeps changing so rapidly that nobody can stay on top of it. Forget about the customer — it's hard enough for the industry looking at the product trying to keep up with it."
Fort Walton Beach, Fla.-based exprezit!, a 136-store convenience operator, added an "Eat Smart" section with point-of-sale materials and a gondola topper in a 4-foot set in mid-2003. "We've really tinkered with it over the last year," said Bill Mullen, exprezit! vice president of operations and marketing. "It's really targeting more of the white-collar consumer — good ole Bubba doesn't really care about a carb-control bar."
With new health bar products constantly coming across his desk, Mullen emphasized, "You have to keep changing that section up. About every 60 days I pull full movement, look at what's slow and try to pop in one or two new items just to keep it fresh.
"If I would have put all the product in and just left it and walked away from it, I'm sure my sales would have been 30 to 40 percent less than what they are today."
This infusion of new brand extensions has only added to the crowded and cluttered smorgasbord of products all smattered together in one bar shelving unit. "Energy bar" has become a generic term for a hodgepodge of nutritional-based products, and many retailers have begun lumping the PowerBars, SlimFast bars, Atkins, Snickers and Myoplex bars in one unidentifiable conglomerate dubbed "energy."
"There are several types of people that are eating bars. There are dieters, there are women, there are weekend athletes and big sports enthusiasts. Bars are being made for all kinds of different occasions and need states, and yet at the shelf these are all being lumped together," Valkenburgh said.
Mullen said he has tried to combat this through merchandising support from brand manufacturers. EAS, one of exprezit!'s leading brands in energy bar sales, has helped push the brand along. "They've supported us with funding on promotional signage, and they've supported us on buying down the product so we can put good retails on it," Mullen said. "It's great they've gotten involved with us where I'm not out there on an island trying to promote this stuff and do it all myself." Mullen added that they removed a previous energy supplier because the company wasn't supporting the product or helping to try to drive the sales.
Part of the growth of the ready-to-eat energy bar category has been "this big and growing demand for convenience that's driving so much of what we're seeing in our lifestyles today, from drive-throughs to quick-prepared meals," Crnkovich said. With that mindset driving consumers, the c-store category is set to expand on the energy bar craze, offering a quick, balanced meal replacement to on-the-go shoppers. "All of a sudden you've got these $1.89-$2.00 energy bar purchases, and that's a nice ticket ring for c-stores. They're quite happy to replace some of that cigarette volume and other stuff with these higher margin products for a nice growth trend."
"Energy bars should definitely grow faster in the c-stores, because the younger demographic that shops there is more likely to be drawn to the energy benefit."
David Lockwood, Mintel
"It's really targeting more of the white-collar consumer—good ole Bubba doesn't really care about a carb-control bar."
Bill Mullen, exprezit!
"Bars are being made for all kinds of different occasions and need states, and yet at the shelf these are all being lumped together."
Ginny Valkenburgh, Cannondale Associates Inc.