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    Regional brands help c-stores meet provincial tastes, while salting away tasty profits.

    By D. Gail Fleenor

    Customers suffering from a severe snack attack may hit their favorite c-store at any hour, looking for that familiar hometown snack to satisfy salty cravings. Most convenience stores are armed for these sneak attacks with regional favorites. Indeed, according to the Convenience Store News 2008 Industry Report, sales for regional brands are outpacing those for the nationally branded product. In 2007, sales for the Top 10 salty snack SKUs, all national brands declined approximately 15 percent. Regional brands took up the slack though, as sales for the entire category were up 6.4 percent last year.

    Many serious munchers consider central Pennsylvania to be the snack food capital of the world. "We carry two regional lines of chips along with Frito-Lay," Robert Perkins, director of marketing for York, Pa.-based Rutter's Farm Stores, said. "With Martin's potato chips, we focus on their 'Kettle Cook'd' line and with Utz, it's 'Grandma Utz's Handcooked Potato Chips.' These two companies focus more on potato chips."

    Rutter's limits its potato chip suppliers to three. "With more suppliers, I'm not sure we would be capturing more market share," Perkins said. Although the stores have the room to carry as many as five regional snack suppliers, "I'm not sure we would be creating more sales," Perkins explained.

    Rutter's uses an "almost equal" split between its three potato chip suppliers in take-home bags. "From a position standpoint, Martin's is number one, followed by Utz and Frito-Lay," Perkins said. "In our small, 99-cent line, Frito-Lay is the dominant player, and we give them the No. 1 position in grab-bag sized items."

    Pretzels are also very popular in Pennsylvania, according to Perkins. "We have a local pretzel supplier," he said. "The product doesn't hit all our locations, but plays a large part in our strategy." Because Rutter's geographic region makes up just one state, regional brands can become well known, he said. "If they see a brand in the grocery channel, they expect to see it in our stores."

    And regional brands generate higher profit for Rutter's. "Utz and Martin's are very good partners and promotional pricing with them is sometimes better than national deals," Perkins noted. "In this category, we look at what's working and what's not working from a promotional standpoint to make decisions."

    Rutter's tested different sizes of take-home packs to increase profit. "We found that if we went from a 5-ounce package to a 7-ounce size, the retail price goes up, but profit also increases."

    Perkins feels its important to have each supplier focus on what it is good at. "In tortilla chips -- Frito's has Doritos. We are trying to get more space for Doritos, but we still sell quite a few Lay's potato chips. Each company has a niche," he said.

    Also, Rutter's focus on foodservice means salty snacks are often featured in combo deals, which helps increase the sales of both categories, according to Perkins.

    Marketing Strategy
    Heading south to Virginia, Dan Desposito, marketing director of Quarles Food Stores in Fredericksburg, Va., said it's good to have a competitor for national power like Frito-Lay. "If you give them all your space, the service level goes down because they don't have incentive to compete," he claimed. Quarles Food Stores has 21 locations in Virginia. "We carry Utz in most of our stores and Cape Cod in a small group of locations." The chain carries a 50/50 split of Frito-Lay and either Utz or Cape Cod. According to Desposito, the service level would suffer in his stores if he tried to carry all three brands including Frito-Lay in all Quarles stores.

    The company also carries different snack brands in its warehouse line. "The warehouse salty snacks help with our sales," he said. "We carry TGI Friday's chips and Poore Brothers chips. Both do well, and we merchandise them in our salty snacks section where we also carry nuts and other salty snacks like Combos, Pringles and trail mix."

    He explained the stores get a higher margin from warehouse snacks like TGI Friday's and Poore Brothers chips. Merchandising is different in warehouse salty snacks and is more SKU specific, he said. "We evaluate the section on a yearly basis and specify which SKU goes into each slot. With the direct-store distribution section, we give the chip companies an area and let them pick the SKUs."

    Some chains, like Fas Mart, vary their regional favorites across the chain, depending on location. "We carry Herr's in Northern Delaware, and Cape Cod and Tom's in most areas. In southwest Virginia we carry Wise and in Delaware, Maryland, Connecticut and most of Virginia we carry Utz," said Dave Arensdorf, category manager at Fas Mart/Shore Stop, based in Mechanicsville, Va.

    "Utz is our category captain in most regions, and they have five items in our top ten chip line, including the single best-selling chip SKU," he said. "Additionally, Utz is a major supporter of our loyalty program through incremental promotional funding and a better cost of good to discount promo items even deeper. Our sales mandate the inclusion of both regional and national brands, and my vendor partners understand that."

    In the Southwest, Susser Holdings, operating more than 500 c-stores under the Stripes, Town and Country and Villiage Market banners, has many c-stores located near the Mexican border or in heavily Hispanic-populated areas, so the chain's salty snack set reflects this influence. "Outside of traditional national brands, we carry regional distributed Hispanic salty snacks in our border area stores," Kevin Mahany, vice president, field marketing for the Corpus Christi, Texas-based chain said. "Popular Hispanic brands we carry include Chapas pork skins, Barcel, Bokados and Encanto chips, and Klass peanuts."

    Hispanic products play an important role within the salty snack category for Susser, Mahany said. "The products are popular and consumers are very familiar with them."

    In Massachusetts, VERC Enterprises concentrates on national brands in salty snacks. "We carry Wise, Cape Cod and Utz, but not in all of our stores -- maybe in about 50 percent," said Ed Oliviera, category manager. In the case of Cape Cod, Oliviera said VERC offers the brand as a customer courtesy because it is strong in his market area. He estimates that he carries Utz in 40 to 50 percent of the chain's 20 stores.

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