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Spicing Up Salty Snacks

Can c-stores shake some spice into the salty snack mix? The category is predicted to see only modest increases in 2010, with dollar and unit sales per store expected to rise 2.2 percent and 1.9 percent, respectively, according to the Convenience Store News 2010 Industry Forecast Study. But c-store retailers who fold in the right mix of flavor and other innovation, while still focusing on core items, may have the potential to improve upon that forecast more substantially.

Rick Hemmings, general buyer for Dunlap Oil based in Wilcox, Ariz., with 13 stores, is one such determined retailer.

"I just did a complete redo on my salty snacks set, and the numbers already coming through after 30 days are showing good results," he said. "Depending on the store, it's anywhere from 5 percent to 12 percent growth."

One of the key elements he brought in is the multi-vendor snack endcap (MVE), from McLane Co., which puts the attention on core, substantiated items first and foremost.

"I just retrofitted all of my stores with these. They highlight the top snack SKUs in one place -- everything from corn nuts and jerky to peanuts, Pringles and sunflower seeds," Hemmings explained. "They include a lot of subcategories so you don't have to headline them. They're all faced up so customers don't have to walk through the store if they don't want to. It definitely encourages more sales."

Another sales-focused strategy for Dunlap Oil's revamped snack set involves streamlining package sizes. "We reduced our exposure to the take-home segment -- the big snack bags -- and went more to the highly consumable packages that customers finish before they hit the street. The ones they come back for tomorrow or later in the day," Hemmings said.

A veteran of the Safeway supermarket culture, Hemmings takes a controlled approach to fine-tuning the mix. "I base a lot of my merchandising thought process on inventory control and the 80/20 rule. That is, the top 20 percent of my items push 80 percent of my sales," he noted.

So he concentrates on constantly monitoring and keeping the core items that sell well in-stock, and rounding that out with some of the innovation in the category, particularly hot/spicy/savory flavors that the category is trending towards and that do well in moderation, according to Hemmings. One recent flavor trend that crossed over into the mainstream for his customers is dill pickle, selling well in sunflower seed lines. "It's kind of a funny flavor, but the numbers back it up," he said.

More current full-flavored trends that hit the category recently include: buffalo wing, jalapeno cheddar, chili and an assortment of other hot and spicy variations. Pringles Extreme line of potato crisps now includes Torchin' Tamale and Smokin' Hot Ranch, and Bugles offers a Hot Buffalo flavor. Also Krunchers Kettle Cooked potato chips' top flavor is Mesquite Bar-B-Que, and Herr's Kettle Cooked Potato Chips are now available in Horseradish Cheddar, to name a few. Restaurant tie-ins are also gaining ground in salty snacks with Inventure Group's Burger King Hot Fries and TGI Friday's Jalapeno Cheddar potato skin snack chips.

"It's a challenge to make a decision about what items to let go of that you've carried for a long time, in order to make room for some of this new stuff," said Walter Ryan, director of marketing for K&G Stores based in Littleton, Colo., with 113 locations. Nevertheless, he plans to round out his mix with roughly 25 percent to 30 percent of salty snack innovation in the next coming weeks to prepare for the big snack season, which he said begins in the spring but hits its peak in mid-summer.

Finding just the right balance of new-item innovation in snacks will be the challenge for most c-store retailers, according to Tricia Williams, marketing manager with Pine State Trading Co., a distributor based in Augusta, Maine.

The way she sees it, salty snacks are following in the footsteps of candy. While both categories have proven to be somewhat recession-resistant, candy learned a lesson that the salty snacks segment is comprehending now.

"The snack category broadened with so many new items launching that it has the potential of complicating the sale for a lot of consumers," Williams said. "We have too many SKUs in the subcategories, which is causing the consumer confusion, and sometimes the decision not to buy, which is the worst disaster. Snack buyers have to pay attention to what happened with the candy category a few years ago. There were too many new items and limited editions being introduced, and now it has dwindled down drastically with better sales results. Snacks are becoming what candy was three years ago."

But just like with candy, promotional tie-ins still do well in the salty snack category on new items, according to Hemmings. "We do great with shippers that cross-merchandise soda or beer with a salty snack," he said. "In fact, we're just getting ready with the new Frito Lay calendar. They'll have monthly promotions particularly with their new hot flavors."

Ultimately, Hemmings believes it's all about staying in control of how the merchandise flows -- not just once a year, but as often as necessary. "We don't have a set time when we redo the snack set -- it's always up for change. I look at out of stocks daily. I look at the numbers of what's selling and what's not, and I'm ready to change it around on a dime."
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