Going Nuts? Berry Good!

Sales of fruit and nut products are on the rise, as health-conscious consumers seek out more wholesome snacks. Are you missing out on this store brand opportunity?

If recent sales trends are an accurate predictor, an impromptu inspection of lunchboxes and desk drawers across the country likely would reveal an abundance of snacks that count fruit or nuts (or both) among their main ingredients. According to "Nuts and Dried Fruit — US," a July 2009 report from the global market intelligence firm Mintel, the U.S. nuts and dried fruit market expanded an impressive 20 percent between 2004 and 2008 — thanks, in part, to rising consumer interest in healthful snacking options. What's more, Mintel expects the segment to grow another 15 percent between 2009 and 2014.

Recent sales data from The NielsenCo., New York, also paint a positive sales picture for the dried fruit and nut segments (see table, p. 38). Worth noting is a huge sales uptick within the prunes subcategory — dollar and unit sales for the total subcategory climbed 16.2 percent and 17.9 percent, respectively, during the 52 weeks ending April 17, while private label saw 46.2 percent and 42.6 percent respective increases. (At least some of that growth probably can be attributed to the rebranding of many prune products as "dried plums" — a more "consumer-friendly" moniker FDA first began allowing in 2000.)

A plum opportunity

Nima Fotovat, general manager at Markham, Ontario-based Shandiz Natural Foods, calls the store brand side of fruit and nut snacks white hot.

"I think it started with the smaller guys like Mrs. May's and some other trail mixes, and then the big guys got into it," he says. "Now the store brands are getting into it, so it's at the beginning stages of a growth spurt for that category."

The natural and organic arena makes a logical fit for fruit and nuts snacks, including store brand renditions, Fotovat adds.

Dan Stanick, director of sales for Cashew Farm/Dan-D-Pak of El Monte, Calif., agrees, adding that consumer trends toward better-for-you/healthful, low-sodium and low/no-sugar products also should guide private label product development efforts.

"There is a lot of interest in gluten-free foods, as well as 'green' foods," he adds. "Ethnic items are beginning to show up in this category, as more consumers are willing to try different cuisines and are now accustomed to new flavors and products — for example, goji berr[ies] and other antioxidant products found in some fruit and nut snacks."

But Jane Asmar, vice president of sales for National Raisin Co., Fowler, Calif., advises retailers to avoid "me-too" items.

"You need to beat branded in quality and price," she stresses.

And it's that quality factor that will keep recent store brand converts coming back for more.

"Consumers are switching, but they are switching and finding quality products — products they enjoy and feel very comfortable serving to guests," notes Roseanne Christman, director of corporate marketing - private brands for Elgin, Ill.-based John B. Sanfilippo & Son Inc. "So it's a newfound type of awareness for them, and I think private brands will definitely have staying power."

Still, not all retailers are there yet, Stanick insists, emphasizing that high quality comes at a price.

"Retailers are just realizing that it's going to cost more for natural and organic products," he says. "Consumers are demanding more quality and are willing to spend the extra [money] to get it, yet still have an opportunity to save with a store brand."

Private label fruit and nut snacks also can help retailers differentiate themselves from their competition in terms of the shopping experience, Asmar says.

"If you feel your shoppers enjoy the value proposition, offer smaller sizes or reduced counts at smaller rings," she suggests. "If your assortment tends to be more premium, look to dried fruit to offer bigger pieces or fancier blends."

Christman also believes that premium offerings and unique mixes can help a retailer stand out among a crowded sea of merchants, particularly when such items also mesh with the ubiquitous trends of convenience and health and wellness. Flavor "excitement" also is a plus, she says, particularly on the nut side.

"It can go anywhere from a sweet flavor — a honey or a cinnamon or a vanilla — to savory, bold, hot or exotic," she says. "Consumers want ethnic, Hispanic, Asian and more."

Although Asmar admits that product development within the private label fruit and nut snacks segment doesn't call for "rocket science," it does require a bit of homework on the part of retailers, especially when venturing into unchartered territory.

"Does the product have a reason for being? Will people buy it? Does the underlying proposition make sense?" she advises asking.

Eye on execution

Successful own-brand launches require more than an eye on trends and product quality, of course. The right product mix, at the right price point, also is critical.

Asmar says National Raisin's data indicate retailers are best off retailing both national brand and store brand raisin, dried plum and cranberry offerings, while sticking to 100 percent private label when it comes to other dried fruit such as apricots, mixed berries and cranberries.

"This approach has numerous advantages such as reducing shelf clutter while adding to overall shelf appeal, advantageous logistics, private label differentiation, lower prices and potentially higher quality," she contends.

Although fruit and nut snacks are perceived as healthful items, Mintel notes that new consumers are looking for portion-related guidance to avoid taking in too much of the naturally occurring fat and/ or sugar in these products. And because value means a great deal to today's consumers, retailers also should keep price point in mind when developing the pack size, Fotovat says.

Speaking of packaging, clear areas such as windows can go a long way in attracting the consumer to fruit and nut snacks — which come by their curb appeal naturally.

"They are minimally processed. Fruits are colorful, and nuts have some unique shapes and colors," Fotovat says. "Consumers are tired of products hiding behind fancy packaging [only to find] what's inside doesn't looking anything like what's on the packaging."

The package's message is critical, too, Fotovat says — today's well-educated consumers will see right through a flashy communication that has no real meaning. Messaging that stays true to known nutritional and health benefits associated with fruit and nut consumption works best.

Although great-looking packaging certainly commands attention, Christman says retailers also would do well to invest in store-level merchandising and promotion, ranging from shelf danglers and off-shelf displays to the inclusion of own-brand fruit and nut snacks in the weekly circular.

On the promotion side, Stanick recommends retailing a variety of items at one price point — and then offering a discount for multiple purchases.

"Separate 'good-for-you' sections or 'gluten-free' sections attract consumers willing to pay a premium for these types of products," he adds.

With the exception of prunes, dried fruit usually is an impulse buy, so promotions should be creative and purposeful instead of just price reductions, Asmar says. And dried fruit should be merchandised with optimal location in mind — in the produce department and/or in the center store alongside fruit rolls and bars. Displays also work very well to spur sales.

Perhaps most important, however, to the future of store brand fruit and nut snacks is the changing mindset on the part of retailers.

"Private brands are beginning to evolve into true consumer brands," Christman stresses. "Innovation, premium products, state-of-the-art packaging — they can come to their partner/manufacturer for all those needs."

Do beat the national brands in both quality and price.

Don't hide an attractive fruit or nut product behind opaque packaging. Consider using a window to show off a product's unique colors and shapes.

Do consider separate good-for-you and/or gluten-free sections; they draw customers willing to pay a premium for such products.

Don't rely on flashy messaging to attract consumers to a sale. Messaging that stays true to known nutritional and health benefits associated with fruit and nut consumption works best.

Fruit and Nut Snack Segment Performance

Source: The Nielsen Co. Food, drug and mass merchandiser stores, including Walmart, for the 52 weeks ending April 17, 2010 (prepackaged, UPC-coded products only).

*Includes the "dates," "prunes," "raisins" and "fruit-dried and snacks" subcategories.

**lncludes the "nuts-cans," "nuts-cello-wrapped," "nuts-jars" and "nuts-unshelled" subcategories.