Perfectly Positioned

According to “Healthy-Ingredient Snacks in the U.S.: Cereal/Granola, Fruit, and Seed/Nut Snacks and Bars,” a September 2013 report published by Rockville, Md.-based Packaged Facts, a division of MarketResearch.com, snacking is a megatrend that shows no sign of dissipating. The report also states that “healthy-ingredient” snacks are a high priority, with U.S. adults seeking them out for both themselves and their children.

Dried fruit and nut snacks are among the healthy-ingredient snacks outlined in the report. And store brand options within the fruit and nut snack segment offer retailers opportunities to build sales and increase margins.

In the snack nut category, says Mike Swiatkowski, vice president sales and marketing, Hickory Harvest, Akron, Ohio, a name brand is not crucial (in fact, store brands already enjoy a 30.8 percent dollar share — see the table, p. 48).

“The best opportunities for peanuts are blanched roasted, spicy and flavored,” he adds.

Dried fruit snacks also present an opportunity for continued growth on the store brand side.

“Consumers have been purchasing private label dried fruit for years,” explains Jane Asmar, vice president of sales and marketing, National Raisin Co., Fowler, Calif. “Private label is the growth engine of the category.… Raisins and prunes comprise most private label dried fruit sales, and there are significant additional opportunities in private label dried cranberries, dates and figs.”

Bob Wilke, vice president of sales, Trophy Nut Co., Tipp City, Ohio, believes retailers have done a good job establishing their national-brand-equivalent (NBE) fruit and nut snacks and sees tie-ins and seasonal cross-promotions as a natural way to increase sales even further.

“They’ve done an even better job with trail mixes, where private label share was over 55 percent [in 2012],” he says. “The next opportunity lies within differentiating package type from the NBE and/or placement in the store. Also, opportunities exist to cross-promote with a store’s other private label brands in other categories for special events like Super Bowl, March Madness, etc.”

Trends on the horizon

Consumers are fickle, always looking for the next new thing. A successful store brand fruit and nut snacks program should include both the established core items and the latest trendsetters. One area gaining traction is flavor extensions, Wilke says.

“One of the big trends today is flavored nuts and trail mixes,” he explains. “The national brand for almonds has created many new flavors and added opportunity for private label retailers to add flavored almonds to the mix. This creates potential for other nuts and trail mixes, as well where there is not a strong NBE.”

But Swiatkowski doesn’t see flavors as being an area of huge growth.

“Nuts aren’t like chips or jerky,” he says. “A lot of the flavored stuff, in reality, doesn’t stick. We try to do tonnage items so we don’t do weird flavors. We are doing more candy-coated nuts such as pralines and butter toffees. Buyers are more educated on price and quality; we see the trend as sticking with quality.”

Asmar says larger sizes, flavor extensions and exotic offerings characterize the trends in dried fruits.

“Raisins and cranberries continue to post dollar sales increases, especially in larger, more economical sizes and across flavored line extensions,” she says. “National Raisin’s Raisels line of flavored raisins is showing positive momentum in non-traditional channels. In addition, we see growth in a number of the exotic treat dried fruits, including dates, mangos, figs and berries. We also see handsome growth in fruit chips and in the kid-friendly segment of freeze-dried dried fruits.”

Creating points of differentiation within the category also can build consumer loyalty Asmar says, adding that the most innovative retailers do not treat private label dried fruit as “me-toos” of the national brands.

When it comes to packaging trends, gusset bags and tubs prevail in the category, Swiatkowski reports.

“Hickory Harvest packaging runs from 1.5 ounces to 2 pounds,” he says. “The smaller sizes are for convenience stores and the larger for grocery stores. You can’t put very much in a package and retail it for 99 cents or $1.99. We’re seeing more packages at $3.99 and $4.99. But in general, a retailer needs a range of sizes.”

Wilke advises retailers to differentiate from the national brands when it comes to packaging. But he recognizes that doing so isn’t easy.

“It will take a true partnership between the retailer and manufacturer because there’s risk on the manufacturing side when you implement a new pack,” he says, “and there’s risk on the retailer side because they are ‘stepping outside the box.”

Set the stage in store

Retailers could see sales of innovative own-brand mixed fruit blends soar by treating them to strategic promotional scheduling, Asmar says.

“National Raisin Co. is currently working with a number of our clients to promote private label in the weeks before key [seasonal] events such as back-to-school, Halloween and holiday baking,” she explains. “This promotes pantry-loading. In addition, promoting a variety of dried fruits — figs, dates, cranberries, mixed fruit, pineapple, apples, etc. — will drive incremental sales across the year.”

Wilke echoes the need to promote store brand items.

“Sometimes it’s hard to turn down the shelf space dollars of the brands,” he says, “but in the end, your own brand is usually higher margin.”

In addition, Swiatkowski advises retailers to set a clear goal for private label in the category so that suppliers can successfully fill their needs.

“Many times we see retailers that don’t understand their goals,” he says. “If they can’t tell suppliers what they want, suppliers can’t deliver. Is it increased margin? Increased private label recognition? What quality attributes to hit at what price?

“You want to be above the national brands,” Swiatkowski adds. “Equivalents don’t work — private label needs to be better. Low cost equals low quality. Once you start a program, you can tweak it, but too many changes can kill it.”

Do add fruit and nut snack products that are differentiated from those offered by the national brands.

Don’t forget to promote mixed fruit blends in the weeks before key seasonal events such as back to school and Halloween.

Do set a clear goal for private label in the fruit and nut snack segment so suppliers can successfully fill needs here.

Don’t forget to offer a range of packaging sizes to suit a variety of shoppers’ needs.