Bars of Gold | NACS Online – Magazine – Past Issues – 2014 – February 2014
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The Association for Convenience & Fuel Retailing

Bars of Gold

Offering energy, protein and health, bars can improve your store’s image, attract customers and keep the cash register ringing.

​By Jamie Hartford

The hustle and bustle of modern life has made sitting down to three square meals a day nearly impossible for many Americans. So how are these hungry, time-pressed consumers filling their bellies? Increasingly, they’re reaching for energy, protein and health bars.

These functional foods are packaged in a convenient format and loaded with nutritious ingredients such as protein, vitamins and/or minerals to give hungry consumers the boost they need to get through the day.

Retail sales of energy and nutrition bars are expected to post double-digit growth this year, surpassing $3.8 billion, according to market research firm Packaged Facts. But convenience stores trail other retail formats when it comes to capturing market share. Mass merchandisers account for 28% of energy and nutrition bar sales and supermarkets and grocery stores capture nearly a third of sales, according to Packaged Facts. With just 12% of energy and nutrition bar sales, convenience stores come in a distant third.

As consumers’ appetite for energy, protein, and health bars continue to climb, convenience stores would do well to improve their product offers within this growing category.

SNACKING ON THE RISE
The rising popularity of protein, health and energy bars dovetails with several other trends among today’s busy consumers. For starters they’re no longer gathering around the table to eat laboriously prepared meals with their families.

“People eat differently today; they eat on the go,” said NACS spokesman Jeff Lenard.

Once considered a bad habit, snacking is now how many Americans eat a significant amount of the food they consume. Nearly half of all eating by adults today occurs between meals, and 44% of these snack breaks are done alone, market research firm the Hartman Group found.

To make on-the-go snacking easier, “the convenience store customer is looking for food they can throw in their bag,” said Lizanne Falsetto, CEO and founder of ThinkProducts, maker of the ThinkThin line of nutrition bars, which includes 24 SKUs and began selling in 7-Eleven stores in January.

At the same time, consumers are growing increasingly health conscious. They may be snacking more, but they’re also being more careful about the foods they consume.

“Instead of having snacks traditionally thought of as a treat, we’re seeing more consumers embrace the concept of good-for-you snacks,” Lenard said. “More in the way of fruits and vegetables, more in the way of jerky — and particularly energy, protein and health bars because they can give you a quick meal replacement that’s not going to make you seek out something else that may not fit your nutritional goals.”

A GOOD FIT
Convenience stores are well positioned to take advantage of the snacking trend with sales and brand image both potentially benefitting from energy, protein and health bars in particular. Though bars can be consumed any time of day, many consumers choose to stock up on snacks in the morning.

"Forty-one percent of consumers who buy a snack during the breakfast daypart are buying energy bars or a bar of some type,” said Karin Thrift, director of sales for Clif, maker of products including Clif Bar energy bars, Clif Builders protein bars and Luna nutrition bars.Forty-one percent of consumers who buy a snack during the breakfast daypart are buying energy bars or a bar of some type,” said Karin Thrift, director of sales for Clif, maker of products including Clif Bar energy bars, Clif Builders protein bars and Luna nutrition bars.

As the first stop of the day for many consumers, convenience stores could increase basket size by convincing shoppers to pick up a bar when they fill their tank or grab their morning coffee.

But c-store operators need to remain cognizant that other retailers continue to encroach on their territory. “Everyone sells food. If you go into any type of store, they sell food at the register,” Lenard said, citing the candy bars and packaged beverages offered at retailers from Home Depot and Best Buy, to Old Navy and PetSmart.

Offering healthier snacks such as energy, protein and health bars can help convenience stores stand out from the crowd as well as expand beyond their traditional customer base. “These bars can do a lot not only for consumers’ health but for retailers’ health,” Lenard said. “They’re a big part of the good-for-you portfolio that stores can build up to attract new customers.”

Thrift at Clif said protein bars jive well with the convenience store channel’s core demographic of 18to 34-year-old males who are looking for a belly-filling snack — but they can also bring in women, who she said tend to stop at convenience stores only to fill their cars with gas and pay at the pump. Lenard believes offering energy, protein and health bars could also lure younger customers inside the store.

To change the perception that convenience stores sell only junk food, stores should put healthy snacks such as bars in places where they will get noticed, suppliers agree. “When the calendar flips over to January and everybody makes their New Year’s resolutions, convenience stores might benefit by [placing protein, health and energy bars] on an endcap, so they’re the first thing the consumer sees when they walk in the store,” said Lucia Romanello Crater, director of sales for the convenience channel at KIND Healthy Snacks. “Even if it’s just for 30 days, that would crystalize in the consumer’s mind that the convenience store offers these products.”

HIGH MARGIN
Health, energy and protein bars account for less than 6% of sales in the alternative snacks category, and the products brought in just over $1,000 in average store sales and less than $450 in gross margin dollars in 2012, according to NACS State of the Industry data. But their gross margins of more than 43% beat out any of the offerings in the packaged sweet snacks and salty snacks categories.

Those margins should be enough to earn bars prominent placement in convenience stores, Thrift argued. “If you think about it, a lot of stores put things like chips right there up front at the point of purchase,” she said. “But instead of making 50 or 60 cents on a bag of chips, they could be making 90 cents or $1 on a bar.”

One retailer that’s betting on protein, energy and health bars and other healthy snacks is Rockland, Massachusetts-based Tedeschi Food Shops, which has nearly 200 stores throughout the Northeast. The company has been beefing up its healthy offerings in recent years, now offering around 100 SKUs ranging from health, energy and protein bars to nuts and dried fruit from both national and local brands.

Tedeschi also dedicates around 108 linear feet of prime real estate near the front of its stores to the category, said Joe Hamza, vice president of sales and marketing, adding that the gamble has paid off. “Sales in the healthy snacks category have been growing on average of 25 to 30%,” he said. “It was really a fraction of our sales five years ago, but today it accounts for roughly 1.5% of total sales.”

Tedeschi’s sales of items identified as healthy, gluten-free or natural more than doubled in volume, he added. “It’s the fastest-growing category for us by far.”

RAISE THE BAR
As the popularity of protein, energy and health bars has increased, the number of offerings has exploded. Today there are bars marketed for women, children and athletes, as well as versions formulated for dietary restrictions such as low-sugar or gluten-free. Flavors range from fruit and nuts to coconut, dark chocolate and beyond. With so many options flooding the market, customers will also be looking for a wide selection at convenience stores.

“If you want to take full advantage of increasing sales in the bar set, you want variety in the types of bars and flavors,” Thrift said. “You need to have not just protein and energy bars, but snack bars and nutrition bars and a wide variety of flavor profiles.”

While most convenience stores sell protein, energy, and health bars individually, ThinkProducts’ Falsetto says they could also look at smaller multipacks. “As you build awareness, you could ask, ‘Should we carry four or five-bar boxes?’” she said. “You don’t have to go for 10.”

Hamza said Tedeschi sells all of its protein, energy and health bars individually but does offer discounts on multiple items. Consumers looking for healthy offerings aren’t typically looking for a deal, though. “Promotions don’t drive sales of this type of product — not yet anyway,” he said. “Consumers are driven by quality and taste and are less concerned about price. They’re willing to pay a premium for these products.”

As functional foods, protein, energy and health bars tend to be positioned for specific purposes — protein bars for post-work-out, fiber bars to help eaters curb cravings, energy bars to give you a boost. To help customers find what they’re looking for, suppliers recommend organizing products not by brand but by type — all energy bars grouped together, for example.

“Color code it so that people can immediately see when they ’re standing in front of the set what it is and purchase according to the occasion they want it for,” Thrift said. “Put protein bars together and on the top because they tend to be the more expensive bars, so you want them right at eye level.”

To drive add-on purchases, Tedeschi also places them near other healthy items, such as fresh fruit, sandwiches, salads, wraps and yogurt. “They complement each other, and we do see the incremental purchase,” Hamza said.

But health, energy and protein bars aren’t just an afterthought for many consumers. “I can tell you when we first started [increasing our healthy snack options] five years ago, it was an impulse buy,” Hamza said. “But at this point in time, we have repeat purchases now. It’s becoming a destination purchase.”

Yet another reason for convenience stores to raise the profile of health, energy and protein bars.

Jamie Hartford is a freelance writer based in Southern California. Read more of her work at www.jlhartford.com.