Post on 06-Jul-2018
C S P Snack Supplement 2013 11
Green Spot Market (pictured
above) is an anomaly. A Dallas
convenience store, it offers an
array of healthy foods that are not typi-
cal fare in this shopping channel, and its
business is growing.
The store’s manager, Adam Velte,
attributes its popularity to consumers’
growing interest in good-for-you prod-
ucts. Almost every item sold in the store,
he points out, is healthy on some level,
whether it has functional ingredients
such as probiotics and whole grains or
simply has no preservatives.
Green Spot is not alone, but it doesn’t
have a lot of competition—yet. Despite a
gradual shift by consumers to eat more
healthfully, growing sales at retailers
such as Whole Foods Market and Trader
Joe’s, and a shopper base increasingly
made up of women, most convenience
stores continue to flourish on high sales
of fat-, sugar- and sodium-laden items.
However, a rustling of change is occur-
ring, starting with consumer habits and
attitudes.
We’re eating more snacks than ever
today. According to Chicago-based Tech-
nomic’s Snacking Occasion Consumer
Trend report, published last year, about
half of consumers polled (48%) say they
snack at least twice a day, compared to just
a quarter of respondents in 2010.
And, equally as important, two-fifths
of consumers told Technomic that they
are choosing healthier snacks now and
plan to continue to do so: More than a
third of consumers said they expect to
eat healthier snacks over the next year.
Health CheckStrong margins, loyal customers go hand in hand with healthful snacks
By Amanda Baltazar
C S P Snack Supplement 201312
Smart SelectionsSnacks—and specifically healthy snacks—
are a big opportunity for c-stores, yet many
are not yet embracing them. One retailer
that is, however, is 7-Eleven.
The retailer declined to speak to CSP
for this story, but according to a New York
Times article in December, 7-Eleven by
2015 aims to have 20% of sales come
from fresh foods in its U.S. and Canadian
stores—up from about 10% now.
The move toward this increase is vis-
ible in its stores: Seven-grain sandwich
wraps, yogurt cups and carrot sticks share
shelf space with fruit and veggie cups,
hummus and pita.
“We’re aspiring to be more of a food
and beverage company, and that aligns
with what the consumer now wants, which
is more tasty, healthy, fresh food choices,”
CEO Joe DePinto told the newspaper.
In April 2012, Dan Sanderman pur-
chased a 30-year-old 7-Eleven on Lake
Tahoe in Carnelian Bay, Calif., and in just
a year has increased sales by 22%, much
of which he attributes to his product mix,
which has a heavy emphasis on healthy
foods and snacks.
“It is smart business to incorporate
[healthy] items into your store,” Sander-
man says. “It is hard to change old habits,
but we have to differentiate ourselves and
open space for such products.”
Sanderman’s 7-Eleven does good
business in healthy snacks, and in chips
alone, healthy products constitute around
15% of his assortment. His most popular
healthy foods include Clif Bar’s ZBar for
kids, KIND Bars, GoRaw bars and vegeta-
ble chips from a small company in Idaho
called It Takes a Village.
Nuts also do well, as do dairy items such
as organic Greek yogurt and cheese sticks.
He recently switched the latter over to the
Horizon organic brand from Kraft. So
“one product can meet the needs of both
customer types. Opportunities to have
crossover appeal without sacrificing price
are rare, and we happen to be doing so with
cheese sticks.”
The key to selling healthy snacks is
making them visible, Sanderman says.
“Customers are always going to go for
the Doritos and Cheetos, so we try to make
healthy items more prominent, on the
shelves at eye level,” he says.
He also carries brands customers
recognize, which he says builds trust:
“You cannot stray too far away from
nationally recognized brands in a c-store
environment. We are not a health-foods
store, and customers expect to see names
they also see in grocery chains. I prefer
Newman’s Own, Horizon, Kashi, KIND
Bar, and so on—major names that are
organic or natural. There is always room
to experiment with unique items; our It
Takes a Village veggie chips are one such
product.”
Natural IngredientsPopular at Green Spot Market are baked
goods from local company Empire Bak-
ing, such as croissants, muffins and pas-
tries. These types of items are considered
healthy by many people because they
have natural, recognizable ingredients—
butter, flour, sugar, and so on—with no
preservatives, no chemical sweeteners
or the like, says manager Velte. Shoppers
looking for healthy foods are typically
interested in locally made and locally
grown items, too, he points out.
Also popular, he says: Pirate’s Booty,
kale chips, Clif Bars, gluten-free (and
genetically modified-ingredient-free)
bars and sprouted foods. For kids: any
kind of fruit snacks that are candy-
shaped—such as fruit leather or organic
cookies by Late July— and Annie’s Ched-
dar Bunnies.
However, fresh produce is not faring as
well. While some 7-Eleven franchisees may
have success with fresh fruit and vegetable
“Our meals are being displaced with snacks.”
Digging In: Dan Sanderman’s 7-Eleven on Lake Tahoe does good business in healthy meals. The key to sales, he says, is making the products visible.
C S P Snack Supplement 201314
cups, many smaller retailers or single-store
operators are not seeing the same.
“Cooler space for fresh produce is dif-
ficult, and spoilage is an issue,” says Velte.
So Green Spot sticks with apples, bananas
and oranges, though he hopes to see that
change and would love to have a season-
ally rotating produce display. Dried fruit,
sold in individual bags, does really well.
And Sanderman, whose store is sur-
rounded by farms with a bounty of fresh
fruits, carries only those same basic fruits
“because the problem is sourcing it,” he
says. “I should have a case full of all these
[local] fruits, but the distribution system is
not set up for that. So we get the standard
apples, oranges and bananas, and they
come from far away.”
Boom or Bust?Business in healthy snacks may be boom-
ing for some retailers, but for others the
picture is a different one. Most retailers sell
only the most limited of selections, despite
what customers say they’ll buy.
“We don’t eat what we say we want to
eat,” says Greg Parker, who owns 30 Park-
er’s stores in Georgia and South Carolina,
and offers very limited choices in healthy
snacking fare.
But the people who study this indus-
try tell a different story. “Our meals
are being displaced with snacks,” says
Melissa Abbott, senior director of culi-
nary insights for The Hartman Group,
Bellevue, Wash. “We now believe that in
order to be healthy you need to snack,
and we’re putting much more emphasis
on the nutritional profile of our snacks.”
And what are we snacking on? “People
are seeking real food, identifiable ingre-
dients. Snacks have to be something that
makes people feel they’re not putting junk
into their body,” she says. Fruits, cut-up
vegetables and nuts all fit into this cate-
gory, she explains, but there’s still a craving
for popcorn and chips. Cereal’s also getting
more play and is often the snack of choice
at the end of the day.
Darren Seifer, food and beverage
industry analyst for The NPD Group, Port
Washington, N.Y., doesn’t attribute the
rise in snack consumption to decreased
consumption of meals, but to changes in
the makeup of our population.
The numbers of children and seniors
are growing, “and that’s where we see the
biggest growth in snacking. When we are
youngest and oldest is when we snack the
most,” he says. “On the younger end of the
spectrum, parents are keeping a watchful
eye on what they give their kids, so they give
them a lot of fruit and yogurt. And many
seniors have more time on their hands, and
food becomes a greater part of their life
and lifestyle. They also take a lot of pills and
might need to take them with food.”
The customers at Green Spot Market
fit these demographics. “We have two
schools nearby so we see mothers, kids
after school, people who have made it a
lifestyle choice to eat healthy and organic,”
says Velte. “People will go out of their
way to come here. Typically, these people
don’t usually go to a gas station because it
doesn’t fit their lifestyle choices.”
Sanderman says his store likely
wouldn’t do as well if it were moved to
another area.
“I’m fortunate—my demographics
are people who have a third home in
Lake Tahoe, they drive BMWs, and are
not looking at prices,” he says. “It’s not a
standard clientele for 7-Eleven.”
On the WholeWholesaler Core-Mark, South San Fran-
cisco, Calif., is seeing increased demand
for healthy snacks across the country, in
all markets.
“Healthy snacks are definitely on the
rise,” says Carla Boyington, director of cat-
egory management. “We put the healthy-
snack category in over four years ago and
have had double-digit growth every year.
What’s driving our snacking business
is healthy snacks. Our growth on these
brands is phenomenal and is continuing
year over year. If anything, we’re looking
to balance our sets with even more healthy
snacking products.”
Best-selling snacks include fresh fruit
(the No. 1 snack, according to Boyington),
chips such as Food Should Taste Good,
Special K Cracker Chips, Stacy’s Pita
Chips, yogurt and bars from companies
such as Clif Bar, Kashi and KIND. Even
all-natural jerky is on the upswing.
Core-Mark has been slowly building
Snacks on a Rack: In building the variety of the snacks it carries, Core-Mark introduced its Good Health To Go Snack Rack in 2010.
C S P Snack Supplement 201316
the number and the variety of snacks it
carries, and in 2010 it launched a Good
Health To Go Snack Rack. Now, 15% of
the bars and 10% of the salty snacks the
wholesaler carries are healthy, says Boy-
ington. But it’s also important that these
products are big name brands so the con-
sumer can recognize them and associate
with them, she says.
Core-Mark also makes sure it rotates
products with regular new offerings to
continue to grow the category. “To keep
product fresh—in people’s minds—and
to keep on top of trends, we want to have
the right new items and the right brands,”
Boyington says.
One of these brands is KIND, which
saw sales of its bars in convenience stores
double from June 2012 to June 2013; sales
in this shopping channel are slightly ahead
of others, says Cliff Wheeler, senior vice
president of strategic channels.
In fact, he says, “This year, we will put
a strong emphasis on marketing toward
business travelers and students—two
demographics who frequent convenience
stores. Whether it’s near the airport, the
gas stations or close to campus, these are
people on the go, and they do not want to
sacrifice health for convenience.”
People on the go are also highlighted
in Technomic’s snacking report, which
states that impulse purchases of snacks
are up from two years ago. Sixty-two
percent of the respondents to the survey
stated that most of the snacks they pur-
chase for away-from-home consumption
were impulse purchases.
Healthy options were also a focus,
and more than a third of consumers told
Technomic that they expect to eat more
healthful snacks in the coming year.
Carrying on-the-go meal replace-
ments also can make c-stores a desti-
nation for better-for-you items. “The
premium beverage category is growing
at a pace of over 20% per year with great
store margins, so they’re a perfect fit for
retailer needs,” says Jim Whitaker, vice
president of beverage sales for Bakers-
field, Calif.-based Bolthouse Farms,
which offers better-for-you beverages
such as Strawberry Parfait Breakfast
Smoothie and Protein Plus Chocolate.
Margin CallingAll of this is good news for retailers,
because the profit margins on healthy
foods tend to be a little higher than for
mainstream products.
“Some [healthy] snacks might be a
slightly higher cost so the retailer might
be making a little more,” Boyington says.
“We definitely haven’t had to sacrifice any
profit margins—probably the opposite,
if anything.”
“Our profit margins on these products
are between 35% and 40%,” says Sander-
man. “They are more expensive, so we can’t
charge as much, but we make money on the
healthy items because it’s a bigger ring-up,
and I’d rather go for the bigger ring-ups.”
But with more expensive products,
you have to entice customers to buy
them, and to do that, it’s crucial to go
beyond having the right products.
“It’s important to position items cor-
rectly in the store,” says Boyington. “For the
early morning, put sweet snacks near the
coffee; then put savory snacks near fountain
and cooler beverages, because the consum-
ers’ pathway changes throughout the day.”
Retailers should be aware, Boyington
says, that the products that sell change
through the day, with yogurts and bars
the winners in the morning, and savory
dominating through the afternoon and
evening. However, salty snacks are the clear
mainstay all day long, she says.
The NPD Group sees several snack
times through the day. The morning has
two peaks, says Seifer; one precedes break-
fast, and one is between breakfast and
lunch. After noon there’s a peak around 3
p.m., and there’s another between dinner
and bed, or between 8 and 9 p.m.
“And what should be noted,” he adds,
“is that the emphasis on health declines as
the day progresses. We start off with good
intentions and things deteriorate as the
reality of our lives impedes on our day.”
But constantly putting healthy foods
in front of consumers can help change
their perception of convenience stores,
says Boyington.
“It will be a slow change before people
realize convenience stores are a destination
for healthy foods. And to get to that point, it
will come down to the store’s ability to pres-
ent a good variety of quality fresh foods to
change perceptions. It will take a full com-
mitment to a full fresh-foods program to
create the category into a destination.”
Sanderman believes the same thing:
“These items aren’t going to fly off the
shelves right away. But once consumers
know we have it, they’ll come back rather
than stand in line for 40 minutes at Safe-
way.” n
“The emphasis on health declines as the day progresses. We start off with good intentions and things deteriorate.”