The snack market is worth a fortune, but pubs could be missing out on major sales by not offering a big enough range. Tony Halstead finds there are lots of ways licensees can boost interest — and revenue.
The UK bagged snack market is worth a colossal £2.1bn and annual sales are currently growing by 4.5% per year.
But the battle for consumers' hearts and minds is almost exclusively led by the big supermarkets and major off-trade retail businesses. The on-trade is definitely the poor relation in this ever-growing category and it is widely perceived that pubs are missing out on a market that can bring increased sales and good profit margins.
Nevertheless, the leading snack brand owners are launching a series of initiatives to help licensees drive sales and capture more of a market that has the potential to become a major revenue and profit earner.
Trevor Stroud, director of sales for specialist retailer Cranberry Enterprise, which sells pre-packed dried fruit and nuts, says too many licensees go down the easy route and do not bother offering an extended range of snacks.
He says: "There are plenty of opportunities for licensees who want to increase their sales and bottom line, but the key is selling a good range and ensuring what is on offer is clearly visible.
"Consumers are now more adventurous with flavours, so it is important that licensees stock a wide and interesting range."
Richard Clark, head of innovation at Halewood International, which has just launched a range of nuts under its Crabbie's ginger brand, says there is huge potential for pubs to capitalise on snack sales. He says: "It's about selling brands that offer a point of difference and merchandising them in an attractive way."
PepsiCo, which owns the Walkers brand, one of the market leaders in the sector, says licensees can capitalise on the sales opportunities packaged snacks present by applying three key category principles. These revolve around stocking the right range, keeping up with customer trends and making the most of marketing and display opportunities.
The company says it's vital that licensees use the space available to stock the best-selling lines, which will maximise sales and increase profits. Crisps and snacks need to be visible if they are to sell, so should ideally be positioned above the bar and within 6ft of the till point, as this is generally a high-footfall area.
It has also invested significantly in research to monitor consumer trends, finding that value has become increasingly important to consumers since the downturn took hold, with almost 60% actively looking to buy products on promotion, according to him! research. So it is important that licensees stock the right brands that offer value at a range of price-points.
Promotions can also play a major role in lifting sales, whether it is a simple price reduction, multi-buy (buy two packets and get one free for example), link deals (buy a pint and get a bag of crisps for free perhaps) or value-added arrangements, such as meal deals.
United Biscuits UK (UBUK), one of the biggest snack manufacturers, with brands such as McCoy's, Twiglets and Mini Cheddars, agrees with Walkers' view. It is offering licensees support and advice to help boost incremental sales of snacking products.
"Snacking is an area that many licensees struggle to maximise," says Nick Stuart, commercial manager at UBUK. "Stocking snack lines that provide big margins, but aren't necessarily popular, not getting their display right, and not communicating their snacks offering properly are just some areas that are routinely mismanaged," he says.
Consumers have also become increasingly demanding and want more than the traditional crisp and peanut options. Healthier options — indeed healthy snacks — are now worth £95m, according to the latest statistics from Nielsen, and those, as well as different eating formats and more exotic flavour options, are some of the biggest trends.
New suppliers, such as Cranberry Enterprise, the specialist manufacturer of dried and roasted nuts and fruit snack foods, are tapping into these opportunities and see the pub market as a potential area of growth for its ranges.
The company this year moved into the sector by selecting six of its best-selling pro-ducts and packaging them into convenient 40g & 50g 'Snackpacks' with a recommended retail price of 99p.
The range it calls 'healthy indulgences' is a crossover between healthy snacks and confectionery treats. Its aim is to appeal to a cross-section of customers and not just those looking for the strictly healthy option.
Cranberry's Stroud says: "All our experience of the dried fruit and nut snack market has gone into developing this new pre-pack range, including the product selection, pack size and price-point. Forty or 50 grammes of product is ideal as a snack with a drink down the pub — and keeping the price below £1 is psychologically important too."
An extended range of Cranberry products is also available in bulk packs. The products are neatly packed in 2kg to 3kg tubs with resealable lids. They are suitable for the on-trade, where bar owners can offer them as a pre-dinner snack in bowls with drinks, a trend that has been developing at the top end of the pub trade for some time.
Other suppliers are responding to these trends and health concerns, not just with new ranges and pack sizes, but by looking at their existing ranges. For example, at the beginning of 2010, UBUK reduced the saturated fat content of McCoy's by 30%. The packaging was also refreshed to highlight the change.
In line with the healthier trend, UBUK's KP Nuts peanut range, the most popular branded nut in the UK, it claims, has also benefited from a new design to highlight clear nutritional claims on the packaging, including 'low GI', 'high in fibre' and 'MSG free'.
While offering healthy options is an important growth category, licensees must not forget that differentiation is key to the snack product offer. According to Alex Albone, director at Pipers Crisps, licensees need to stock snacks that customers cannot find in a supermarket or local shop.
"If pubs are selling a product that is available everywhere, they are not offering anything different," he says. "And if the product is ubiquitous then there is no opportunity to raise the price."
Albone suggests that this perpetuates low cash margins, which in turn may be the reason licensees appear to put little effort into promoting bagged snacks and "offer them as a mere afterthought".
However, he points to an increasing number of licensees turning to suppliers such as Pipers to stock products that create a real point of difference, and this suggests the tide might be turning.
Albone says: "The major differ-ence between ourselves and other premium crisp makers is that we do not sell to supermarkets. This protects our customers' point of difference and allows them to offer real value with something distinctive and special."
Crisp manufacturer Salty Dog has also gone down the road of meeting the needs of consumer change and has produced a range of what it describes as "feisty flavours ideal for pub-goers".
Dave Willis, founder of Salty Dog, says: "Snack sales can give a good return if you choose the right products. Our customers particularly like the fact that Salty Dog won't be on the shelves of their nearest supermarket, which gives them a point of difference, along with a healthy margin.
"Salty Dog is very much a pub crisp. Delivering to pubs is how we started and they make up 75% of our customers, so we have really tried to get our PoS right. We have beer mats, tent cards, window stickers, fridge magnets and bar-top display stands. All of these are free of charge to any customers, new or old."
The company's award-winning jalapeño and coriander flavour has a kick to it, and that is a direct result of licensees and their customers saying they loved really hot crisps.
"We are launching chicken tikka masala flavour soon, which came from our lo