Friday, February 2, 2018

Next-Generation Dairy Snacks: Processors Need to Play the Convenience Card

Just the other day I read this recent stat: 17% of consumers who purchase soup through a foodservice channel consider it to be a snack. This is up from 11% percent in 2015, according to Technomic. Soup? As a snack?

Think about soup, specifically soup at retail foodservice. It’s the perfect example of perception vs. reality and the ignorance of today’s shoppers.

Many shoppers believe that hand ladling hot soup into a to-go paper bowl at the front of store is a healthier choice than walking to the center of store and purchasing a microwavable bowl of soup for half the price. The reality is both versions of soup are high in sodium and far from minimally processed. But it does not seem to matter. They think it’s a healthy snack.

Most of the time the soups sold hot come from the same companies that produce the branded soups found in the ambient grocery aisle. Shoppers do not know this. (FYI, the soups served in the United Club are from Campbell’s Foodservice.)

I can promise you most of the hot soups contain preservatives—artificial or natural—to prevent everything from warmed-over flavor to microbial growth. And depending on the soup system, stabilizers are often necessary to keep dumplings from disintegrating and creamy solutions from separating. Hot soups sitting in a kettle are not simple, clean-label formulations. But shoppers love them. And they are snacking on them because they are conveniently located at the front of store in the fresh department, where shoppers increasingly are purchasing foods for immediate consumption.

It’s all about speed, experience and personalization.

And here’s where dairy foods are challenged, in particular at grocery stores. This is because many dairy foods—think yogurt cups, string cheese, frozen novelties, etc.—have long been merchandised in single-serve formats. Why would retailers relocate these lower-margin products from the back of the store—that’s usually where the dairy case is located—to the front of store where consumers are willing to pay $7.99 per pound for a scoop of yogurt on the salad bar? And, that’s not even touching on “slotting fee” bribery schemes. (Just calling it what it is!)

It’s time to reinvent dairy snacks and go after other channels, namely convenience stores, gas stations, coffee shops, school cafes, health clubs, and more. I emphasize the “reinvent,” because the convenience shopper is looking for products that catch their eye and meet their personal needs, emotionally and physically.

About a year ago, Nielsen research showed that U.S. convenience stores have boasted relative strength and sales growth in recent years. Built on the premise of speed, convenience stores are modeled to deliver on specific consumer needs that competing channels don’t fully meet. Convenience stores are highly relevant to consumers’ on-the-go lifestyles and are well equipped to deliver products that meet their immediate needs. Have you seen what you can now purchase at a neighborhood CVS or Walgreen’s? These stores are no longer just cold medicine and birthday cards.

The same is true for Target. Many have recently been remodeled and their fresh food offerings are quite impressive. Who would have thought just two years ago that you could run into Target and get a premium snack pack of imported charcuterie and cheese?

With 91% of consumers snacking multiple times throughout the day and 8% of these consumers forgoing the traditional three-square meals in favor of all-day snacking, according to research from The Hartman Group, food and beverage marketers are down-sizing packages and getting creative with flavors and nutrition profiles in efforts to make their products the ones grabbed for this growing dining daypart. Dairy foods manufacturers are no exception.

I recently wrote an article and slide show on dairy snacks for Food Business News. You can read it HERE.

The challenge is to get dairy foods merchandised in the grab-and-go case for immediate snacking needs. You need to be creative. It is wise for dairy foods manufacturers to have a team that separately works on the snackifying of its product lines. Retailers are not going to relocate products from the dairy case.

Research from The Hartman Group explains that while the phenomenon of snacking is messy and at times hard to fully describe, coherence is brought to snacking by examining how three key drivers represent a thematic shift in food values and are connected to the needs driving snacking occasions. The first driver is nourishment. This is snacking that meets needs for daily sustenance, long-term wellness and health management.

Source: The Hartman Group

The second is snacking that fulfills emotional desires for enjoyment, craving and comfort. And lastly, the third is optimization. This is snacking that helps one fulfill physical and mental performance demands. 

Dairy can do all this. Add a little flavor, boost up the protein, fortify with vitamins and minerals, etc. You get the idea.

And here’s my advice: call it a snack! Why are the meat and cheese combo packs doing so well at retail? They look like snacks. They are called snacks. They are described as meeting the needs of one of the three drivers of snacking.

Also, it has to look different than your other products. It has to look like a snack. With products such as yogurt, it has to look like a freshly prepared snack.

One of my favorite examples comes from the U.K., where Waitrose markets blended yogurts in clear cups. The yogurts are made with fruits, veggies and botanicals and the packages clearly showcase the content while they also simply describe the contents.

It’s time to develop new snacks, not new dairy case foods.

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