SNAXPO 2008 Draws Industry Execs Worldwide

SNAXPO 2008, the annual convention and exposition by the Snack Food Association (SFA) was held March 1-4, 2008 in San Antonio, TX, with industry executives from across the nation and 35 countries participating in the largest trade show created specifically for the snack food industry.

Held at the Henry B. Gonzalez Convention Center, SNAXPO opened with an all-day Latin American Educational Program presented in Spanish, featuring discussions of industry trends, developments and issues of concern. The day concluded with a lively Western Party at the famed Buckhorn Museum & Saloon, where a country-western band entertained as armadillos raced and a Texas cowboy lassoed guests.

Keynote speaker on Sunday, March 2 was former Rep. J.C. Watts, now a business consultant, who discussed the ongoing presidential election campaigns and key issues involved. He urged SFA members to involve themselves in the association’s government relations efforts, including SnackPAC, the political action committee.

The SNAXPO exhibit floor, featuring the leading suppliers in the snack food industry opened Sunday afternoon, as industry executives searched for new ideas and services to help their businesses grow. There were also two concurrent educational sessions that focused on managing the cost of commodities and innovations in snack food ingredients.

Monday featured an address by incoming chairman Daryl Thomas, senior vice president of sales and marketing, Herr Foods Inc., the annual State of the Industry report from Information Resources, Inc. and more trade show activity in the Exhibit Hall. Educational sessions featured discussions on new product development and on the important issue of sustainability.

Heather Mayo, vice president-merchandising at Sam ‘s Club, discussed her company’s overall strategy as well as specific issues affecting snack company suppliers, on Tuesday morning before the exhibit hall opened for its final session.

There was a golf tournament Tuesday afternoon, and the convention concluded Tuesday evening with 2nd Annual Tribute to Sponsors & Exhibitors Reception and Gala, which featured “1964 The Tribute,” a nostalgic Beatles show that was then followed by dancing to a local band.

“We had an absolutely outstanding SNAXPO,” reported SFA President & CEO Jim McCarthy, who said members found real value in the presentations and educational programs that were offered and benefited from being able to meet with top suppliers in one place within a three-day period. “Many exhibitors told us they were able to speak with decision-makers who were there to do business,” he said.

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SFA Installs New Chairman at SNAXPO

Daryl Thomas, senior vice president for sales and marketing, at Herr’s Foods Inc., was installed as the 2008 SFA Chairman Monday, March 3 during SNAXPO 2008 in San Antonio, TX. Thomas succeeds Tom Dempsey, president, Utz Quality Foods, the 2007 chairman.

Thomas pointed out that the snack food industry generates $26 billion in annual sales and is growing at an average rate of 4.5% every year. While some of the industry’s products date back to the 17th century, he noted that 1,100 new products were introduced last year with 79% bearing “some type” of health benefit claim.

“Our industry represents 70,000 jobs,” he noted. “We pay $1.4 billion in taxes. We contribute heartily to helping the poor and needy, and when disaster strikes, our members respond.” SFA’s more than 400 member companies donate $68 million to charities each year, he said, and are the “backbone” of many local economies.

He urged active member involvement in the association, and said he hopes to build upon the work of Dempsey and other previous chairpersons who helped launch new education initiatives, worked to strengthen the organization’s financial position, and strengthen SFA’s government affairs initiatives. This year, Thomas said he hopes to help broaden SFA’s membership base and increase partnerships with allied organizations.

“Let’s join forces through our association and search out those areas of common need and benefit,” he said. “We’ll all be stronger and better off by working together.”

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State of the Industry: Healthier Snacks
Lead the Way

With healthier-for-you snacks leading the way, the snack food industry turned in a 4% dollar sales increase over the past year, despite a rocky economy, with snack/granola bars outpacing every category with 11% growth, followed by yogurt at 8%, chocolate candy at 5%, snack nuts/seeds at 5% and crackers and salty snacks at 4%. 

Those were top-line results of the 2008 State of the Industry report presented at SNAXPO 2008 by Sally Lyons Wyatt, senior vice president, Information Resources Inc. (IRI). Lagging behind were frozen novelties and non-chocolate candy, up 2%; ice cream/sherbet, up 1%; and cookies, down 1%. 

Despite the dollar sales increase, however, overall total industry volume was flat, Wyatt said, with the exception of products delivering nutrition and light versions of the more indulgent products. Overall, healthier snack growth was 6.6% for the year, compared to 1.3% for indulgent snack products. 

“Despite the strong growth among healthier snacks,” Wyatt said, “it is important to note that indulgent products still comprise 2/3 of snack market spending. So don’t forget about them.” 

But, she said, healthier snacks have gained 2% to 34% of total sales and are generating momentum. 

Further, IRI’s surveys indicate that purchase frequency of indulgent snacks per buyer is down almost 3% from 2004 to 2007, while purchase occasions for healthier products have increased by about 1.2%. 

“Both weight management and nutrition are driving growth among healthier products, and innovation has been a key source of growth within each of these areas,” she said. 

According to IRI, the industry has taken substantial price increases over the past year, partly due to the increasing cost of energy and commodities. Leading the way were bakery snacks, with an 11% price hike, while virtually every other category was up at least 4%. With consumers looking to save money, Wal-Mart’s share of snack sales increased across most categories. In some categories private label products also gained, with the largest share increase reported by trail mixes and coated snacks at 4.5%. 

Consumers are also thinking more about their snack purchases, according to Wyatt, as they focus on eating healthier and finding snacks that offer nutrition and weight management benefits. “This trend is no fad,” she said. 

Chief health factors considered by consumers are no trans fat, low fat, low calorie, low cholesterol, low sugar, whole grain, low sodium and vitamins and minerals. All of those factors have increased in importance over the past year. About 62% of consumers eat foods that help prevent health problems or manage existing conditions, according to IRI, while 42% seek snacks offering health benefits beyond basic nutrition. 

Portion control products, such as 100-calorie packs, have gained dramatically as 55% of consumers seek ways of controlling portion size. 

SFA Members may view the complete presentation by clicking here.

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PepsiCo’s Sustainability Initiative Explained

 A sweeping initiative underway at PepsiCo to limit the company’s impact on the environment, provide opportunities and a positive work environment for employees, attract outstanding talent—all while continuing double digit growth--was outlined during a SNAXPO educational seminar Monday afternoon, March 3. 

Robert D. Schasel, director of energy and utilities resource conservation, discussed the company’s program that is designed to reduce its carbon footprint by reducing energy consumption, water usage, and waste discharges. 

“It doesn’t matter if you believe in global warming or not,” he said, “you still want to save money.” 

Schasel encouraged executives of snack food companies to set a “big” challenge for their firms, then create a team to execute the initiative and establish a budget to support it. Use scorecards and audits to track progress, encourage innovation and fresh ideas, and communicate the results, he advised. 

When his team was given the green light to launch a plan to dramatically reduce energy, water usage and sewage discharges, “it was exciting to see the ideas that had languished for years begin to take off,” Schasel recalled. 

The objective, he said, is to achieve a “net zero” plant concept – in effect, make company plans “disappear” from the public utilities in their communities. A pilot plant in Casa Grade, CA has nearly achieved that objective, he said. 

Examples of PepsiCo’s successes, Schasel said, include a landfill project that converts methane gas for use in boilers, thus using less natural gas and improving the environment. Such an initiative is now underway at seven of the company’s locations. 

A solar-powered facility in California produces about 75% of the energy needed to produce Sun Chips. 

The water content of potatoes used to produce potato chips is being converted to steam for boilers, reducing the need to use water from the public water supply. 

One caution: don’t make environmental or sustainability claims that you can’t support.

The Federal Trade Commission is “paying attention,” he said. 

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Snack Strategy at Sam’s Club

Sam’s Club is responding to key drivers that concern today’s consumers and policies being established can be expected to affect snack food product suppliers, according to a presentation by Heather Mayo, vice president-merchandising, at SNAXPO Tuesday, March 4. 

Included in those “drivers” are the consumer’s increased concern about health and wellness, a need to save time and purchase on-the-go products, as well as social responsibility and sustainability. 

Mayo said the company believes consumers should not have to choose between environmentally friendly products and products they can afford. She said Wal-Mart is instituting a policy that will favor suppliers that meet the company’s standards for sustainability. She applauded PepsiCo’s efforts in this regard, noting that Frito-Lay intends to reduce its use of electricity and water by 90% and its reliance on natural gas by 80% by 2010. 

“We will favor suppliers that meet our standards for sustainability,” she said, adding that the company will favor local producers when possible, in part to reduce energy consumption required to bring those products to market. 

She pointed out that healthy products, including portion control products, are increasing in popularity due to increased consumer concern about health and wellness. “Consumers are more educated than ever,” she said, noting that they are being more careful when they purchase food products, including snacks, to pay attention to nutritional attributes. 

Also identified as having significant growth potential were energy products, including energy drinks, power bars, and snacks with energy additives. 

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Innovations in Snack Food Ingredients

Important ingredient issues such as lowering trans fats, reducing acrylamide and altering the plant genetics to improve the nutritional and flavor profiles of snack foods were among the topics discussed during the educational session  on “Innovations in Snack Food Ingredients” at SNAXPO 2008.

Mary LaGuardia, omega-9 oils market manager, Dow AgroSciences, Indianapolis, IN, spoke about how plant breeding has yielded healthy oils. “We have gotten rid of trans with low levels of saturated fat without sacrificing stability, flavor and shelf life,” Ms. LaGuardia said. Gary Johnson, marketing manager, Novezymes North America, Franklinton, NC, who spoke on “Enzymatic Method for Acrylamide Reduction in Baked and Fried Foods,” pointed out that with the use of the enzyme asparaginase, the company reduced acrylamide in products by up to 97% without changing the appearance of the fried foods. Asparaginase is self cloned into a genetically modified organism, and it has GRAS status.

Joe Cornelius, Ph.D., vice-president, consumer trait business development, Monsanto, St. Louis, MO, talked about how plant genetics could be applied to structure and function to new products. He said that through plant breeding, it is creating a new tool kit for food processors.

He also discussed several new innovative soybean oils that help to reduce trans and/or saturated fats, as well as a soybean oil that can produce omega 3 fatty acids. He pointed out that by marring agriculture and food science technology food processors have been able to do the things that are taking place today in regard to new innovative ingredients and products.

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New Product Development Session

At the “New Product Developments seminar at SNAXPO, John B. Lord, Ph.D., professor of marketing at Saint Joseph’s University, Philadelphia, PA, emphasized that employees, customers and company owners must work together to provide product value. And that value must be genuine, and based on customer mandates, he stressed.

Dr. Lord said the value equation includes quality, convenience, innovation and points of differentiation. It must have an entertainment or experience factor, and the price/value relationship must be attractive.

Dr. Lord gave numerous reasons why new products most often fail. Products may not be meaningfully different; do not meet customer needs or experiences; or could be easily copied. There may be a lack of company preparation to fight competitors, poor merchandizing or a failure to sustain product support after launch. He also talked about achieving and measuring success, finding opportunities and understanding key characteristics of product categories such as sales and profit potential, scale, reward and risk. He finished with a discussion on ideation, mixing art with science to define a great idea.