Monday February 25, 01:30 PM
Raising the Bar
By
Judith Crown
Americans are going bar crazy, and not for the sort that purvey wine, beer, or salads. Rather, the ardor for snacks packed with cereal, nuts, and other things crunchy or chewy is growing. The latest iterations take bars to a healthier realm -- they trumpet
fiber, low calories, or multigrains, yet frequently add chocolate or fruit to make them a somewhat wholesome indulgence. Sales popped by 14% last year to $1.6 billion, according to market tracker ACNielsen, at least three times the growth rate of overall supermarket products. Consumers appreciate bars because they're convenient -- they often substitute for a sit-down breakfast, compensate for a skipped lunch, or satisfy the need for a 3 p.m. sugar fix. Now the labels are proliferating as manufacturers carve out ever more narrow niches.
"Anything that's portion-controlled and portable that helps consumers manage their cravings is on fire," says Brad Davidson, president of Kellogg (NYSE: K - news) 's U.S. snacks division. What's more, Davidson says, there's ample room to grow: Only 68% of households in the past year bought granola and snack bars, compared with 90% for an established product like cold cereal.
Promising Sales
Such promise was abundantly evident at the Consumer Analyst Group of New York conference in Boca Raton, Fla., which ended on Feb. 22. Market leaders Kellogg (K) and General Mills (NYSE: GIS - news) (GIS), which hosted breakfasts on different days, stacked cereal boxes and piles of snack bars for anyone to sample. Kellogg had on hand its Kashi Chewy Granola bars and Special K Bliss bars, while General Mills passed out its Fiber One and low-calorie Curves bars.
In his presentation to analysts, General Mills CEO Ken Powell said sales of the company's grain snacks outpaced the industry, rising 35% for the past 12 months to $426 million. Half of the 10 fastest growers were General Mills entries, including Fiber One bars, Nature Valley Sweet & Salty Nut bars, and Caribou Coffee bars. The newest varieties appeal to health-conscious adults with busy lifestyles, says Kim Nelson, president of the snacks unlimited division at General Mills. "They're eating smaller portions more frequently."
A Standby Snack
Although granola bars have been around since the 1970s, growth has taken off over the past decade, according to market research firm NPD Group. In 2007 the number of Americans who ate a bar at home at least once in a two-week period was 19%, compared with 15% in 2004 and 7% in 1994. NPD Vice-President Harry Balzer says the category has become increasingly fragmented, with granola bars appealing to kids and young adults under 35, low-calorie bars doing well with women over 18, and energy bars [classified as a separate category at the supermarket] going to men over age 18. "There's a bar for everybody," quips Balzer.
While purchasing several varieties at a downtown Chicago supermarket on Feb. 20, 29-year-old attorney Mandy Schermer said she's been eating bars in place of skipped meals or as a snack since she was a kid. "I like to believe that they're better for me than chips or a candy bar."
Major Market Players
General Mills was a pioneer of the category in 1975 with its Nature Valley brand, now nearly a $300 million franchise in supermarkets and most other food retailers. Quaker Oats, a unit of PepsiCo (NYSE: PEP - news) (PEP (Vienna: PEP.VI - news) ), came on strong with its Quaker Chewy Granola bars, which were aimed at mothers who wanted healthy snacks for their kids -- but ended up eating them as well. Soon after, Kellogg made a splash with its fruit-filled Nutri-Grain bars, targeted for breakfast and mid-morning snacks.
Kellogg leads the category with an estimated share of nearly 30%. No. 2 General Mills, close behind at around 27%, says it's poised to overtake its rival, while Kellogg maintains it enjoys a 2.5-point share gap that it expects to widen this year. Meanwhile, No. 3 Quaker, with a 20.5% share, is extending its 90-calorie Chewy Granola bars into flavors such as dark chocolate cherry and is launching multigrain Simple Harvest bars -- both with adult snackers in mind. "There are almost unlimited permutations and combinations," says Mark Schiller, president of Quaker's foods and snacks division. "You can bet on that."
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