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.”