Doug VanDeVelde, senior vice president, marketing and innovation, U.S. Snacks for Kellogg Co., discusses the latest snacking trends with managing editor, Marina Mayer.

It’s all part of the annual process that we do for our upcoming 2009 State of the Industry report.

During the past two months, the editors at Snack Food & Wholesale Bakery magazine have contacted dozens of experts in the industry.

Unfortunately, we once again gathered too much information that won’t make it into our print edition. Good thing we, where we can publish the “uncut” versions of our interviews.

Check out what VanDeVelde has to say about the Battle Creek, Mich.-based snack giant, its new products and the overall state of the snack industry.

1. What are the emerging consumer trends in the snacks category, specifically cookies, crackers, 100-calorie packs and bars, and how are they driving sales? How are you meeting those trends with new products introduced over the last few months?

We’re seeing two macro trends contributing to the cookies category: the desire for indulgence and the need for more balanced snacking. Indulgent cookies, such as fudge and chocolate, are growing, along with “better-for-you” cookies represented by non-chocolate varieties, such as shortbread and oatmeal. 

We’re well positioned to address these growing trends. In February, we launchedKeebler Chips DeluxeOatmeal Chocolate Chip cookies, which combine the wholesome goodness of oatmeal with the taste of chocolate in every bite. We also introducedKeebler SandiesCashew Shortbread cookies, featuring crunchy cashews in consumers’ favorite shortbread cookie.

We’re also continuing to see the trend for healthier choices impacting the cracker industry. In December, we introducedSpecial KCrackers, the first savory snack to be launched by theSpecial K brand. Available in Tomato & Herb and Multi-Grain, these crackers contain 90 calories and 8 g. of whole grains per 17 crackers.

Convenience and portability also remain key drivers for the snacks category. Forty-one percent of consumers look for snacks that can be eaten on-the-go . Furthermore, 63% of consumers are trying to replace high-calorie snacks with healthier options. We’re finding success where these trends intersect, including ourRight Bites100-calorie packs as well as our breakfast and snack bars, which address the trends for both convenience and better nutrition.

While consumers have embraced portion-controlled snacks as part of their sensible eating plans, they want snacks that taste like real cookies and crackers, not pressed cookie-like chips. OurRight Bites100-calorie packs offer consumers a satisfying snack alternative, in a 100-calorie single-serving snack. We recently introducedKeebler Right BitesFudge Shoppe Cookies ‘n Crème cookies – bite-sized chocolate cookies topped with white icing.

In our bars category, we launchedKellogg’s FiberPlusAntioxidants bars in January.  Although fewer than 10% of Americans are consuming the recommended levels of fiber each day, fiber is only one of today’s top nutrition concerns for Americans . Consumers are also seeking to add more antioxidants and other nutrients to their diets . Available in Chocolate Chip and Dark Chocolate Almond,Kellogg’s FiberPlusAntioxidants bars provide a combination of fiber, antioxidants, calcium and 7 g. of whole grains that promote better nutrition. The bars contain 35% of the daily recommended value of fiber , plus 20% of the daily recommended value of antioxidants, vitamin E and zinc.

2. What are your top-selling products and how have they changed from two or three years ago?

Our snacks business posted another strong year in 2008, driven in part by successful innovation.Cheez-It andTown Housesales grew a double digit for the year, including great performance fromCheez-It Duoz as well Town House Flipsides, one of our most successful cracker innovations in years. Right Bites and Fudge Shoppe were strong contributors to our cookie sales growth and helped gain share for the year. Wholesome snacks sales grew mid-single digit for the year driven in part by ourSpecial KBliss innovation, and performance from our Rice Krispies Treats and Nutri-Grain cereal bars was strong as well.

We’ve seen strong performance from several of these brands for the last couple of years, includingCheez-It,Town House,Fudge Shoppe andRight Bites.

3. Have you redesigned your packaging? If so, how and why?

We continue to innovate around new packaging formats to satisfy the consumer needs for convenience and portability. For example, we offerCheez-Itmulti-packs for on-the-go occasions to enable consumers to enjoy the big cheese taste ofCheez-It crackers wherever they go. 

4. How are you merchandising/promoting your products?

In January, we launchedKellogg’sBig Game VIP Getaway Sweepstakes on several snacks products, offering one grand-prize winner and three guests a getaway to the 2010 Super Bowl in Miami, Fla. Ten first-prize winners will receive a Jerome Bettis autographed authentic jersey. The sweepstakes runs until July 1.

We also launched a very successful promotion with our Yogos Bits fruit snack in January.  With the purchase of specially marked packages of Yogos Bits, consumers could instantly win a Yogos Bucks card worth $5, $10, $20 or $100. The cards can be used anywhere Discover Network cards are accepted. The promotion runs until September 30.

This month we kicked off a sweepstakes promotion with ourRight Bites products, offering consumers an opportunity to win a trip to Kristi Yamaguchi’s “backyard” – San Francisco. From the Golden Gate Bridge to Fisherman’s Warf to the famed cable cars, one lucky winner and three guests will enjoy touring Kristi's favorite sites in addition to meeting Kristi at a table for five at her favorite restaurant. The sweepstakes runs until February 28, 2010.

5. Where are the greatest opportunities for growth in your category?

We believe there is great growth potential within the wholesome snacks category. More and more, we’ve found that consumers are looking to balance indulgent options with nutritious choices that fit into their everyday lifestyle throughout the day. With this increasing focus on weight management, portion control and positive nutrition comes an opportunity to provide wholesome snack products to meet individuals’ needs and taste preferences, no matter what they are looking for – whole grains, fiber, antioxidants and more.

We’ve tailored our product innovations to meet these needs, including our newKellogg’s FiberPlusAntioxidants bars andSpecial Kcrackers. In addition to our product innovations, we’re continually looking for opportunities to improve our products. In June of 2008, we launched reformulated Nutri-Grain cereal bars. Still made with whole oats and real fruit filling, Nutri-Grain cereal bars now deliver more whole grains (8 g,) – five times more whole grains than the average morning snack.

6. What are the biggest challenges facing companies that compete in your category? Why?

Like many other companies, we continue to be challenged by volatile commodity prices.  We continue to invest in our brands by introducing product innovations that bring excitement to our snack portfolio and by reminding consumers about the great taste and convenience of our products.

7. What are the biggest challenges that your customers face and how are you helping them solve those issues?

Successful merchandising in this challenging economic environment is important. This includes location, price/value perception, SKU [stock-keeping unit] optimization and display size. We provide a variety of merchandising vehicles to our customers, which can be strategically placed throughout the store, ranging from small, front-end register displays to large, thematic lobby displays. Retailers leveraging Kellogg’s Snacks DSD [direct-store-delivery] delivery system can benefit from our merchandising and services, while reducing their labor costs.

8. What is the economic outlook for the cookie, cracker, 100-calorie pack and bar industries?

Performance within the snacks category remains strong. For example, the cracker category is up +6.5% in dollar sales, year-to-date.

9. How have you streamlined or expanded your operation to meet the demand for your products?

Our company continually assesses the capacity and strengths of our manufacturing network. We are always looking for opportunities to improve our business.