Snack Attack
by Dan Malovany
Go ahead. Pop ’em, dip ’em, dress ’em up as a party snack or simply just graze on ’em right out of the bag. When it comes to catering to consumers, cracker producers are stealing a page, or possibly a whole chapter, from the salted snack aisle’s playbook.
Although imitation may be the sincerest form of flattery, the copycatting going on by some cracker manufacturers is anything but subtle. In fact, salted snack players may believe the cracker team is competing blatantly on their home turf.
In some cases, it’s almost too obvious. Take oven-toasted Ritz Chips, which Kraft Foods rolled out in the last year and are among the top 10 brands in the cracker category. Found in the cracker aisle, the hybrid product comes in 9-oz. bags and in Original, Cheddar and very chip-like Sour Cream & Onion flavors and are geared specifically toward couch potatoes and the “casual snacking” occasion, according to Daryl Brewster, president of Kraft’s U.S. Snacks Sector.
In yet another effort to make the cracker aisle the main destination spot for snacking Americans, Kraft has rolled out Ritz Sticks, which can be dunked in or used to scoop up everything from salsa to cheese spreads.
For those with a sweet tooth, the Northfield, Ill.-based company created Honey Maid Sticks, which come in Honey, Cinnamon, Chocolate, and Apple and Cinnamon varieties for dunking and dipping in everything from milk to yogurt to ice cream.
And consumers don’t have to leave the cracker aisle to find those dips. Recently, Kraft came out with Cracker Dips, which come in 11-oz. jars and sell for a suggested retail price of $2.49. The Cheese & Salsa variety is the “perfect companion” for Wheat Thins and Ritz crackers, according to Kraft, while the Zesty Cheese & Bean flavor accompanies Triscuit and Ritz products.
The Top 10 Brands
(For 52 weeks ending October 3, 2004)
  Dollar Volume % Dollar Unit Sales %
Rank Brand (in millions) Change Share (in millions) Change
1. Nabisco Ritz Everyday $232.3 +0.9% 7.3 88.2 +0.7%
2. Pepperidge Farm Goldfish $166.0 -8.3% 5.3 78.1 -9.4%
3. Nabisco Premium $158.0 -3.9% 5.0 74.3 -6.7%
4. Sunshine Cheez-It $138.4 -5.5% 4.4 57.8 -7.3%
5. Nabisco Wheat Thins $125.1 +1.2% 4.0 52.3 +1.5%
6. Nabisco Triscuit $107.1 +3.2% 3.4 44.9 +3.9%
7. Nabisco Honey
  Maid Grahams $93.6 -0.2% 3.0 30.4 -0.8%
8. Nabisco Wheat
  Thins Reduced Fat $89.3 +0.9% 2.8 36.4 +1.3%
9. Nabisco Ritz Chips $75.8 +290.9 2.4 29.3 +274.7
10. Keebler Club Everyday $74.1 -2.1% 2.4 28.5 -0.3%
  TOTAL* $3,140.5 -1.2% 100.0 1,475.8 -3.0%
*including brands not shown
Source: Information Resources Inc. Supermarkets, Drug Stores and Mass Merchandisers, except Wal-Mart.
According to Brewster, new challenges such as changing consumers, retail consolidation and rising overhead costs require quick reactions and new packaging and product ideas by the cracker industry.
“We used to put the business on automatic pilot and just crank and roll,” he told attendees at the Biscuit & Cracker Manufacturers’ Association technical conference in October. “Today, those changing consumers, those consolidating customers and those rising costs [force us] to find solutions, new answers and new ways to playing the game.”
Snack Wars
Kraft isn’t the only one honing in on the snacking occasion. In many ways, Pepperidge Farm’s Snack Sticks could be seen as a healthful, crunchy, low-fat product that competes with the pretzel category. Pretzels have responded to such infringements with double-baked braids, which resemble a crunchy breadstick, and Synder’s of Hanover is launching Pretzel Sandwiches, touting them as healthier alternatives to the cracker sandwiches on the market.
Likewise, Kellogg Co.’s snack division also found a new way to mimic salted snacks by producing a Cheez-It that more resembles an extruded snack. Rolled out last spring, Cheez-It TwisterZ uses the Battle Creek, Mich.-based company’s cereal technology to create a product has a distinct texture that can best be described as half cracker and half snack. It’s sort of the cracker aisle’s version of Frito-Lay’s Chee-tos.
In an apparent sign that the Plano, Texas-based snack giant isn’t sitting still in what’s shaping up to be a snack war between the two aisles, Frito-Lay launched Baked! Chee-tos, which contain only 5 gm. of fat, 1 gm. of saturated fat and no trans fats or cholesterol per serving. On the other hand, regular Chee-tos have 10 gm. of total fat and 1.5 gm. of saturated fat per serving. Offering Baked! Chee-tos is part of Frito’s effort to develop and promote better-for-you snacks under its “Smart Choices Made Easy” campaign aimed at health-aware consumers who are watching what they eat.
Healthy Eating Evolves
No doubt, the concept of producing healthier, but good-tasting snacks isn’t anything new, especially to specialty cracker companies such as Old London Foods. For decades, the Bronx, N.Y.-based company has produced a wide variety of toasts sold under the Old London and Devonsheer brands, geared toward consumers who are watching their weight, searching for wholesome, natural and organic products or simply want a light snack.
However, the definition of what constitutes healthy eating continues to evolve.
The Top 10 Vendors
(For 52 weeks ending October 3, 2004)
  Dollar Volume % Dollar Unit Sales %
Rank Brand (in millions) Change Share (in millions) Change
1. Nabisco $1,488.7 -0.4% 47.4 617.6 -1.8%
2. Keebler $418.7 -5.8% 13.3 176.8 -5.5%
3. Sunshine $335.2 +3.5% 10.6 138.2 0.0%
4. Pepperidge Farm $274.3 -1.3% 8.7 125.7 -3.3%
5. Private Label $214.0 -9.5 6.8 167.2 -9.1%
6. Non-Key Vendors $88.2 +16.4 2.8 48.2 +13.3
7. Lance $72.3 +2.6% 2.3 42.7 +3.5%
8. Kraft $55.3 -0.7% 1.8 38.2 -5.0%
9. Carr’s $45.2 -5.3% 1.4 16.8 -17.3%
10. Dare $25.1 +4.2 0.8 10.5 +0.4%
  TOTAL* $31,140.5 -1.2% 100.0 1,475.8 -3.0%
*including vendors not shown
Source: Information Resources Inc. Supermarkets, Drug Stores and Mass Merchandisers, except Wal-Mart.
Notes: No. 6 item includes All Other Non-Key Branded Vendors, Nabisco and Kraft are owned by Kraft. Kellogg’s owns Keebler and Sunshine.
“Looking at the total marketplace, what the media is reporting and what I see going around, my feeling is that people want products with great taste. They want products with good value, and they don’t necessarily want healthier product. My feeling is that they want products that just don’t do you no harm,” said John Wilcha, Old London’s chairman and CEO.
Specifically, he says, cracker companies like Old London, Kraft, Kellogg and Pepperidge Farm are reformulating products in response to current consumers’ concerns and the media hype over trans fat, cholesterol, fat and carbs.
Additionally, Old London participates in the Weight Watchers program and advertises in its magazines with coupons for its melba toast, bagel snacks and other snacks. Under the Devonsheer brand, the company offers organic alternatives and promotes a holistic lifestyle featuring Bart Conner and Nadia Comaneci.
“I think consumers appreciate what we’re doing, and they’re looking at labels, but none of these products are so-called healthier for you because, in the grand scheme of things, they are only one very, very small part of their total diet to begin with,” Wilcha said.
Although eating healthy is admirable, life’s too short to indulge a little.
“The industries that we are in are hopefully fun industries, and the products that you’re eating are not just totally a basic part of your diet, but you want some enjoyment,” he added. “You want a snack, a dessert and a little happiness in your life.”
Old London is trying to add a little more fun into the category with three commercials featuring long-time spokesman and former Monty Python comedian John Cleese, who also plays the new Q in the latest James Bond films.
In the TV spots, Cleese promotes the Italia variety of International Toasts, which are softer, thicker, non-compressed versions of the company’s signature Melba Toast. In the first one, titled “Opera,” which is being aired starting in May, Cleese tries the Italia variety and he’s no longer John Cleese. Rather, he’s transformed into “The Three Cleeses” and breaks out into pure opera. The three ads will run throughout next year on The Food Network.
Every Shape and Color
Despite efforts to broaden crackers into the snacking occasion, category sales remain relatively flat to down. Overall, part of the problem is a lack of true innovation. From a consumer’s perspective, eliminating trans fat is not unique or innovative, nor is adding more flavor or adding a barbecue variety to a Cheez-It snack cracker. And while Cheez-It TwisterZ is a unique product, it’s only one small example in a very large category.
As Wilcha explained, “There is no real widespread dynamic innovation in terms of the marketplace. I haven’t seen any real, super new types of crackers or new types of flavors. For the most part, companies are sort of tinkering with ingredients and making their nacho flavor more nacho-ish, and I don’t think that’s going to lead to any increase in sales by any stretch of the imagination.”
Still, some industry players are reporting that their cracker sales have rebounded of late.
Although Kraft reported in October its U.S. Snacks sales inched up a measly 0.9% in its third quarter, Kellogg’s snack sales, which includes cookies, toaster pastries and such wholesome snacks as snack bars, jumped 9% during the most recent third quarter. Carlos Gutierrez, its chairman and CEO, told analysts that on-the-go packaging and family snack packs helped spark sales by addressing consumers’ desire for convenience.
TwisterZ continues to do well and drove overall growth for Cheez-It,” he said. “Townhouse produced very good sales growth, and our Scooby-Doo crackers incredibly continue to be a huge success.”
Lance reported its sales rose 7% in the third quarter, due mostly to an increase in sandwich cracker sales. Wilcha reports that Old London’s sales rose 4.3% in dollars and 2.2% in units over a recent 12-week period.
“To a certain degree, specialty crackers are doing a bit better than the mainstream varieties,” he said.
For some time, Pepperidge Farm with its Goldfish brand has competed with salted snacks for share of stomach. Over the last several years, Pepperidge Farm has transformed its Goldfish line into a mega-brand by adding Baby Goldfish, Giant Goldfish, Goldfish Colors, Goldfish sandwich crackers and Flavor Blasted Goldfish, to name a few. Newest to the marketplace are Flavor Blasted Color Changing Goldfish, which change your tongue into red or blue. In this case, the new variety steals a page from the popcorn and cookie categories, which came out with tongue-coloring varieties several years ago.
Pepperidge, overall, has done a commendable job giving Goldfish attitude by having it wear cool sunglasses or creating smiling varieties. However, the whole cheese cracker segment has come under pressure because of a price war among Kraft’s Cheese Nips, Kellogg’s Cheez-It and Pepperidge Farm Goldfish brands. At some mass merchandisers, consumers can purchase a 6.6-oz. bag of Goldfish for under $1.
Although many mainstream cracker sales remain flat, specific segments are experiencing solid growth. Cracker companies report that sales in the whole-grain, wheat and graham segments have been performing nicely of late.
To boost revenues and develop new products, many players still rely on the age-old partnering with movies or TV shows. Kraft has rolled out Shrek products while Kellogg has teamed up with Scooby-Doo. Meanwhile, smaller players like Old London are cross-promoting with Plochman’s mustard, Skyy vodka and Columbia Crest wineries to broaden its toasts into new meal and entertaining occasions.
Whether it’s cross-promotions, new packaging or tongue-coloring Goldfish, cracker manufacturers need to do whatever it takes to bump up sales. That’s because they’re competing now not only with other cracker producers, but also with a huge salted snack category as well.
Many cracker manufacturers are adding new products, promotions and marketing programs that not-too-subtly resemble the successful strategies used by traditional salted snack producers.