Consumers still challenged by economy; elevates store-brand appeal
CINCINNATI — Consumer sentiment toward the economy continues to be negative, acknowledged David Dillon, Kroger chairman and CEO, a factor that may drive many consumers toward more of the value-driven store brands in which Kroger is investing.
"The sluggish economy continues to strain household budgets while increasing consumer anxiety," Dillon said. "In fact, customers tell us their expectation for the economy are more pessimistic now than at any time this year."
Corporate brands at Kroger certainly are on the rise. Kroger enjoyed 34% penetration in grocery department units sold for the second quarter ended Aug. 13, representing 27% of all grocery sales. "When you look at these trends compared to our first-quarter results, corporate brand dollars and total units each increased by 100 basis points," Kroger president and COO Rodney McMullen. "Our multibillion dollar corporate brand portfolio is a competitive advantage because it gives our customers more choices and variety and value to complement the broad assortment of national brand products we offer. This is particularly important today as many shoppers continue to watch expenses and look for quality items at affordable prices."
Inflation may be another factor forcing many consumers to take a closer look at store brands. The industry is continuing to pass along inflationary increases, including Kroger. "We will continue to pass along product cost increases from suppliers. At the same time, we will continue to invest for the future in pricing, people, products and customer shopping experience."
That means stocking that customer’s marketbasket with more margin-friendly store brands has become increasingly important, McMullen said. "Customers are even more value conscious when they shop, are buying smaller baskets and are selecting some lower-cost items, including our low — our corporate brand products. This has made the value we offer our customers through lower every day prices, weekly promotions and personalized rewards to loyal households even more compelling."
During Kroger’s discussion of second-quarter results with analysts last week, the Cincinnati-based grocer announced it would be expanding its selection of Big K brands soda flavors, including apple, pineapple, passion fruit, watermelon, kiwi, blackberry, citrus and mandarin.
Mike-sell’s rolls out new snacks
DAYTON, Ohio — Snack food company Mike-sell’s has introduced five new products.
Mike-sell’s lineup of products now includes Blazin’ Hot Crunchin’ cheese curls, Cheese Crunchin’ cheese curls, Blazin’ Hot corn chips, barbecue corn chips and Smoky Mountain barbecue kettle-cooked potato chips.
Mike-sell’s snacks are sold at grocery and convenience stores nationwide.
Health a factor in single-serve snacks
The back-to-school season brings a focus on single-serve snacks, and healthy snacks become a bigger part of the business every year. A recent report from Mintel revealed that while children are a major influence on the buying of multipack/bulk salty snacks, “given the increased concerns regarding nutrition, manufacturers can appeal to parents with products offering a better-for-you selling proposition.” Christine Brown, a spokeswoman for Natural Snacks said the company, which focuses on all-natural products, sees “a double-digit spike once school starts.”
In a back-to-school circular that devoted five pages to lunch and snack foods, Target featured Crunch Pak’s bagged apple slices, Clif Kid Z Bars and private-label Mandarin orange fruit cups. Whole Foods devoted endcaps to a cross promotion for Honest Kids and Pirate Brands’ Booty and Veggie Booty.
Nut-free snacks may be an area to watch as more elementary schools adopt nut-free policies for some lunch tables.
The article above is part of the DSN Category Review Series. For the complete Back-To-School Snacks Sell-Through Report, including extensive charts, data and more analysis, click here.