Piece of the Action

After largely losing out on increased consumer snacking during the pandemic, c-stores are positioning for recovery.

Piece of the Action

September 2021   minute read

By: Terri Allan

Americans’ penchant to indulge in tasty treats during the pandemic last year was countered by altered shopping patterns in convenience stores, conditions that dramatically influenced the performances of snack food categories in the channel. With the situation easing in 2021, retailers and marketers alike are keeping a watchful eye to see if last year’s trends will continue, and if so, how to respond.

Increased snacking by pandemic-weary consumers was well documented in 2020. According to Mondelēz International’s State of Snacking report, released late last year, nearly 90% of adults said they were snacking the same or more than before the outbreak. That increased demand for treats largely benefited channels like supermarkets and club stores, where consumers loaded up on their favorite snacks. In c-stores, however, slowed foot traffic—as many worked from home—disrupted some of the leading snack categories. “Last year was a tough one for center-store categories,” explained Jayme Gough, NACS research manager. “Customers were interested in getting in and out of stores quickly. They weren’t interested in browsing.” Except for candy, all center-
store categories lost in-store sales share in 2020 versus 2019, Gough said.

“The pandemic had a huge impact as trends for the snack categories follow our guest count and store-traffic patterns,” said Maddie Crandall, category manager, snacks and candy, at RaceTrac, with more than 550 stores. Some categories suffered more than others, she added, noting that “salty snacks—one of the largest categories—took the biggest hit as our store volume wasn’t typical.”

Crunch Time

Salty snacks, a key in-store category for c-stores, were hit hard last year, a direct result of new work-from-home routines and slowed store traffic. According to the NACS State of the Industry Report of 2020 Data, average store sales in the salty snacks category slipped 3.2% to $123,751, and the category’s share of in-store sales dropped slightly to 4.3%. “Salty snacks purchases rely heavily on the number of trips consumers make to convenience stores,” said Bob Clark, vice president, marketing, at Herr Foods Inc., of the performance. “Pre-pandemic, the growth rate for salty snacks year on year was stronger in c-stores than traditional supermarkets.” (According to NielsenIQ data, c-stores account for 22.3% of all salty snack sales, with food stores at 42.0%.)

Pre-pandemic, the growth rate for salty snacks year on year was stronger in c-stores than traditional supermarkets.

Among the salty snacks subcategories to post declines last year were potato chips, pretzels and nuts and seeds, while other salty snacks (vegetable chips, pork rinds) and tortilla and corn chips grew in average store sales and gross profit dollars year over year. Gough said she was a bit surprised that potato chips suffered in the c-store channel in 2020. “Initially, I expected they might have benefited due to increased indulgency trends during the pandemic; however, package sizes played such a large role last year.” Indeed, increased demand for larger salty snacks pack sizes bled over to c-stores. “In the past year, we’ve seen consumers gravitate toward larger size packaging and more take-home offerings as they sought out value,” reported Stefanie Nobly, consumer and market intelligence manager at General Mills Convenience. “We saw more at-home consumption as overall c-store shifted a little from immediate consumption.” Kimberly Billings, director of category management for Pilot Co., agreed, noting that despite the category’s weak performance last year, it “saw the biggest lift in take-home packages.”

Bold—and often spicy—remains the key flavor trend for salty snacks, retailers and marketers said. “Consumers still love hot and indulgent flavors,” noted Clark. “The level of heat desired seems to keep rising.” At RaceTrac, “extra hot, flaming hot and spicy continue to drive the category,” Crandall said.

How Sweet It Is

Candy was the snack category bright spot in 2020, as average sales per store increased 1.9% to $79,690. “The confections category is resilient and is known to play a role in emotional well-being during times of stress and uncertainty,” remarked Caroline Bader, vice president, category management, at Ferrara USA. “COVID drove growth as shoppers sought comfort from familiar brands and excitement from innovation.” Gough added that unlike other snack categories, candy may have benefited from its ubiquitous merchandising at c-store counters.

Chocolate bars, nonchocolate, bagged and pegged candy, novelties and seasonals, and bulk candy all saw average store sales and gross profit growth from 2019 to 2020. However, gum and rolls/mints/drops fell—victims to work from home, social distancing and masking practices during the pandemic. “Chocolate was cited in The Wall Street Journal as the No. 1 quarantine comfort food,” said Glenn Frazier, director of category management - convenience store, at the Hershey Co. Still, he conceded that shopper behavior was different last year. “Trips were down, and basket size was up,” Frazier said. Gummy sales in c-stores continued to surge, several retailers reported. Jodi Meinen, chief financial officer at Wisconsin’s Handy Mart, pointed to dramatic sales growth for products like Ferrara’s Trolli Sour Brite gummies. “With kids out of school, they would come in and purchase them,” she remarked.

As with salty snacks, large candy packs saw increased demand in c-stores. “As the home became the center of life for consumers, c-store shoppers gravitated toward buying larger pack sizes for stocking-up purposes,” said Lance Smith, vice president, industry affairs and customer strategy, at PIM Brands Inc., marketer of products including Sun-Maid chocolate-covered raisins and Original Gummi FunMix. “We saw consumers opt for stand-up pouches and peg bag candy,” remarked Pilot’s Billings, which coincided with “less frequent in-store visits.”

Average store sales of packaged sweet snacks, meanwhile, declined 2.7% last year. Snack cakes, pastries and desserts fell in both sales and gross profit, while muffins and donuts registered sales and gross profit gains. “Early morning daypart sales during the pandemic were impacted by fewer people commuting to work,” noted Scott Ward, vice president of sales, at Hostess Brands, “but have since stabilized.” Billings added that Pilot experienced a decline in morning pastry sales with fewer consumers stopping for gas early in the day. “However, we did see growth in snack cakes, which typically were purchased in the afternoon hours,” she noted.

Even packaged sweet snacks leveraged increased demand for larger pack sizes during the pandemic. According to Ward, “Hostess bagged donettes experienced a significant increase in sales, and some retailers expanded their Hostess portfolio by adding larger take-home packs.” Nick Smith, director of category management at Hostess, added that the company has “been able to gain distribution for some of our legacy brands in c-stores in the last few years, thanks to our warehouse model.”

Combined in-store sales of alternative snacks increased to $56,196, according to NACS SOI data, largely driven by gains in the granola and fruit snacks subcategory. Gough noted that since many of the category’s products—which include better-for-you products like health, energy and protein bars—require trial, they suffered, as consumers “leaned on comfort snacks heavily.” But General Mills’ Nobly believes that “better-for-you products will circle back,” although it “likely will take a year or so to fully recover.”

So Far So Good

By all accounts, snack food trends in c-stores so far in 2021 are vastly improved. According to Gough, through the first quarter of the year, sales of salty snacks, candy and alternatives were all up versus 2019, with packaged sweet snacks flat. “Consumers are starting to get back to their previous lives,” noted Nobly, “but also have embraced new values that will stick with them coming out of the pandemic.”

Consumers still love hot and indulgent flavors.

Hershey’s Frazier reported that the company is seeing “very strong demand” through the first half of the year, and that while gum and mints are performing better, they’re still down versus 2019. Smith said PIM “expects continued momentum behind candy sales in 2021, both chocolate and nonchocolate, as tailwinds will outweigh headwinds.” Those tailwinds include increases in both incidence and frequency of snacking and the return of c-store traffic to pre-pandemic levels. At RaceTrac, Crandall noted at mid-year that “things have changed for the positive. Since April, our guest numbers are up, and salty snacks are rebounding.” Salty snack sales are also on the rise at Pilot this year, Billings said, while the larger pack sizes and bigger baskets that sprung from the pandemic continue.

While snack categories are pivotal for c-stores, they present their share of challenges, both ongoing and new. “With new products introduced virtually every day, we don’t have the room to stock them all, so it’s always a matter of finding the right mix,” remarked Handy Mart’s Meinen. And PIM’s Smith conceded, “c-store shoppers are pushing for healthier and better-for-you options, which will present a challenge to the candy category.”

But most immediately, retailers are concerned about supply-chain challenges, troubles born of the pandemic. “The biggest challenge is distribution and trying to get the products,” said Lane Attrash, owner of Skinny’s c-store in St. Helens, Oregon. “The supply chain has been inconsistent, and it’s frustrating. The customer thinks it’s the retailer’s fault.”

Feed The Impulse

One way to confront the challenges, retailers and marketers agreed, is through effective merchandising. “Confections is a very impulsive category, so secondary placement is key,” remarked Ferrara’s Bader. “Many retailers are investing in front-end placement near checkout, dedicated end stands and floor displays,” and are successfully converting shoppers into buyers, she noted. That’s the case at Handy Mart, where, according to Meinen, “whatever we put on the counter sells.”

At RaceTrac and Skinny’s, shipper displays go a long way in encouraging impulse sales of snacks. “We keep them updated and fresh and move them around the store,” Attrash said of shippers to promote both candy and salty snacks. The Oregon c-store also relies on multiple-unit promotions, a tactic that Hostess supports. “Offering an everyday ‘two for $X’ can drive a lot of incremental purchases,” Ward noted.

Marketers and retailers are optimistic that the conditions that damped sales of snack foods last year have waned. “We predict that c-store traffic will get closer to pre-pandemic levels, which will bring further growth to the channel and the candy and snacking categories,” said Smith. But Bader noted that continued work-from-home practices will restrict c-store visits, so retailers must drive basket size via displays, promotions and the correct product and packaging assortment. These days, the Ferrara executive noted, “right-size pack type assortments ensure representation across both small and larger pack types to cater to a wider variety of trip missions.” Indeed, she added, “COVID has redefined convenience and value for
c-store shoppers.”

Terri Allan

Terri Allan

Terri Allan is a New Jersey-based freelance writer. She can be reached at [email protected] and on Twitter at @terriallan.