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Americans are growing tired as the COVID-19 pandemic rages on, but it seems we're all using at least one of the same coping mechanisms: snacking. Whether we’re feeding our feelings with indulgent cravings or trying to keep our immune systems healthy with better-for-you snacks, the snack category is surging. Snacking is up 51 percent, according to Mondelēz International data and 37 percent of shoppers are making sure their pantries are stocked with snacks, according to NPD.
Senior Director of Red Oval Partnerships Heidi Huff checked in with Mondelēz International’s customer business lead for UNFI and IGA, Jeff Schneider, to learn first hand how the pandemic has affected shopper behavior in the snacking category and what that means for SKUs moving forward. Watch the full interview in the video, or catch the highlights in the story below.
Heading into 2020, the snacking category was looking good. Cookie and cracker were up 3.2 percent in 2019 according to Schneider, and Mondelēz was in the process of shifting many of their products in the category to larger pack sizes. Then the pandemic hit the U.S. and pantry loading took over in March, increasing the snacking category exponentially. "The latest 13 weeks, ending in May (which covers that whole COVID period), the category is up 20.4 percent in all channels," Schneider says.
We all know what happened next. "Everyone was going to the store less, and when they went, they wanted to get the most convenient pack with the most offerings or ounces in it," Schneider says. Shoppers started stocking up, with multipacks and family sizes selling out across the category thanks to shoppers’ need to buy more in fewer trips. "Anything that said 'family size' or 'large size' or has multiple servings to last beyond a single shopping trip," he continues. They sought out trusted, familiar brands that provided indulgence. Luckily for Mondelēz, they were prepared for this shift, and the statistics prove it, with large sizes performing well in brands across the category. Schneider says in the past few months Mondelēz has seen:
Even though the shift to larger packages had been happening in the category pre-pandemic, COVID-19 shopping pushed it over the edge. The same happened with better-for-you snacks, which were popular before the pandemic. In an interview with IGA last year, Schneider remarked, “Health-minded items are on fire, especially when you can tie it to brand recognition,” and that comment holds up today. According to Sally Lyons Wyatt, IRI executive vice president and practice leader, client insights, “All Coronavirus has done is made the trends that were already redefining snacking even more important.”
With manufacturers focusing on what's selling now, shoppers have likely noticed some changes to what SKUs are available on retailers' shelves. After evaluating their portfolio, Mondelēz has stopped making niche SKUs, like those geared toward parties or special events and “third or fourth flavors,” as Schneider says. "We focused on producing as many RITZ as we could so the core SKU that everybody eats and everybody loves, we're making those 24/7," he elaborates. With this approach, there will be plenty of the core SKUs on shelves.
One thing that’s not selling? Gum. "When you start thinking about when consumers are using gum, why they're buying it, and where they're chewing it—as everyone is staying home, not driving in their cars, and not meeting face to face, people stop chewing gum," Schneider explains. Coffee breath is literally masked by your mask, meetings are via video or phone, and as the statistics suggest, people at home are snacking instead of chewing gum (hello, Quarantine 15!).
Similarly, sales for snacks that are often consumed on-the-go, like nutrition bars, are down. A Bernstein report says performance nutrition bars have dropped 20 percent, meal replacement bars 17.9 percent, weight management bars 11 percent, and health and nutrition bars 5.8 percent since the pandemic hit the U.S. "Instant consumption items that might be at a lane block or up at the front of the store—all of those have seen significant declines because because people are spending a lot of money filling up their basket to provide for their family for the next couple weeks," Schneider explains.
But there have also been some unpredictable surprises. Schneider notes that even though baking has been very popular, it doesn’t seem to have affected the cookie category, which is up 25 percent since March. “No one can make an OREO,” he says, noting that OREO sales are up about 40 percent.
And it seems s’mores have never been so popular. Graham crackers sales are were so high at the beginning of the pandemic that there were supply issues. "With everybody isolating themselves with their families, the s'mores season exponentially started faster than anyone could have predicted," Schneider says. "People are having s'mores parties and that's kind of the social gathering of the neighborhood right now." Manufacturers have since shifted production to ensure s'mores supplies are back on shelves to meet consumer demand.
By now, retailers and shoppers are no strangers to supply chain issues. But Schneider shared that Mondelēz was taking steps to ensure there were plenty of graham crackers and other popular snacks on store shelves before the July 4th holiday, and they succeeded.
With manufacturers adjusting quickly to shoppers' needs in our pandemic world, shoppers have likely already seen the big changes Schneider referenced earlier: the reduction of smaller pack SKUs and low performers like specialty flavors. But the pandemic has also shone a light on the importance of independent retailers. Consumer's desire to shopper safer has resulted in 78 percent of customers changing where they shop, buying their groceries either online or closer to home in smaller stores.
"It's really benefitting two groups: the small, independent retailer, which is the makeup of IGA—and I'm sure some stores are seeing phenomenal growth—and obviously eCommerce," Schneider says of the shift in where consumers are shopping. And as shoppers frequent the independent retailers, they have been on the receiving end of the benefits of shopping local independent retailers. With supplies low in the early days of the pandemic due to pantry-loading, Mondelēz limited the distribution of certain SKUs to more equally distribute the most in demand products to stores nationwide, making sure IGAs got their fair share of goods.
Schneider says smaller stores serviced through a warehouse, like independents, "were probably able to get more inventory as they were not bound to our allocation process." Both shoppers and retailers alike benefitted, with Schneider saying that those smaller IGA stores serviced through a warehouse were up 36.6 percent through June.
"The snacking industry, like all the rest of us, was not prepared for sustained, double digit comp growth like we have seen during the pandemic, but with SKU rationalization, extended shifts, and lots of innovative thinking, they've done a remarkable job of maintaining product production and distribution," IGA CEO John Ross says. "Mondelēz's continued focus on shoring up the supply chain for independents is allowing IGA retailers to fully embrace the snack opportunity and serve their shoppers with options that are as good or better than any national chain."
Want more category insights? Take a deep dive.by watching IGA's Heidi Huff and Mondelēz's Jeff Schneider interview, and stay tuned for category interviews with more Red Oval partners coming soon.