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Can companies make chocolate more sustainable? One researcher is trying to find out

Screen Shot 2019-08-13 at 2.47.08 PMSophia Carodenuto is looking for ways to make food more sustainable in an unusual place: The business practices used by the companies who control the world’s chocolate trade.

“On the one hand, you have the private sector driving deforestation” in cocoa-producing regions, said the professor at the University of Victoria. “(But) the private sector can also be the instigator of sustainable land use.”

Carodenuto – along with Janina Grabs, a postdoctoral researcher at ETH Zurich’s Environmental Policy Lab – wants to know how, and if, these businesses can drive widespread change to sustainable farming.

Each year, the world consumes about four million tonnes of cocoa, most of it grown by small farmers in West Africa. The beans then pass between middlemen along increasingly concentrated supply chains. By the time they reach supermarket shelves, over 60% of the beans will have been controlled by three international commodity companies, she said.

That creates an “hourglass” structure, she said. There are lots of farmers at one end and plenty of chocolate consumers at the other, but they’re only linked by a few large companies. It’s a structure replicated across most commodity supply chains, from coffee to corn.

Often, the same trading companies will manage several commodities at once. For instance, the U.S.-based company Cargill trades cocoa, beef, seafood, and several other commodity crops.

That concentration gives those companies tremendous power over everything from farm-gate prices to farming techniques to the prices paid by consumers. For Carodenuto, that could be a way to encourage more sustainable cocoa farming practices.

“Thinking about how to reach these millions of smallholder farmers ? traders are often a key entry point because they aggregate the commodity, and they have a relationship with the farmer – more so, often, than the (government),” she said.

This influence has long been recognized by the trader _ and their critics. Over 20 years ago, widespread concern about the environmental and social impacts of industrial commodity farming spurred the creation of third-party certification systems like Rainforest Alliance, UTZ Certified, and Fairtrade. Commodity farmers – including cocoa farmers – need to meet specific environmental, social, and economic standards to be certified.

Historically, governments also played an important oversight role. Since the 1990s, however, their leverage has weakened as many have adopted free trade-oriented policies.

More recently, however, major cocoa producers and manufacturers have also started to develop their own sustainability certificates. Mondelez International, for instance, introduced its proprietary Cocoa Life scheme in 2012.

These efforts have the potential to be effective, she said. For instance, many farmers can’t afford to transition to more sustainable practices alone. Traders could arguably even have an “ethical” responsibility to offer financial and technical support to farmers they’re requiring to meet expensive sustainability requirements, she said.

But the impact of these corporate schemes remains unclear, Carodenuto said.

“What we’re seeing is that the large traders are really dictating a lot of these sustainability programs. There’s a move away from government-led sustainability approaches and more towards private sector (efforts),” she said. The private sector is often driving deforestation, she noted. With Grabs, she is looking at whether those private sector sustainability initiatives actually work.

“We’ve been looking at what are these sustainability approaches in practice? What are they actually trying to do? How do they compare to previous approaches? And we’ve found a huge gap in knowledge around what traders are actually doing,” she said.

And while they have tremendous influence over farmers and governments, there remain gaps in how effectively these large companies can trace the sustainability of their beans.

Most will draw some of their beans from sourcing areas where they have direct relationships with the farmers and more control over farming practices. The remainder – for some companies, up to 40% – will come from smaller middlemen, eliminating the larger companies’ control over how the beans were grown.

“We’re looking at traders from this diversity of perspectives. You have these huge concentrated companies ? but then you also have an important role for traders that are operating informally and under less public scrutiny. There’s a lot less transparency about what they’re doing _ and those are some of the key players in terms of sustainability.”

Figuring out how to integrate those smaller players into sustainability initiatives is also key, she said.

With their research in its infancy, Carodenuto and Grabs have no answers yet. Finding them, however, is increasingly important if we want to make cocoa and other commodities more sustainable, they said.

“This relationship between farmers and their downstream partners is so important for sustainable supply chains,” said Carodenuto.

“This is where traders come in _ they’re usually the ones who are the first point of contact with farmers. In other words, they provide a lot of hope for reaching out to millions of smallholders who need support in changing their farming practices.”

 


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Nestlé creates vegan KitKat bar

Coming soon to a selected retailer near you: a vegan version of the iconic KitKat candy bar.

Switzerland’s Nestlé didn’t spell out in its announcement on Monday the exact formula for the new treat to be known as the KitKat V, but said it would “soon have a delicious plant-based option that delivers the perfect balance between crispy wafer and smooth chocolate that people know and love.”

The company said it already launched plant-based alternatives to dairy made from rice, oat, soy, coconut, pea and almonds that are found in its non-dairy ice cream, coffee creamers and other products.

The KitKat V, which will launch later this year in “several countries across the globe,” is certified vegan and uses 100% sustainable cocoa, the company said.

As the product is tested it will only be available in the company’s boutique KitKat Chocolatory shops or online, and through select retailers.

It will be available in Britain, where the KitKat was originally developed in York–and where the research on the vegan version was done–but not in the U.S. where the KitKat is produced under a licensing agreement with Hershey’s, the company said.

Nestlé said it was not releasing information on other countries participating in the initial roll-out at the moment.


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Kraft Heinz sells Planters brand to Hormel Foods

Planters_nutsHormel Foods is going nuts.

The Austin, Minnesota-based company, known for its meat brands like Spam and Applegate, said Thursday it is buying the Planters nut business from Kraft Heinz Co. for $3.35 billion. Included in the deal are Planters brands like Nut-rition, Cheez Balls and Corn Nuts.

“The acquisition of the Planters business adds another $1 billion brand to our portfolio and significantly expands our presence in the growing snacking space,”Hormel Chairman, President and CEO Jim Snee said in a statement.

The proposed transaction is expected to close in the first half of 2021.

Kraft CEO Miguel Patricio said the sale is a major step in the company’s transformation. Patricio said the company plans to reinvest in products that have more growth opportunity, like Lunchables and P3 protein packs.

Kraft Heinz, which was formed in a 2015 merger, has been struggling as customers increasingly seek fresh, minimally processed foods. It has also had trouble differentiating its products from cheaper store brands.

In 2019, it slashed the value of its Oscar Meyer and Kraft brands and took an impairment charge because of the falling value of brands like Maxwell House and Velveeta. Last year, it sold its natural cheese business, including its Cracker Barrel brand, to French dairy company Lactalis Group for $3.2 billion.

But Kraft Heinz also saw stronger retail sales last year as customers stocked up during the pandemic. The company said Thursday its net revenue grew 4.8% to $26.2 billion last year. That beat Wall Street’s estimates, according to a poll of analysts by FactSet. Kraft Heinz also beat its fourth quarter earnings expectations.

Hormel reports its fiscal first-quarter results next week. For the 2020 fiscal year, which ended in October, its sales rose 1% to $9.6 billion.

Under the agreement, Kraft Heinz will sell its Corn Nuts production facility in Fresno, California, and Planters production facilities in Fort Smith, Arkansas, and Suffolk, Virginia, to Hormel.


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Pandemic-era snacking 

A shift in consumption reflects evolving consumer behaviours, priorities

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How Canadians eat and drink continues to change and evolve, particularly as we retreat into our homes with government regulations, restrictions and public health guidance continuing to limit our daily movement.

During the pandemic, many consumers re-connected to home life as a place of refuge, comfort and belonging. In tandem with this re-connection has been the re-prioritization of meals as pillars to define our days.  

But, the question remains: “Has the shift to meals impacted Canadians’ daily snacking habits?”

The answer is, yes. 

Although the ‘snackification’ of Canadians’ eating routines has been well-documented for nearly a decade, we often forget that the rise of snacking can be directly correlated to the de-prioritization of meals, as Canadians gravitated to less cumbersome, less work-intensive and more flexible approaches to eating and drinking.

As we find ourselves 10 months into the pandemic, our snacking behaviour, while still robust, has softened when compared to the early pandemic days in 2020 and the pre-pandemic period during 2019.

While snacking remains a huge behaviour, with more than two-thirds of consumption occasions in an average day continuing to occur outside or in-between meals (at snack), the retreat from snacking has impacted consumers’ choices and the performance of related categories.

Snacking defined

At Ipsos, the FIVE consumption tracking study (it has been in the field every day since 2013, tracking eating and drinking behaviour amongst 24,000 individuals aged 2 and over) defines the snacking universe according to consumers’ reporting of what they ate or drank by time of day and occasion. 

The food and beverage items consumed outside traditional meal occasions are grouped together and these ‘snacks’ are evaluated by three distinct segments: traditional snack goods (e.g. fresh fruit, potato chips or chocolate) vs. non-traditional snack foods (e.g. pizza, sandwiches, chili) vs. beverages.

Rise of daytime snacking 

Even today, snacking habits continue to shift as we settle into winter routines, with increasing snacking rates during morning and afternoon occasions. While ‘eat rate’ increases can be traced to kids’ being at school, there is also a considerably large cohort of adults that continue to work from home—wearing out the path from home office to pantry—to meet increasing daytime needs/demands for energy, mental well-being and grazing. 

Increased daytime snacking at home has resulted in more fresh produce snacking (though potato chips remain strong), particularly when compared to the pre-pandemic period. Fewer carried-from-home occasions and less requirement for portability is having an impact on cookies, crackers and granola bars.

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The increase in daytime snacking habits has put pressure on the evening occasion; with evening eat rates for snacks declining when compared to early pandemic days.

The snacking pantry

The pandemic era has certainly re-invigorated Canadians’ use of the pantry, particularly among families with kids. According to Ipsos findings, almost two-thirds of family shoppers report that they will continue to pantry-load even after lockdown restrictions have ended.

New stockpiling habits are also impacting how consumers define convenience, with a growing share of individuals reporting that having items on hand is a key factor in making the snacking event both easy and accessible.

It is also important to note that the third most reported item identified as a ‘grocery essential’ among a diverse cross-section of food and beverage options was snacks. Interestingly, their importance as an essential ranked ahead of several ‘hard to find’ options coveted in the early pandemic days, such as baking goods. 

The role of the pantry will likely remain ‘top of mind’ important as we head into the back half of 2021 and more of us venture outside. In our latest FIVE data release (October 2020), carried-from-home snack occasions increased considerably when compared to spring rates, although they remain lower than reported in 2019.

Evolving needs drive choices

Undoubtedly, our in-home cocooning and discovery of new routines, new schedules and new ways to entertain have exposed new consumer tensions. Even during ordinary times, many of us struggle to balance work, family and social responsibilities. These struggles have been amplified by both the health pandemic and our new homebound status.

Beyond ‘point of entry’ needshunger, thirst, gap fill and conveniencethat motivate snacking choices, there is a growing focus on meeting mood needs (e.g. comfort, stress relief and relaxation) and opting for healthier guilt-free choices, nurturing and nostalgia.

In their continuing quest for healthier snacking options, Canadians are moving beyond simply focusing on nourishment and nutrient intake. They are increasingly prioritizing emotional well-being and focusing on metabolic benefits, such as digestion, weight management, boosting immune systems and beauty health, to name just a few.  The rise of personal health spaces provides huge growth opportunity.

Post-pandemic snacking 

As we move through the balance of the pandemic era, there will be undoubtedly more shifts and changes as consumers respond to their environmental circumstances.  

Beyond evaluating current changes, it will also be critical to identify the legacy impacts of our cumulative confinement experience to determine what impact they will have on consumer snacking habits, as well as category and brand choices. Integrating these factors into future planning will be an important dynamic in shaping the snacking path ahead.

 


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PepsiCo goes Beyond Meat in new partnership

The_PLANeT_Partnership_LogoPepsiCo and Beyond Meat are creating a joint venture to develop snacks and drinks made from plant-based proteins.

The companies didn’t reveal what kinds of products they will make Tuesday, saying they’re still in development.

But the collaboration sent Beyond Meat’s shares to their largest single-day gain since they began trading in 2019, jumping by more than $50 each to $209.17.

The join venture gives Pepsi access to one of the leading plant-based meat companies at a time when consumers are increasingly cutting back on meat consumption and looking for healthier, more sustainable foods. Beyond Meat’s burgers, sausages and chicken, which are made from pea protein, are sold worldwide, including at Starbucks in China and Pizza Hut in the U.S.

Beyond Meat gets access to to Pepsi’s distribution system and broad product line. Pepsi, in addition to drinks, makes Fritos, Cheetos and Tostitos, as well as Matador beef jerky.

It’s a shot in the arm for El Segundo, California-based Beyond Meat, which had been struggling to convince investors of its growth opportunities as competition increased. Beyond Meat shares plummeted in November after retail sales slowed and McDonald’s hinted that it might work with another supplier on a new plant-based burger for the U.S. market.

Food companies are increasingly jumping into the plant-based space. In 2019, Chobani introduced coconut milk-based yogurt and Nestle brought out plant-based burgers and ground meat. Meat giant Tyson Foods, which used to own a stake in Beyond Meat, now has its own line of plant-based meats.

“Plant-based proteins represent an exciting growth opportunity for us, a new frontier in our efforts to build more sustainable food system,” said Ram Krishnan, PepsiCo’s global chief commercial officer.

Financial terms of the deal weren’t released. The joint venture will be managed through a new entity called The Planet Partnership.


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Sweet comforts

From nostalgic classics to new innovations, candy is getting a new lease on life during the pandemic

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If you’ve found yourself indulging in sweet treats more often over the past few months, you’re not alone. Canadians seem to be finding comfort in candy amid the stress of the pandemic, with Nielsen reporting Canadian confectionery sales were up by more than 3% in August 2020, compared to the previous year.

And at Mintel, Marcia Mogelonsky, director of insight, food and drink, says the pandemic changed the trajectory of 2020 confectionery sales, which were initially down from 2019. “Consumers began to defect from candy categories, cutting back on consumption in order to maintain their health; but COVID changed that,” says Mogelonsky. “Anecdotal evidence suggests that consumers, seeking comfort and security, are buying candy again.”

Mintel’s data indicates that young adults, in particular, enjoy the sense of nostalgia that some candy products bring. Nostalgia and comfort seem to be the driving forces behind the growth in candy sales at Alberta-based grocer Freson Bros., according to Lesleah Horvat, general manager and floral specialist. Horvat says their stores have seen an increase in candy sales, overall, but the boost has been especially large in the specialty candy section, which focuses on retro products.

Indeed, sales in the retailer’s specialty candy section have jumped by as much as 20% in some stores this year, says Horvat. “This candy isn’t your traditional grocery candy—the price points are higher—so [consumers] are treating themselves to a higher-priced item,” she says.

It may not have been the ideal year for new releases, however, says Kimberly Snyder, candy brand manager for Dare Food Limited. She says sales of Dare Cherry Canadian Eh, which was released in the summer of 2020, were not as strong as the company had hoped. “We chalked that up to the fact that fewer consumers were physically in stores and they wouldn’t see it,” explains Snyder. “If they’re doing online shopping, they wouldn’t have heard of it because it was new so they wouldn’t be searching for it.”

The desire for comfort also seems to be fuelling a trend towards bulk candy purchases. Mike Dziadyk, space and category management director for B.C.-based grocer Quality Foods, says he’s seen an uptick in the sales of larger-format candy packages this year. “I think with COVID, people are choosing to indulge more at home and [are] picking up a lot of what they want,” he says. Dziadyk adds that long, physically-distanced lineups of the  pandemic have created an opportunity for Quality Foods stores to add more displayers around the check-out areas to showcase these larger-format packs. “They’re right there as people are lined up, so they have no choice but to see them,” he says.

The trend towards larger format packs has also been observed by Mars Wrigley, according to marketing director Barbara Cooper. “We see ourselves in a category centred around moments, and many of them are rooted in immediate or impulse consumption,” explains Cooper.

“Mars Wrigley quickly identified that stay-at-home restrictions and less frequent trips to the store meant that how and when people shop was changing, and that this was going to have an impact on these impulse moments,” she adds, noting that consumers are now more likely to stock up on larger bags of candy for future consumption.

Consumer desire for larger bags of classic candy, however, doesn’t mean the trend towards better-for-you candies is slowing, says Dare’s Snyder. “I think low-sugar is here to stay. It’s not a fad,” she says, pointing to Vancouver-based SmartSweets as a company that’s shaken up the market with its low-sugar candies. SmartSweets debuted its first plant-based candies in 2018, and Snyder adds that vegan and plant-based candy is another emerging trend.

Vegan candy has long been a pillar for Squish, a Montreal-based candy company that launched in 2014. “I was surprised there weren’t more interesting vegan options in the market and I still think it’s quite limited in terms of flavour,” says Squish founder Sarah Segal. “Brands don’t have as much fun with it,” she adds. “They think it’s a serious category, whereas we think it’s as exciting as non-vegan. I think that’s why we’ve resonated.”

Ultimately, while consumers seem to crave the choice offered by low-sugar and plant-based candies, it’s important not to underestimate the classics. “The thing with candy is there’s a difference between what people say they’ll do and what they actually do,” says Snyder. “No one wants to admit ‘yeah, I’m eating way more candy.’ People will say they’re trying to be healthier, but then there’s the reality of dealing with a global pandemic and wanting to have affordable luxuries and indulgences. That’s where candy fits in.”

Originally published at Canadian Grocer. 


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Holiday socializing 2.0: Eat, drink and be wary

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With the constant uncertainty and change that is prominent in a COVID-19 environment, it is vital that we look towards the face of this new reality and consider how we might adapt upcoming fall and winter celebrations.

Undoubtedly, foods and beverages will remain at the centre of these celebrations, particularly during the upcoming treat-focused Halloween 2020 season and into the myriad of winter social occasions. But, how might COVID-19 crisis-inspired habits impact treat choices?

It’s challenging at the moment to forecast too far ahead.

However, barring any dramatic progress, it is likely that far fewer kids will be heading out on the evening of October 31st to gather goodies throughout their neighbourhoods, particularly as public health officials continue to promote necessary social distancing and warn of probable infection resurgences.  

These notifications and warnings have led to a third (34%) of Canadian parents reporting (as seen in the Ipsos Path Forward Study) cautiousness towards permitting their children to participate in group activities of any kind, even after the pandemic restrictions ease.  

Screen Shot 2020-10-19 at 1.42.08 PMNotably, even before our lockdown confinement in mid-March, Ipsos FIVE data had revealed that trick-or-treating activities and consumption rates of seasonal favourites at Halloween were already on the decline in 2019—almost a 10% drop in eating rates from Halloween 2016. 

Given this trend, which has likely accelerated during COVID-19, perhaps there is opportunity to re-invent or modernize Halloween and other holiday rituals.

Online celebrations

More than half of Canadian parents (54%) report that they intend to continue to meet with friends and family virtually even when COVID-19 related closures and restrictions end—Zoom socializing has been met with tremendous positivity.

These virtual sharing events open up opportunities to prepare, decorate and engage with other family and friends within safe distancing protocols, while still enjoying activities, games, crafts and, of course, food.  For instance, in order to elevate the fun factor, individual treat baskets could be assembled and shared for kid (and adult) participants.

Stock up on baking supplies

Although increased baking rates that were front and centre during the early-lockdown days receded somewhat by summer, still more than a third of Canadians (37%) now report that they will continue to bake more often than they did during the pre-pandemic period, motivated by the following benefits:

  1. More time to bake
  2. Baking gives me a sense of accomplishment
  3. I like the taste of home-baked goods
  4. Baking makes me feel comforted
  5. I like the smell of home-baked goods
  6. Fun activity for my children

Given the discovery (or the re-discovery) of the joys of baking, there is a significant opportunity to capitalize on this renewed behaviour by creating Halloween-inspired baking fun through the establishment of programs and promotions that include great-tasting recipes, activities and fun kid-driven preparation and decorating ideas. These same strategies, with the right seasonal twist, can be applied also to the winter holiday season, including Diwali, Christmas and into Valentine’s Day.

Small gatherings to centre on favourite foods

Screen Shot 2020-10-19 at 1.41.49 PMEvening celebrations offer an opportunity to decorate the inside of the house and, in the case of Halloween, for instance, host a ‘dinner in the dark’ celebration with one bubble or circle of family and friends.

Parents can have kids participate in the dinner preparation and ensure that it includes their favourite dishes. C-stores can help by stocking the right products for busy families.

 

Undoubtedly, given the gravity of the current COVID-19 environment, it is inevitable that Canadians will be forced to re-think the many components, habits and traditions of our holiday rituals. Of course, we might also want to reflect on what parts of the old ways of celebrating did not necessarily work well, and use this as an opportunity to innovate and change.

Our current forced societal limitations have not squashed our unending spirit and collective creativity, just the reverse.  It is the challenges that we face that spark necessary change and often force us to think outside the box.  It is precisely that mindset that both inspires us and keeps us moving forward. 

Screen Shot 2020-01-16 at 3.49.27 PMKathy Perrotta is a vice-president with Ipsos Market Strategy and Understanding, working with the Food & Beverage Group Syndicated Services.  Data sources within this group include, Ipsos FIVE and Foodservice Monitor (FSM). Ipsos FIVE is an ongoing daily tracking of consumption behaviour, attitudes, situational dynamics, health statuses, preparation and shopping habits that influence item choice for more than 20,000 individuals annually across all dayparts, categories/brands and venues. Ipsos FSM is a daily tracking of purchases, habits and motivations at all foodservice segments and at branded operators among more than 36,000 individuals annually. 


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Mondelēz unveils racial equity initiative

Mondelēz International. Inc is amping up its efforts centered on diversity and inclusion (D&I) through a new multiyear commitment.

As part of the new dedication, the candy and snack manufacturer will elevate its existing D&I initiatives to make meaningful impacts in the area of racial equity economic empowerment around the world. The plan is designed to accelerate the company’s existing D&I efforts following extensive consultations between company leaders, colleagues and experts through listening forums and educational sessions focused on diversity, inclusion and belonging.

“Mondelēz International is committed to building a more diverse, inclusive and equitable world, both socially and economically,” said Dirk Van de Put, chairman and CEO of Mondelēz International. “As a global company, we know that diversity in all its forms is a driver of innovation and growth and we must reflect the diversity of our consumers to deliver stronger business performance as we lead the future of snacking.”

Over the next three years, the company will address local and global opportunities to advance racial equity and economic empowerment by expanding its D&I initiative across three key areas:

Colleagues

For instance, to ensure the diversity of its colleagues at all levels represent the communities, customers and consumers Mondelēz serves, the company has committed to double Black representation in U.S. management by 2024.

To enable this goal, it has implemented a series of actions across its business, including increasing the presence of underrepresented candidates on interview slates, doubling investment in early career programs, including with historically Black colleges and universities, and establishing new mentoring and leadership development programs for people of color.

In addition, Mondelēz will increase the strategic impact of D&I within the organization by appointing a Global D&I Officer.

Culture

Mondelēz will invest in building cultural competences for all employees and will include D&I performance metrics in business units and functional goals as part of the company’s effort to strengthen its culture and continue to cultivate an inclusive, bias-free and equitable workplace that enables all colleagues to be themselves and achieve their full potential, the company stated.

It also plans to mobilize its consumer-facing brands and leverage its partnerships with agencies and advertising platforms to drive change, equity and inclusion. To foster reflection and service in its U.S. Business Unit, for instance, the company will honour Martin Luther King Jr. Day as a paid U.S. Holiday and recognize Juneteenth with a U.S. day of service.

Communities

Across every business unit, the company will foster partnerships to support underrepresented communities. Efforts include:

  • Committing $1 billion to minority and women-owned businesses globally by 2024 to drive economic inclusion for underrepresented communities;
  • A new multi-year signature partnership with Boys & Girls Clubs of America to help close the opportunity gap for youth; and
  • Establishing a signature multi-year college scholarship program for underrepresented youth in the United States.

“In a world that can seem more divided than ever, our business and our brands have the power to bring people together and take a stand on this important issue,” said Glen Walter, executive vice president, and president, North America. “We are confident that we can make a true and meaningful impact over the short and long term, and we will continue to evolve and refine our plans to ensure we are driving, positive, lasting and much-needed change on the issues of racial equity and inclusion.”

Mondelēz will report its annual progress against its D&I goals in its Snacking Made Right Report, alongside other purpose-focused activities and KPIs.

Based in Chicago, Mondelēz International empowers consumers to snack right in more than 150 countries globally. Its net revenue was approximately $26 billion in 2019.

Originally published by Convenience Store News. 


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Insights and lessons from pandemic snacking trends

Increased home time, family time, leisure screen time, stress and near 24/7 access to our pantries, have all translated into a rise in snacking, as Canadian consumers reach for treats and comfort foods

Screen Shot 2020-08-10 at 4.30.51 PMOther than checking my bathroom scale, there are broader metrics to demonstrate that consumers like me increased snacking during the lockdown.

In order to quantify these kinds of shifts in consumer spending in the United States as a result of the COVID-19 pandemic, market tracking company IRI recently launched its CPG Demand Index to measure weekly changes in consumer purchases, by dollar sales and channel.

IRI tracked an increase in total core snacking of +40% year-over-year (YOY) for the week ending March 15, and +34% for the following week. For the week ending April 5, snacking sales modulated, but still grew +7 YOY.

Results from a broad survey of consumers in the United Kingdom, conducted by supermarket chain Waitrose, revealed that nearly 40% of consumers reported an increase in snacking during lockdown. 

In turn, the Frito-Lay Snack Index, released at the end of May, found 85% of respondents said eating their favourite snack makes them feel normal, while 83% said their favourite summer snacks remind them of good times and nearly half (48%) said eating their favourite snack makes them feel happy. 

Bottom line is that increased home time, family time, leisure screen time, stress and near 24/7 access to our pantries, have all translated into a rise in snacking, as Canadian consumers reach for treats and comfort foods. 

 

Stocking up

In the third week of February 2020, the Dow Jones average was nosing 30,000 for the first time: This was the end of the longest bull market in recorded history. However, by the third week of March, the Index had lost more than one-third of its value, essentially wiping out the cumulative gains of 2017, 2018, 2019, and Q1 2020. As of this writing, markets have recovered somewhat to levels of early January 2018.

There have been some exceptions to this general trend. Shopify is a Canadian multinational e-commerce company, offering a proprietary software platform that facilitates retailers selling their products online and in stores. Shopify’s stock value has flourished during COVID-19, as most retailers scrambled to up their online presence. Between January to mid-March 2020, Shopify stock was up about 5%. Between March and May, Shopify’s stock value doubled, surpassing RBC as Canada’s most valued stock. 

Despite a precipitous drop in foodservice channel sales during the global lockdown, a number of large food companies have seen success. Mondelez, PepsiCo and Kellogg’s are all examples of bucking the trend and boats rising in a down market.

Mondelez reported organic sales growth of more than +6% for the first quarter of 2020, beating Wall Street estimates. Mondelez CEO Dirk Van de Put attributed the performance to the rapid growth in snacking due to shelter-at-home behaviours.

PepsiCo reported nearly +8% net revenue growth in Q1 2020, as consumers stocked up on beverages, salty snacks and other food items for at-home consumption. Key observations during COVID-19, include:

o   Shift to at-home consumption – growth in snacking during the day

o   Increased usage of large-format pack sizes

o   Shift away from immediate consumption

o   Increased purchase “basket size”—fewer shopping trips with a higher value

o   Increased use of e-commerce sourcing

The company is leaning into the changes in consumer behaviour and has developed a game plan, with an emphasis on snacking. While PepsiCo expects gradual improvement in sales at convenience and gas channels as people return to work, the company is also embracing an e-commerce strategy, launching two U.S.-based direct-to-consumer sites to capitalize on the growing appetite for snacks. Snack.com offers more than 100 Frito-Lay snack products, while PantryShop.com features multi-product bundles of Quaker and other brands to meet specific day-part and lifestyle needs

At Kellogg’s, North America financial reporting for the first quarter of 2020 showed organic sales rose 6%, with volumes up 5%. This largest driver for this growth was the company’s snacks segment, according to Amit Banati, senior vice president and chief financial officer.

Kellogg’s cracker sales jumped almost 40% versus a year earlier, while salty snacks and wholesome snacks rose nearly 30%.

“This consumption growth has been broad-based across our portfolio of brands,” Banati said. “From an occasion standpoint, we have seen less lift for on-the-go items and more growth for pantry packs”.

Opportunity to take share

Traditional convenience and gas non-fuel sales have been oriented towards impulse consumption—providing products that are consumed within an hour of purchase. Legislated changes to consumer behaviour have impacted the convenience channel significantly. 

The convenience business model is built on and grounded in consumer mobility, social activity and time scarcity. In a pandemic, virtually overnight, this evolved into immobility, isolation, CPG scarcity and boredom. Rather than getting from point A to B as fast as possible, fuelled by an on-the-run meal or snack, consumers’ priorities shifted to limiting retail trips, avoiding crowds, and eschewing public transit.

The great news for the convenience channel is that proximity plus offering consumers a streamlined retail experience have never been more important. As working from home and home schooling/daycare become entrenched as a kind of new normal for consumers, there is an expanded role for the convenience channel to play as a provider of pantry staples, meal kits, fresh produce, non-food cleaning/hygiene products and even office supplies.  

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Use your smarts

Symphony RetailAI, along with partner ROC Associates, use technology to optimize performance for gas/convenience, foodservice and grocery, drawing insights from their pool of retailers: Their findings are representative of thousands of stores and millions of households globally. 

Trusha Pandya, account director at Symphony RetailAI noted a number of trends emerging across the convenience channel as the effects of the COVID-19 pandemic unfolded.

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Data showed that, overall, c-store sales tracked improving week-over-week performance. At the outset of the lockdown, Symphony “recommended that convenience store retailers stock up on frozen and canned fruits and vegetables.” As the market gradually transitions into a new phase of the pandemic, Symphony is advising convenience retailers to renew their “focus on better-for-you and fresh options, (which should) also translate to snack categories.”

 Be a camel

In an article in The Globe and Mail, venture capitalist Alexandre Lazarow called for Silicon Valley to create a new model for a post-pandemic world. 

He notes that the tech world has spent the past 20 years trying to find the next “unicorn” startup. Unicorns are companies having seemingly unlimited potential, capable of growing from zero to more than $1-billion valuation in short order. 

Our current harsher, less stable market environment calls for a different approach. Instead of unicorns, the future will be “camel” startups that prioritize sustainability and resiliency.

Lazarow writes that the camel, “adapts to multiple climates, survives without food or water for months, and has humps to protect itself from the desert’s deprivations. Unlike unicorns, camels are not imaginary creatures… camels are survivors.” 

There will be bumps and impediments in the road ahead. As always, the ability to adapt to changing circumstances, and sustain your business through emerging challenges, will enable you to survive and flourish. Put simply, just like all of us in the face of COVID-19, be prepared to do what you need to do to live to fight another day.

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Darren Climans is a foodservice insights professional with close to 20 years’ experience partnering with broadline distributors, CPG suppliers, and foodservice operators. His practice is to understand issue-based decisions by taking a data-driven approach to strategic decision making.

 


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Celebrate good times, come on!

Changing consumer behaviour is affording c-stores a unique opportunity to help customers mark special moments, from family moving nights to Halloween, but it starts with the right product mix

Shutterstock

Shutterstock

COVID-19 restrictions may have put a kibosh on Easter gatherings this year, but Canadians still sought out chocolate and candy. Fortunately for the sector, more shoppers than usual found their treats at c-stores.   

Easter confectionery in the convenience and gas channel reached $3.8 million nationally and grew 13% over 2019, according to Nielsen MarketTrack for the season ending April 25th, 2020. 

It has given c-stores reason to be bullish about their role in helping customers celebrate other calendar milestones amidst a new normal of social distancing and shifting shopping behaviours. 

The Civic Holiday, Labour Day, Back to School, Thanksgiving and Halloween are all upcoming opportunities for the convenience industry. 

Maintaining traditions

“Quality time with family is important and Canadians are still looking to maintain their traditions even if they can’t celebrate like they once did,” says Julie Sirois, VP of sales at Mondelez Canada, adding “these moments during the year are providing a sense of normalcy for our turbulent times.”

After 17 years with PepsiCo Foods Canada where she led sales for its Frito-Lay portfolio, Sirois joined Mondelez in late March—at the peak of the pandemic. She believes it has set up the c-store to become a favoured destination of seasonal and holiday goodies.

To help consumers capture the essence of summer, Mondelez has introduced limited-time varieties of its Cadbury Dairy Milk chocolate bars—Fireworks, S’mores and Rocky Road—as well as summer-themed flavours of its Maynards gummies, called Tropical Swedish Berries, and Sour Patch Kids gummies, Sour Patch Kids Crush. 

Size matters

It has also partnered with key c-stores on larger take-home sizes of its candy and gum brands. “Historically, single-serve confectionary has been a big part of the convenience business, and it still is. However, we are seeing larger packs growing faster than anything else in this channel,” notes Sirois. 

At the start of the COVID outbreak, that was attributed to pantry loading. Now she says consumers are wanting “to avoid long grocery store line-ups” and are picking up staples like bread and dairy at their local c-store. While there, they are adding treats to their shopping baskets that can be enjoyed multiple times or shared at home. 

This includes for special occasions, but also moments with loved ones like during a BBQ on the patio or a movie night with the kids. 

To that end, promotional bundles like a bag of milk with a pack of Oreo cookies could work really well, says Sirois, especially given people are watching every dime they spend. 

Halloween highlights

Or, once October hits and the weather turns cooler, a hot beverage with a king-sized chocolate bar, since “after trick-or-treating, the next big driver of Halloween treat consumption is to give yourself a treat,” says Sirois.  

As for trick-or-treating, “we don’t know what it will look like, but people are still going to want to celebrate Halloween with their kids. They will just do it differently,” she says.  “We are working with retailers to ensure we bring products that customers desire.” 

Retail analyst Ed Strapagiel agrees candy packs could do very well for c-stores this October. 

“The main supermarkets have gone into bulk-sized boxes of Halloween treats, but right now nobody knows what the turnout is going to be for trick-or-treating, except that there will be less kids going out. The question is, how much less?” says Strapagiel. “Parents are going to be concerned about how the candy was stored, cared for and handled, and so households may only need to give out a small amount.”  

It is easy to imagine a scenario where trick-or-treaters go door-to-door only to the homes of friends and family, for instance, rather than the entire neighbourhood.

C-stores might also want to invest in felt masks with Halloween designs, adds Strapagiel. 

Seasonal displays

Screen Shot 2020-07-15 at 1.48.28 PMRussell Large, senior business development manager in Ontario for the Continental Store Fixture Group (and former VP of retail services for Hugh Large & Associates Inc.), advises clients to feature a seasonal wall or display for kids, especially if their store is located on the way to cottage country. 

In the summer, that might mean displaying quality water toys and colouring books, and during back-to-school time lunch snacks and supplies, such as pens, pencils and markers. In the lead-up to Halloween, the assortment could change again, to not just masks but also make-up, pumpkin carving kits, costumes and candies. 

“Consumers are looking for c-stores to replace their trip to Toys ‘R’ Us Canada and other big stores, but the onus is on convenience owners to carry quality product,” says Large. “People are willing to pay a higher price for quality, especially if they don’t have to drive around and expose themselves.”

The allure of fireworks

Screen Shot 2020-07-15 at 1.48.19 PMAnother way c-stores can deliver a bang in seasonal/holiday sales? Fireworks! 

With the cancellation of fairs, festivals and other public gatherings, expect more households to put firework displays on in their own backyards. 

After Victoria Day and Canada Day, Blast-Off Fireworks, the largest fireworks importer and distributor in Western Canada, cites the Civic long weekend and Labour Day as big purchasing occasions for fireworks. Halloween is also popular, especially in British Columbia, and Diwali, the Hindu festival of lights that starts Nov. 14, is becoming a popular time for fireworks. 

Blast-Off has focused on new products in two categories—finale cakes, which produce a display with a single ignition, and family packs, which provide high-quality fireworks, ignition tools and firing instructions in one box.

“Fireworks can do very well for c-store owners, delivering profit margins of 50% or more,” says Matt Bialek, president of Blast-Off, which works with retailers to navigate city by-laws. In Calgary, for example, consumer fireworks are banned, while most other cities across Canada lift fire bans during key times.

“With those margins, in a year like this, it can help c-store owners make up lost dollars from other categories,” adds Bialek. “Remember, people still want to celebrate moments even if they are stuck at home.” 

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This article originally appeared in the July/August issue of Convenience Store News Canada.