Americans have ratcheted up their snacking during the pandemic. Mondelēz International’s second State of Snacking study discovered that 70% of millennials and 67% of those working from home would rather snack than eat a full meal. “Snacks provide a bit of accessible excitement during difficult times,” said Beth Bloom, associate director of U.S. Food and Drink Reports for Mintel. “New flavors and formats can provide an enjoyable change of pace and sense of agency when other life factors feel beyond your control.”

That spells good news for alternative snacks, which tend to pack more protein punch than salty snacks. “Customer preference for healthy and portable snacks has helped alternative snacks in recent years as demand for plant-based and sustainable snacks continued to grow,” said Jayme Gough, NACS research manager.

“Alternative snacks have become increasingly more in demand than more traditional snack items,” added Lance Smith, vice president of industry affairs and customer strategy for The Promotion In Motion Companies Inc.

Sales Soar

In 2019, alternative snacks grabbed 1.71% of in-store sales, with nearly all stores (99.5%) stocking the category. Average annual sales per store grew 9.8% year over year, according to the NACS State of the Industry (SOI) Report of 2019 Data, with average sales per store hitting $27,578 for the category. Gross profit dollars per store averaged $11,249 in 2019, while the average gross margin reached 40.79% for the category, according to the NACS SOI data. In 2020, NielsenIQ* data indicate that total U.S. convenience alternative snacks accelerated 1.9% over 2019, while units dropped 4.9%.

“Alternative snacks is a profitable yet small category that experienced a lot of growth in 2019,” Gough said. “Many of the subcategories have higher than average margins and have experienced considerable innovation in recent years.”

In 2017, alternative snacks broke into the top 10 merchandise categories in terms of gross profit contributions. A year later, the category snagged the No. 8 spot, where it remained for 2019. “One of the reasons for the category’s success is that alternative snacks fit in with a lot of different diet restrictions, from keto to paleo to Whole 30 to high-protein/low-carb,” Gough said. “It’s been able to weather all the diet fads and trends.”

Lockdown, Snack Up

As with many products, the initial lockdowns at the beginning of the coronavirus pandemic hurt alternative snack sales, which dipped below the 2017 sales level in April 2020, according to NACS CSX monthly sales data. However, sales for the category improved over the summer, surpassing 2019 heading into the final months of 2020. “This is a great sign for the category,” Gough said.

“The category finished strong despite trip contraction,” said Dafna Gabel, vice president of strategic insights and insight products at PDI Insights. “Shoppers are putting more units in the basket but also paying more, indicative of persistent stocking behavior.”

PDI Insights Cloud data indicate that alternative snacks finished 2020 with same-store sales up more than 6% versus 2019. “The increase occurred despite a greater than 5% decline in trips and was driven by larger basket spend,” Gabel said.

Alternative snacks have become increasingly more in demand than more traditional snack items.

Alternative snacks started 2020 outpacing total store performance of all products, with dollar sales growth of nearly 5%, according to PDI Insights Cloud data. Following the shelter-at-home and peak restrictions, a new normal emerged for the category. “For example, the spend per trip on alternative snacks was over 15% higher than 2019, due to more units in the basket and increased price paid per item,” Gabel said.

It’s All About Meat

The alternative snack category has four subcategories: meat snacks, health/energy/protein bars, granola/fruit snacks and other alternative snacks. Traditionally, meat snacks have been the powerhouse of alternative snacks, accounting for the majority of the category's sales. According to CSX data, meat snacks primarily drove the alternative snacks category’s summer rebound. NielsenIQ* data show meat snacks as the greatest contributor to the category’s growth, with a 10.7% increase in sales and a 4.9% in units.

According to the SOI Report of 2019 Data, meat snacks accounted for the largest percentage of the category at 42.9% of sales and brought in $11,831 in sales per store that same year, for the category. “There’s been a lot of innovation in meat snacks, and that’s behind some of the sales,” Gough said. She pointed to turkey or chicken meat snacks and different flavor profiles, such as sweet and spicy or teriyaki, as examples.

“Travelers and customers out and about during the summer spurred some growth for alternative snacks in 2020,” Gough said. “Alternative snacks, especially meat snacks, offered options for meal replacement, portability and single servings. Meat snacks is a large part of the reason for the category’s recovery.”

Gabel with PDI Insights agreed. “When it comes to alternative snacks, the big story is meat snacks,” she said. Leading up to the pandemic, meat snack dollar sales growth outpaced the total store sales growth and hovered around 5% higher versus a year ago.

Overall, the meat snack category enjoyed double-digit same-store dollar sales growth in 2020 versus a year ago, along with a small gain in trips, according to PDI Insights Cloud. “Quite likely a decline in foodservice because of COVID-19 helped to accelerate meat snacks’ growth as a meal replacement,” Gabel said.

Other Basket Choices

Other alternative snacks and health/energy/protein bars accounted for the second- and third-largest contributions to the category at 30.2% and 22.3%, respectively, according to NACS SOI data. “2019 had a lot of innovations in other alternative snacks, such as nonmeat jerky like portobello mushrooms or coconut, and chickpea pops and seaweed crunches,” Gough said.

PDI Insights Cloud data showed health/energy/protein bars didn’t manage the same recovery as meat snacks. “While the subcategory’s contraction is half of what it was during the peak of restrictions, the trends in health/energy/protein bars lag significantly behind total store and total category numbers,” Gabel said.

New Category Definitions Released!

NACS Category Definitions & Number Guide Version 8 was released in early 2021. Developed by the NACS Research & Technology Committee, this new version reflects significant updates to the last broad iteration (version 7.0 released in 2010). To view the latest updates, visit www.convenience.org/categorydefinitions.

That’s not to say retailers aren’t finding bright pockets in other alternative snacks. “Most of the new products that are entering the market are plant-based,” said Rachel Krupa, founder of The Goods Mart in New York. “Our customer is definitely looking for a better-for-you option for snacks they grew up with. They are looking for flavors they remember but don’t want to put all the junk in their body. And they don’t want to compromise health for flavor.”

Smith with The Promotion in Motion Companies pointed out that fruit snacks have also done well lately in convenience stores, registering 11.6% growth, according to PDI Insights and IRI data. “Health is the cornerstone of a good life and a priority for many amid the pandemic,” he said. “As a result, COVID-19 has accelerated a focus on health and wellness, and consumers are taking a more proactive approach to health by adjusting their snacking habits and are increasingly reaching for better-for-you snacks.”

An Alternative Mindset

Pandemic or not, the desire to live a healthy lifestyle isn’t going away anytime soon. “It’s not a trend, but a mindset, and the alternative snacks category is ripe with options for health-conscious and/or concerned customers looking for a delicious c-store snack,” Gough said.

For retailers, one easy way to capitalize on the healthy trend is with a robust alternative snacks category. “One in four c-store operators project growth in alternative snacks sales and units this year,” Smith said. “There is a growing appetite among c-store shoppers for alternative snacks, with 50% claiming that better-for-you options are important when choosing a c-store.”

The Power of CSX Data

CSX, the engine behind category metrics and NACS State of the Industry data, provides current and customizable tools for financial and operational reporting and analysis in the convenience industry. Retailers can measure their company by any of the myriad metrics generated via our live database. Contact Chris Rapanick at (703) 518–4253 or [email protected] for a complimentary executive walkthough.