Last week, Snyder’s-Lance reported third quarter revenue of $589 million, a 41% increase from $417 million in Q3 of 2015. The jump primarily is attributed to the inclusion of Diamond Foods, which was acquired in February 2016. The company also expanded its operating margin from 7.0% in Q3 2015 to 9.1% this year. The gain is due to several factors, one of which is the accelerated growth of higher margin products such as better-for-you brands, including some gluten-free varieties.
During its third quarter conference call, Snyder’s-Lance executives stressed a two-fold plan for continued growth and share gains:
- Expansion of better-for-you items in its product portfolio
- New and/or increased distribution among various channels of trade
Snyder’s-Lance Better-for-You Focus
More than a third of Snyder’s-Lance sales now come from Better-For-You brands and products. As stated by President & CEO Carl E. Lee, Jr. in the company’s third quarter earnings press release:
“We have assembled a portfolio of brands on trend with the growing consumer demand for organic, gluten free, non-GMO certified, and reduced fat. Our ‘Better-For-You’ brands now represent over 33% of our sales and will continue to grow with innovation and focus on better ingredients and great taste.”
With regards to specific brands, the company’s namesake Synder’s of Hanover pretzel brand gained nearly two full points of market share in the third quarter, according to statements made during the company’s quarterly conference call. The company cited positive gains across all traditional channels, with gluten free having especially notable gains.
Similar sentiments were expressed about Lance sandwich crackers. Lance is benefiting from investments made in packaging, ingredients and taste. The company stated that gluten free continues its strong growth and ACV (all commodity value) gains. In addition to gluten free peanut butter sandwich crackers patterned after its conventional wheat-filled crackers, Lance also introduced gluten-free multi-packs for easy on-the-go snacking or as a fun lunchbox treat.
Snyder’s-Lance also commented on Snack Factory Pretzel Crisps, stating that sales were driven by new distribution in key retailers, innovation and higher velocity. One of the more notable innovations was the launch of Gluten Free Pretzel Crisps earlier this year. Gluten-free varieties include Dark Chocolate and Vanilla Yogurt Minis. We found the new items at Target during a May 2016 store visit.
Snyder’s-Lance Expands Retail Distribution
Snyder’s-Lance reported that it is building market share due to increased retail distribution. Among the key growth drivers is increased distribution through alternative channels, including warehouse clubs and the natural channel. The company expressed seeing nice gains in both the club and convenience store channels in part due to its stronger better-for-you portfolio.
On its go-to-market strategy and expanded retail distribution strategy, Lee commented:
“I think we’re clearly focused on the c-store channel for expansion. We’ve got some opportunity in that channel as we continue to build it out. […] We’ve seen some nice improvements in the club channel, in particular. And as the club channels across the U.S., both East and West being able to leverage a new broader portfolio, with consumer trends and retailer trends moving to a bigger and bigger focus on better-for-you, and Millennials having more impact in the way retailers merchandise has opened up some real opportunities for us to expand distribution again over our full portfolio.”
Snyder’s-Lance also called out drug stores as an area where its retail customers are focused on adding health and wellness food products. For more information on drug store grocery initiatives, see related post: 5 Signs CVS Is Getting Healthier.
Note: The company’s full third quarter transcript is available to view here.
GF Retail HQ Take
- Big CPG companies, including Snyder’s-Lance, are investing in growth and innovation. A key area of focus is, and will continue to be, “better-for-you” products that align with shopper expectations and retail customers’ health and wellness initiatives.
- Watch for a pickup in innovative product launches around natural/organic, gluten free, non-GMO certified, and other “free froms.”
- Expect innovation to take the form of new product sizes and packaging as well. Maintaining a gluten-free diet is anything but convenient. So anything manufacturers can do to develop more “convenient” products – for example, on-the-go snack packs, and other easy meal or snack solutions – is likely to result in a win.
- Retail distribution of better-for-you foods extends beyond natural grocery stores and supermarkets. Other channels, including c-stores, drug stores and warehouse clubs are placing more emphasis on healthy assortments.