For a mature category, the meat-snack segment is certainly coming on strong with aggressive product development, advanced packaging, and strategic marketing efforts.
By Lynn Petrak, Special Projects Editor
America’s meat-snack business is far from being “ up in smoke” or “all dried up.” Sliced, seasoned meats dried and aged into take-along snacks have been a main munching food for decades, if not centuries, and they are available in more varieties and venues than ever before.
Items ranging from the perennial favorite — beef jerky — to tender beef nuggets to gourmet turkey sticks are being cooked up by major corporate brands, as well as local smokehouses and butchers. All of this activity reflects continual growth in an entrenched category.
Even those who have worked in this marketplace for years are impressed at its staying power.
“I’ve been in the business since the early ‘90s, and when you look at where we were back then and were we are now — it’s the difference between night and day,” says Greg Firestien, vice president of national sales/private-label for Tillamook Country Smoker, Tillamook, OR. “I think the meat-snack companies have grown really as sophisticated in how we market and sell our product as any chip or beverage company.”
The latest sales figures relay that the “big guys” still lead the snack pack. Data from Chicago-based Information Resources Incorporated (IRI) indicates for the year-long period ending November 30, 2003, Oh Boy! Oberto dried meat snacks represented 22.5 percent of the entire $285.8 million category, racking up sales of $64.2 million, a 30.9 percent jump over the previous year. Jack Link’s was second, with sales at $45.5 million for a 22.3 percent increase from the previous time period. Rounding out the top 10 were ConAgra’s Slim Jim® at $45.3 million, Pemmican at $29.8 million, Bridgford at $22.5 million, Amour at $8.6 million, Old Wisconsin at $6.9 million, Hickory Farms at $6.8 million, Oberto’s Lowrey’s at $4.2 million, and Tillamook at nearly $4.1 million.
Total private-label sales reached just more than $6 million, an impressive 32.7 percent gain over the previous year.
Trends fueling growth
Several trends seem to be in alignment to help fuel category growth. The current big driver is unprecedented interest in high-protein, low-carbohydrate diets.
Just as retail buy-in has shifted, the demographics of the meat-snack consumer are also changing.
“We are finding more ‘non-traditional jerky consumers’ entering the category, such as more women and families with kids,” says Cathy Sturm, Senior marketing manager for Jack Link’s Snack Foods, Minong, WI.
As brands continue to build equity, the category surge has not escaped retailers.
“Virtually every major grocery chain or mass marketer is considering a house brand because of the dynamic growth in national brands,” Firestien concludes.
Fueling the FIRE
New products continue to energize the meat-snack category.
Here’s something to chew on. As a testament to the growth of the category, the meat-snack industry has enjoyed double-digit growth in recent years, thanks to both to new product introductions and evolving consumer palate preferences. Many recognizable brands have introduced new SKUs to the marketplace as have the smaller and specialty smokehouses.
To not capitalize on current consumer demand for convenient snacks and high-protein foods is to lose an opportunity, say those who have made the investment in research and development.
“We are trying to bring new flavor experiences and new product forms to our consumers who are increasingly seeking variety in meat snacks,” reports Mick Taylor, vice president-marketing for Oberto Sausage Co., Kent, WA, which has rolled out three new items in the past year.
For many companies, there is no status quo. “New product development is a process done on an ongoing basis. There are always plans on the table – it depends on when you can fit it into production schedule. Additions have been ongoing time and time again,” says Greg Firestien, vice president of national sales/private-label for Tillamook Country Smoker, Tillamook, OR.
New product launches tend to center around diversity in flavor, shapes, and package size aimed at expanding the category. Things are getting hot on the flavor side. Oberto recently introduced a new ‘Flamin’ Hot’ Jalapeno flavored sausage stick, and a tangy barbecue-flavored beef jerky. Last summer, Jack Link’s unveiled a new X-Stick Snack Stick, a beef and pork stick with a kick of cayenne pepper, while just a few months ago, the company also partnered with “The Original” Louisiana Hot Sauce to offer its first co-branded product — a 4-ounce Louisiana Hot Sauce Beef Jerky.
Some new varieties aren’t as spicy but include more savory ingredients. Go-Fer Snax, St. Joseph, MI, has developed a new honey turkey breast jerky made from all-white meat. Available in 3.5-ounce and 1.2-ounce sizes, the poultry jerky won a “Best New Snack” distinction from the California Restaurant Association, says marketing director Larry Hadley. Oberto also has incorporated more savory ingredients, adding a new Steakhouse Seasoning jerky as well as developing new Pizza, Taco, and Barbecue sausage sticks under its Lowrey’s brand.
Beyond spice and seasoning, size and shape are considerations for new product development. Jerky slices and sticks may be the standard bearers of the segment, but piece-like sizes are gaining in popularity, such as Slim Jim “Snaps,” which were first rolled out two years ago.
Quakertown, PA-based Knauss Snack Foods, LLC, now offers smoked tender beef nuggets in Original, Teriyaki, and Sweet Barbecue flavors.
“Basically, it is a chunked beef roast, like how mom would make a roast and chunk it,” explains Jeffery Fisher, executive vice president of sales and marketing, adding that response has been positive among both retailers and consumers.
Oberto has pursued smaller portion sizes, as well, through its line of Jerky Bites. Interestingly, there is activity as well on the opposite side of the size scale. Jack Link’s Snack Foods, Minong, WI, has enjoyed strong initial reaction to its Teriyaki-flavored 2-ounce Super Size Beef Stick, a larger portion designed to appeal to adult on-the-go consumers.
Changing of the guard
Oh Boy! Oberto and Jack Link’s now lead the meat-snack pack,
Getting to the top of the meat-snack category is no easy task — and staying there isn’t easy either. The nation’s two leading brands of meat snacks, Oh Boy! Oberto and Jack Link’s, strive to continue their double-digit yearly sales growth by aggressively pursuing new product developments, innovative packaging, and extensive marketing programs.
Both brands helped to re-shape the relatively mature meat-snack category.
“A lot has changed in the past decade,” says Cathy Sturm, senior marketing manager for Jack Link’s Snack Foods, Minong, WI. “The biggest change is the position of category leader. Ten years ago, Slim Jim was the leading brand. Consumer desire for a healthier, natural-style meat snack, low in fat and carbohydrates and made from high-quality cuts of beef, has contributed to this changing of the guard.”
But who ranks first in the brand shuffle isn’t quite cut in stone. AC Nielsen data, based on 52-week dollar sales ending Sept. 27, 2003, shows Jack Link’s is the number-one brand in all outlets combined, with a 25 percent market share. Meanwhile, Information Resources Inc. data shows Oberto in the leading position.
Since both companies can lay claim to the title of brand leader, they have made tremendous strides in recent years by combining a commitment to quality with marketing savvy. Both processors have continually developed new product flavors and forms, launching spicy/hot varieties in the wake of consumer interest in products with more of a bite, and introducing new formats, such as Oberto’s bite-sized meat snacks and Jack Link’s Super Size beef stick.
Both brands also recognize the importance of sticking to the basics.
“New products will always play a role in any food category, but the focus will be on our core products and flavors,” says Mick Taylor, vice president-marketing for Oberto Sausage Co., Kent, WA. While new product launches have garnered consumer attention and initial early sales, the products that move fastest are still traditional varieties, he adds.
“The top-selling type of meat snack in the category is beef jerky, with meat/sausage sticks in second place,” he adds.
Likewise, Jack Link’s cites kippered beef steak, made from sliced strips of whole-muscle round steak marinated and smoked, as its most popular item. Sturm says her company’s brand enjoys a 66-percent market share in the kippered-beef segment.
Jack Link’s and Oberto also helped standard meat-snack products break out of a longstanding packaging mold. Both companies offer snacks sold in resealable pouches with high-impact graphics. In addition to traditional advertising programs, both brands regularly devise marketing promotions on a national and regional scale, keeping in mind their core customer base.
To appeal to its key demographic group of 18- to 34-year-old males, Jack Link’s created two consumer offers last year: a consumer loyalty promotion leveraging its relationship with NASCAR and Nextel Cup driver Rusty Wallace, and a sweepstakes directed to fishing and hunting enthusiasts.
Oberto gears marketing and sponsorship efforts to outdoors-related interests. Last year, it was named the official beef-jerky sponsor of FLW Outdoors, the world’s leading marketer of competitive fishing — and it connected with more than 52 million anglers through tournament sponsorships. NP
Wrapped up in expansion
Tillamook Country Smoker continues to grow along with the meat snack industry.
Paralleling the surge of the meat-snack category in the past several years has been the expansion of Tillamook Country Smoker, Tillamook, OR. The 50-year-old company, which started out with a home recipe by Art Crossley that was marketed by business partner Crawford Smith, has diversified as much as any product line or package type—and demonstrates staying power through innovation.
Several years ago, the company’s forte was unwrapped jerky sold through counter displays at convenience stories.
“That is what we’ve been known for and are leaders in. But in the last five years, we have dramatically grown our retail business, through four-ounce jerky bags and our three-and-a-half ounce beefsteak nugget package,” recounts Greg Firestien, vice president of national sales/private-label.
In the late ‘90s, says Firestien, second-generation company leaders recognized the potential for the meat-snack category in an age where convenience and nutrition were key consumer issues, and retail consolidation and diversification were occurring at a rapid pace.
“We had an opportunity become available to us, and at that point in time we started pursuing the grocery trade,” he says, adding that supermarket mergers and acquisitions at the time also worked to the company’s benefit. “We got our foothold because we had a recognizable trade name. We started out in the west, which eventually led us to move into other [grocery] divisions throughout the country. And new stores were exposed to the movement potential of our brand.”
Although Tillamook’s jerky varieties were popular in c-stores as well as supermarkets, the company’s marketing team realized that to take advantage of retail potential, it was wise to expand their lineup.
“That was also when we developed the beefsteak nugget for retail. Even though it’s two years old now, it is still considered one of the newest entries in the meat-snack category, and we lead that category at this point in time,” Firestien says.
Available in Original, Teriyaki, and Black Pepper, the nuggets are sold in 8-ounce and 4-ounce sizes, which seem to be the packages of choice, Firestien relays.
Operationally, Tillamook processes whole-muscle beef cuts from both domestic and Brazilian cattle in its Tillamook facility, and it has an interest in a Latin American site, as well. In addition to producing and packaging SKUs for its own brand, the company supplies larger multi-packs for club stores and mass merchandisers, as well as meat-snack products for private-label purposes. It works with grocery chains and independents throughout the country.
To meet the needs of its various private-label customers, Tillamook offers a wide range of products.
“In the west, people prefer a natural or drier style. As you move east, they prefer more of a softer chew or kippered items. We manufacture all types,” Firestien says. “It all depends on the account. Some want generic, cookie-cutter items, and for other accounts we will consider or do what makes sense for both of us.” NP
Room to GROW
Knauss Foods Inc, already more than a century old, plans for future growth.
Being part of a 102-year-old company means knowing a thing or two about what it takes to stay in business and remain competitive. The Knauss Snack Food Co. LLC, owned by century-old dried-meat processor Knauss Foods Inc., Quakertown, PA, has demonstrated its commitment to a forward-thinking vision with new products, new packaging, and most recently a new plant.
Several months ago, Knauss opened the doors of its newly constructed 90,000-square-foot facility in Martinsville, VA, where the company manufactures meat snacks under its own Bull & Hannah’s brand and co-packs various meat snack items for other large snack-food marketers and private-label businesses.
The Martinsville move was more than two years in the making, says Jeffrey Fisher, executive vice president of sales and marketing, who adds that the location was chosen for its land quality, surrounding community, and strong local employee pool. The plant is a ways away from Knauss’ original headquarters in Quakertown and its other facility in Richland Township, PA. Yet, for what it lacks in proximity, the operation makes up for in modern features.
“We have almost all new equipment, five brand new smokehouses, and a much more effective product flow from materials to production to shipping,” Fisher says, adding that a high-tech test kitchen and research and development center are also up and running. “This new facility is probably the most state-of-the-art meat-snack facility in the country.”
Building a larger plant to accommodate production demands helps Knauss maintain a presence throughout this rapidly-growing segment of the meat processing industry, Fisher says.
“We compete in every meat snack category — we like to say we have a horse in every race,” he remarks. Among other items, the processor supplies beef sticks, beef jerky, kippered beef, pickled meats, and beef and cheese combination packs under its own Bull & Hannah’s brand and for private-label purposes.
In addition to pursuing new technology, Knauss has also explored new products and packaging for Bull & Hannah’s products. Its most recent innovation introduced last year is Tender Beef Nuggets in Original, Teriyaki, Peppered, and Sweet BBQ varieties. On the packaging side, the brand’s top-selling beef jerky is now available in 4-ounce packages with a resealable closure, while overall package graphics are in the midst of a makeover. “Mid-last year, we began to contemporize our graphics approach on the Bull & Hannah’s brand, which should be completed by the end of 2004,” Fisher says.
Such an aggressive approach to operations and marketing has not occurred by chance. Like other meat-snack processors, Knauss recognizes that the market is ripe right now. “From a production and sales standpoint, the growth of the category has been dynamic,” Fisher notes. “We feel that although it will be extremely hard to sustain the twenty to thirty percent growth of the category every year, since meat snacks are now in the mainstream of the snack- food industry, expansion can be in just about any segment of the business — from supermarkets to c-stores to mass merchandisers — with branded and corporate-branded products.” NP
Meat snack packaging evolves
Grabbing attention is a major goal in the meat-snack arena.
The process for making dried meat snacks may date back to the Middle Ages, but packaging for today’s products is decidedly 21st century. Both packaging materials and package graphics have given meat snacks a much-needed image boost over the past few years, further underscoring the growing sophistication of the category.
Starting from the purely visual perspective, several meat-snack brands have recently overhauled packages. Jack Link’s, for example, updated the graphics for its Jerky Chew packages, timed with the launch of a new Teriyaki flavor. “Jerky Chew is a very popular item with kids, so we updated the look to a more candy-like appearance with bright prism foil labels,” explains Sturm. In addition, Jack Link’s also added “extreme foil graphics”’ to its new X-Stick Snack Stick to appeal to the target demographic group of 14- to 25-year-old young men, says Sturm.
Sign of the times
Going for a younger, hipper look is also the approach of ConAgra’s Slim Jim brand, which features bolder graphics on its packages and supporting marketing materials. Trail’s Best Snacks, a Sara Lee company, also recently updated on-package graphics for its line of jerky and meat snacks, to include a bigger, brighter brand logo at the top of the package, larger and easier-to-read flavor names, and color-coded packages that define the product name and “family” of products, such as jerky or stick items.
The easy-to-use features of a package are important as well, of course. Many meat snack processors, including Tillamook Country Smoker, Oberto, and Jack Link’s, among others, now offer recloseable pouches for meat snacks, with press-to-close features. “That’s very important. I am not sure how much it’s used, but it is a perceived value — people want to know they can reseal the bag if they are driving down the road and don’t finish the product,”’ observes Firestien.
For one-stop snack shopping, especially during “occasion” merchandising seasons like the holidays or tailgating season, meat- snack processors are also developing combination packages with other snack items or accompaniments. Old Wisconsin Food Products Co., Sheboygan, WI, co-packs dipping sauce and cheeses with its meat snacks, for gift packages, as well as serving and entertaining purposes.
Continually conveying messages of convenience and ease of use up front is especially important for meat snacks. “It is an impulse item, so it needs to be very visible,” points out Firestien. “It is getting more and more that grocery stores want inside setups and secondary marketing setups.”
Hence, point-of-purchase displays have largely become an extension of package design. Clip strips and lane blockers, along with promotional materials and cross-merchandising pieces tied into other foods and beverages like cheese, beer or chips, are an increasing component of marketing programs. NP
Back to the FUTURE
Staying on top of market trends keeps segment leaders at the head of the pack.
Meat-snack processors are striking while the iron — or smokehouse — is hot. Demand for high-protein, portable, and flavorful snacks are spurring impressive category gains for now. But processors in this business are all too aware of the pendulum effect, especially when it comes to diet and health matters.
“Is low-carb a phase?” ponders Jeffery Fisher, executive vice president of sales and marketing for Quakertown, PA-based Knauss Snack Foods LLC. “I don’t know. I do know it’s a great phase for us, but a poor phase for the pretzel guys. But we went through that twelve or thirteen years ago.”
The gourmet market may be the next niche worth watching. Some processors are already specializing in more upscale meat snacks.
Another predication based on current trends is continued channel expansion.
“I expect as meat snacks become mainstream and retailers dedicate more space to this category, a larger share of sales will come from the grocery and mass channels,” says Cathy Sturm, senior marketing manager for Jack Link’s Snack Foods, Minong, WI.
One final point is to not underestimate the importance of one of the most fundamental business principles: price. NP