The year for fruits and nuts: a trend toward healthful snacking, and a change in consumer palates are helping to grow the fruit and nut snacks category.

Salty, sweet, dried or glazed--consumers today can have their dried fruit and nut snacks any way (and anywhere) they want thanks to the category's explosive popularity. As U.S. consumers have proven time and again, food is a versatile vehicle for trends, and no segment has gone untouched. Today's

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Essentially, growth in the dried fruit and nut snacks category is the direct response to increased consumer awareness. Shoppers are applying what they learn in the media toward their food choices. An increased awareness of GMO, chemicals, pesticides, hormones and other unhealthy ingredients in conventional snacks has helped boost the success of the dried fruit and nut snacks category. So has heightened awareness of the USDA's new dietary guidelines, which call for an abundant variety of fruits, vegetables and nuts. The obesity crisis in the United States, particularly in children, also has impacted the way consumers shop, sparking the demand for sugar-free and low-fat snacks.

While trends stoked by the media are largely responsible for the category's increased popularity, its been around for quite a while, but just recently has become a destination point for consumers.

"The category has gained popularity over the past several years thanks to the help of major retailers such as Whole Foods and Trader Joe's, who were ahead of the 'trend,' says Mark Devencenzi, national sales director for Sunridge Farms, Pajaro, Calif. "When before there was a limited market, now we're seeing excitement in the category because of what Whole Foods and Trader Joe's have done with these products."

For some retailers, using the word "excitement" to describe the current state of the dried fruits and nut category is an understatement! According to Chicago-based Information Resources Inc., the total dried fruit category increased by 10.4 percent over the past 52 weeks ending April 16, 2006, while sales for private label dried fruit increased by 22.2 percent over this same time period. What's more, subcategories such as raisins and trail mixes experienced substantial growth in the private label sector with 18.2 percent and 71.0 percent increases, respectively.

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THE APPEAL

While it's obvious that consumers are more informed about the benefits of munching on dried fruit and nut snacks, a plethora of new products have recently hit the market in an attempt to satisfy everyone's sweet or salty tooth.

"The category is very much driven by berries, basically because they taste good and have the benefits of antioxidants, which is a really hot area right now," says Jeff Vogel, vice president of sales for Amport Foods, Minneapolis. "We're also seeing more tropical fruit blends like pineapple and mango."

The types of dried fruit and nut snacks being offered to consumers today aren't of the same recipe that started the category. Over the past two or three years, new flavors have burst onto the scene, adding spice to a food segment that once was considered to be a bland alternative to junk food.

"Fruit and nuts are having more various spices added to them, which is a direct response to the ethnic explosion within grocery retail," Devencenzi says. "We're seeing flavors derived from the Middle-East, Asia and Latin American. A lot of what's popular has a little more kick to it--spice has been added. Other mentionable flavors include ginger, which recently has found its way into the mainstream due to its health benefits and soothing abilities. Mothers are becoming aware that they can give products containing ginger to their children when they have upset stomachs."

While trail mixes and nuts, such as almonds, are wildly popular within the category, fruit-based bars and other fruit-based snacks, such as shapes and strings, also are proving to be popular with consumers. Additionally, these types of products also have the unique ability to provide a number of benefits to retailers.

"The appeal these and other fruit- and nut-based snacks have to retailers include organic certification, convenience, shelf-life in certain cases, multi-position for merchandising, low cost-factors, flavor variety, packaging and size flexibility as well as the inclusion of healthy claims," says Sergio Varela, president of SunOpta Fruit Group, Brampton, Ontario, Canada.

Because of the popularity of dried fruit and nut snacks, the demand for them has made its way into all channels of retail. "Consumers want these types of snacks readily available wherever they go," Vogel says. "Buyers weren't interested in these brands of private label a couple years ago, now it's all their buying. In the beginning it looked like a fad category, but now it's growing, and it's proven that it's going to stick around."

Although dried fruit and nut snacks are being offered in all channels, consumers are still purchasing them at the most familiar place--the grocery store; and this is especially true when it comes to private label.

"As far as store brands go, grocery is more in tune with the concept opposed to convenience stores," adds Joe Joity, national sales manager for Trophy Nut Co., Tipp City, Ohio. "It's because the grocery channel does more in-store promotion of food items compared to convenience or dollar stores. When a customer goes into a convenience store and sees a store brand, it's very likely that the brand doesn't ring any bells for the customer, but that's not the case at grocery stores."

CONTINUED GROWTH

When products spreading across all formats of retail in the way that dried fruit and nut snacks category have done, it becomes difficult for manufacturers and retailers to identify one specific demographic to market towards. "The category is so broad that it tends to appeal to all groups," Joity says. Because of the category's broad appeal, the question of how to market to the masses is one that becomes increasingly difficult for manufacturers and retailers to answer.

"The primary consumers of fruit and nut snacks appear to be health-conscious, educated, middle- to upper-class consumers," Varela says. "Additionally, these consumers are aware of the issues surrounding obesity, and the role intelligent food choices play in the healthy development of children."

Preventing obesity by way of a healthful diet can be done by purchasing healthful products in both private label and national brands. For the most part, there is no great difference in product variety when comparing private label and national brands. That being said, why is it that private label has experienced such phenomenal success in the dried fruits and nut snacks category? Why are consumers choosing store brands over national brands?

According to Vogel, consumers recognize there's not a big difference between the product offered by national and store brands; therefore customers still are making their decisions based on price.

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"You can look at trail mix and see that there's no reason to pay more--they're a crop item. The preference toward private label is so pronounced that there are some major retailers out there that don't even carry national brands in this category."

Varela agrees. "Private label growth in the fruit and nut snacks segment appears to be exceeding nationally branded products due to the displacement of branded product shelf space in numerous mass-market retailers," he says.

"There haven't been a lot of new developments in the category over the past year, so the separation between private label from national brands is being credited to price and private label's relentless efforts to provide consumers with high-quality products at a value to the consumer," adds Josh Sowell, marketing and packaging specialist for Nutcracker Brands Inc., Dothan, Ala.

The concept of appealing to consumers by way of their wallets has worked well for the private label industry, across the board. However, some industry professionals warn that for some categories, prices should not be the focus.

"With regard to pricing, where private label positions itself with national brands isn't as important as it used to be," Vogel says. "Somewhere between 10 and 20 percent below national brands is a nice place to be. Consumers can see the product, and can see quality, and if you make it less expensive they might become skeptical. You still want to show a value to consumers, but it's more important to meet a price point."

GOING AGAINST THE GRAIN

Over the past decade, the private label industry has made amazing strides in appealing to the masses. Stores have created destination points with their store brands, positioning them more as boutique or specialty items than commodities. Being attentive to a regional demographic has helped retailers specialize their store brand offerings, enabling them to have the feel of a gourmet item at a reduced price. But for a category such as dried fruit and nut snacks, which has seen substantial growth without the help of national brand attention, what more can be done to the category so that it continues to stand out compared to national brand products? How can store brands stay at the top of the crop, so to speak?

According to Varela, private label needs to continue its innovation and new product development in the area of organic and all-natural products, as well as educate consumers about the health benefits of organic and all-natural fruit and nut-based snacks.

The current trend toward more healthful eating habits has helped spark the explosive popularity of natural and organic products in the retail food industry. While the trend has surpassed the fad title, natural and organic products still have not made it onto the grocery list of the mainstream consumer, primarily because of availability issues and the higher price tag often associated with said products. However, the intense popularity of natural and organic items is helping these types of products reach the masses.

"As organics reach economies of scale, products will become affordable to the lower middle-class demographic," Varela says. "This will open a significant untapped market for retailers across the country."

While Whole Foods and Trader Joe's are the perceived destination point for natural and organic products, many retailers across the country are developing their own programs to position themselves in the same light.

"The importance of this category has been realized by the large players, resulting in shelf-emphasis on natural and organic fruit- and nut-based products," Devencenzi says.

Creating a destination point for consumers seeking natural and organic products, particularly organic dried fruit and nut snacks, is a concept many private retailers have uniquely implemented within their private label programs. According to Vogel, a variety of retailers are attempting to make a consumer destination for the dried fruits and nut snacks category by rotating different types of items in and out of the program. "We're seeing some do it inside the aisle, while others are doing it in a fixture," he says.

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When sprucing up a category to make it a destination point for consumers, Devencenzi recommends retailers be more open to new products. "Unique products can differentiate a store's brand from its competition," he says. "There's a little bit of risky-ness when shaking things up with a new product, but that comes with being an innovator."

For those retailers who prefer to go the route of the ladder instead of the diving board, Devencenzi offers the advice to "perhaps offer a small 'new items' section, maybe a few shelves that every six weeks or two months display a number of new items. This will help customers notice the product, thus making it a destination."

FRUIT AND NUT SNACKS PERFORMANCE

                                                                  AVG.
                DOLLAR     % CHANGE          UNIT       % CHANGE  PRICE
                SALES (IN  VS. YR.   DOLLAR  SALES (IN  VS. YR.   PER
CATEGORY        MILLIONS)  AGO       SHARE   MILLIONS)  AGO       UNIT

DRIED FRUIT
TOTAL PRIVATE      $82.9    22.2%     15.4%   38.8       15.1%    $2.14
  LABEL
TOTAL CATEGORY    $538.5    10.4%    100.0%  212.9        2.1%    $2.53

DATES
TOTAL PRIVATE       $1.0    35.9%      3.9%    0.4       43.9%    $2.63
  LABEL
TOTAL              $26.0     6.3%    100.0%    9.9        3.0%    $2.63
  SUBCATEGORY

DRIED APRICOTS
TOTAL PRIVATE       $3.0    16.6%      6.8%    1.1       17.9%    $2.78
  LABEL
TOTAL              $44.0     8.6%    100.0%   14.4        6.0%    $3.06
  SUBCATEGORY

DRIED CRANBERRIES
TOTAL PRIVATE       $2.6    30.0%      3.9%    1.6      132.6%    $2.48
  LABEL
TOTAL              $65.5    25.5%    100.0%   26.4       19.5%    $1.56
  SUBCATEGORY

DRIED FIGS
TOTAL PRIVATE       $0.2   350.0%      1.6%    0.5      664.0%    $2.89
  LABEL
TOTAL              $12.6     7.5%    100.0%    4.3       -0.6%    $4.12
  SUBCATEGORY

DRIED FRUIT CHIPS
TOTAL PRIVATE       $0.5    21.4%      3.1%    0.3       23.1%    $1.74
  LABEL
TOTAL              $17.6     4.9%    100.0%   10.1        0.5%    $1.94
  SUBCATEGORY

DRIED PLUMS
TOTAL PRIVATE      $16.1     2.8%     18.4%    6.2       26.2%    $2.58
  LABEL
TOTAL              $87.5    37.8%    100.0%   30.4       -7.5%    $2.88
  SUBCATEGORY

RAISINS
TOTAL PRIVATE      $55.4    18.2%     25.7%   27.4        7.8%    $2.02
  LABEL
TOTAL             $216.0    10.7%    100.0%   94.0        0.1%    $2.30
  SUBCATEGORY

OTHER DRIED FRUIT
TOTAL PRIVATE       $4.0    18.1%      5.8%    1.7       39.2%    $2.34
  LABEL
TOTAL              $70.0    12.3%    100.0%   23.5        6.4%    $2.97
  SUBCATEGORY

SNACK NUTS/SEEDS/CORN NUTS
TOTAL PRIVATE     $474.5     1.8%     30.0%  157.0       -4.2%    $2.78
  LABEL
TOTAL CATEGORY  $1,584.0     1.7%    100.0%  570.2       -3.5%    $3.03

SNACK NUTS
TOTAL PRIVATE     $463.8     1.8%     31.4%  150.0       -3.9%    $3.10
  LABEL
TOTAL           $1,475.0     2.3%    100.0%  481.0       -2.4%    $3.07
  SUBCATEGORY

SUNFLOWER/PUMPKIN SEEDS
TOTAL PRIVATE      $10.7     1.1%     10.6%    7.0       -9.6%    $1.23
  LABEL
TOTAL             $100.5    -7.5%    100.0%   82.0      -10.2%    $1.54
  SUBCATEGORY

NUTRITIONAL SNACKS/TRAIL MIXES
TOTAL PRIVATE      $32.0    71.0%     24.2%    9.4       72.1%    $3.37
  LABEL
TOTAL             $131.0    23.2%    100.0%   60.0       19.3%    $2.38
  SUBCATEGORY

Source: Information Resources Inc. Total supermarket, drug and mass
merchandiser sales for the 52 weeks ending April 16, 2006, excluding
Wal-Mart.

CATEGORY SHARE -- TOP 3

CATEGORY                    DOLLAR SALES (IN MILLIONS)  CATEGORY SHARE

DRIED FRUIT
SUN MAID RAISINS            $132.0                      24.5%
PRIVATE LABEL RAISINS        $55.4                      10.3%
SUNSWEET DRIED PLUMS         $53.0                       9.8%

SNACK NUTS/SEEDS/CORN NUTS
PLANTERS SNACK NUTS         $474.0                      29.9%
PRIVATE LABEL SNACK NUTS    $464.0                      29.3%
BLUE DIAMOND SNACK NUTS      $68.3                       4.3%

Source: Information Resources Inc. Total supermarket, drug and mass
merchandiser sales for the 52 weeks ending April 16, 2006, excluding
Wal-Mart.