Bars: Boom or bust?

by Eric Schroeder
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Nutrition bars
The bar category has only experienced a modest gain in year-over-year dollar sales.
 

KANSAS CITY — A quick glance at data from Chicago-based market research firm Information Resources, Inc. shows only a modest gain in year-over-year dollar sales for the bars category.

In the 52 weeks ended Oct. 8, dollar sales in the snack bars/granola bars category totaled $7,065,568,256, up 0.34% from the same period a year ago, despite a 2% decline in unit sales during the period, according to I.R.I. Dollar sales trended lower for several sub-categories, including granola bars (down 1.6%) and breakfast/cereal/snack bars (down 0.16%), but trended higher for nutritional/intrinsic health value bars (up 1.6%).

Despite what appears to be a flat category, the past few months have been anything but staid, and several recent transactions could shake up the segment.

RXBAR, Kellogg
On Oct. 6, Kellogg entered an agreement to acquire the maker of RXBAR clean label protein bars.
 

On Oct. 6, the Kellogg Co., Battle Creek, Mich., entered an agreement to acquire Chicago Bar Co., L.L.C., maker of RXBAR clean label protein bars, for $600 million.

“Adding a pioneer in clean label, high-protein snacking to our portfolio bolsters our already strong wholesome snacks offering,” said Steve Cahillane, chief executive officer of Kellogg. “RXBAR is an excellent strategic fit for Kellogg as we pivot to growth. With its strong millennial consumption and diversified channel presence including e-commerce, RXBAR is perfectly positioned to perform well against future food trends.”

With six or fewer simple ingredients and 12 grams of protein, RXBAR offers 11 varieties of bars ranging from apple cinnamon to mint chocolate chip to pumpkin spice. The bars contain no gluten, soy, dairy or added sugar.

Kashi and Special K bars, Kellogg
RXBAR will join Kellogg's other bar category players, including Special K and Kashi.
 

Kellogg will look for RXBAR to provide a boost to its lagging bar business. Despite being a player in the bars category for many years through its Nutri-Grain and Special K brands, Kellogg over the past year has noted difficulty within the Special K portfolio as consumers have shifted focus. In the 52 weeks ended Oct. 8, dollar sales for Kellogg’s Special K protein bars totaled $126,688,720, down 7.5% from the same period a year ago, according to I.R.I. Kellogg also owns Kashi, which experienced a 26% decline in dollar sales during the 52 weeks ended Oct. 8.

On the heels of Kellogg’s announcement, Downers Grove, Ill.-based Hearthside Food Solutions in late October agreed to acquire Standard Functional Foods Group (SFFG), a unit of privately held Nashville, Tenn.-based Standard Candy Co.

Founded in 1901 as a regional confectioner, Standard Candy Co. expanded into nutritional and functional bars in 1999 through SFFG. Today, SFFG serves as a contract manufacturer to many of the largest food companies and brands.

Nutrition bar production
In late October, Hearthside Food Solutions agreed to acquire Standard Functional Foods Group, which makes nutritional and functional bars.
 

Hearthside believes the acquisition of SFFG will enhance its entry into the functional bar category.

“In addition to new network capacity, geographic reach and production capabilities, SFFG brings leadership in R.&D. with their ability to design, formulate and commercialize the increasingly complex nutrition and energy bars customers are demanding,” said Rich Scalise, chairman and chief executive officer of Hearthside.

The acquisition of SFFG comes a little more than two years after Hearthside announced its presence in the bar category with the acquisition of VSI, Leerdam, The Netherlands, from NPM Capital. VSI is the largest European producer of nutrition, diet and functional bars. Hearthside also acquired a nutritional supplement bar production facility in Boise, Idaho, from a subsidiary of Post Holdings, Inc.

SunOpta nutrition bars
SunOpta plans to exit its private label nutrition bar product and operations in Carson City, Nev.
 

While Kellogg and Hearthside have taken steps to ramp up their presence in the bars category, Toronto-based SunOpta in late September announced its intent to exit its private label nutrition bar product and operations in Carson City, Nev. The company is working with nutrition bar customers to expedite the process and aims to complete the exit by the end of the fiscal year, which should be about the end of 2017.

Nutrition bars accounted for about $13 million of SunOpta’s revenues in fiscal 2016 and $11 million in revenues during the first half of fiscal 2017, but the company felt it made more financial sense to shift focus elsewhere.

“Given our size relative to the competition, our customer profile and limited avenues to meaningfully penetrate private label we decided to exit the (nutrition bar) business,” David Colo, president and c.e.o. of SunOpta, said during a Nov. 8 conference call with analysts.

General Mills Fiber One Protein Nut bars
General Mills is launching Fiber One protein nut bars with 10 grams of protein.
 

Meanwhile, General Mills, Inc., Minneapolis, may not be looking to exit the bar business, but it is looking to bust out sales growth for its Fiber One brand, which underperformed during 2017. Dollar sales of the brand totaled $201,592,512 in the 52 weeks ended Oct. 8, down 27% from the same period a year ago, according to I.R.I. To right the ship, General Mills has pledged to get back in touch with its primary consumers — women.

“We’re emphasizing what the brand is known for: making fiber taste great,” Jonathon J. Nudi, group president of North America Retail, said during a July 12 investors’ day conference. “We’ll be adding more drizzle to our brownies and more nuts to our protein bars. We’re launching a new permissible treat with protein nut bars. These bars contain 10 grams of protein but only 5 grams of sugar with no artificial colors, flavors or sweeteners, perfect for consumers looking for hard-working calories and great taste.”

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