Finding new ways to pop corn

by Max Sosland
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Smartfoods Inc. leads the ready-to-eat popcorn category with $124,865,880 in sales.

 

KANSAS CITY — New flavors of ready-to-eat popcorn/caramel corn have helped prop up the popcorn industry. In the 52 weeks ended Aug. 10, dollar sales of the ready-to-eat popcorn/caramel corn totaled $703,786,048, a 27% increase from the same period a year ago, according to Information Resources, Inc., a Chicago-based market research firm. Unit sales also rose, increasing 14% to 286,549,152. The increases in dollar and unit sales are significant compared to other categories within the grain-based foods industry. For example, dollar sales of pretzels, crackers and cookies each only increased 2% over the same timeframe.

Smartfoods Inc., Dallas, is easily the category leader with $124,865,880 in sales, a 15% increase from the previous year, and a 10% increase in unit sales at 48,897,616. Smartfood benefited from a praising review in Consumer Reports. Published back in January 2014 on-line and in the March 2014 issue of Consumer Reports, the popcorn brand was part of a report titled “Top popcorns for your superbowl party: why we liked Trader Joe’s and Smartfood.” Smartfood had a “tender inside and crisp outside with balanced sweetness and saltiness and a delicious caramelized flavor,” Consumer Reports said.

The popcorn company was created in 1985, and purchased in 1989 by Frito-Lay, a division of PepsiCo, Inc. Smartfood has shown consistently strong demand for its popcorn flavors, starting with its staple white cheddar popcorn that it entered the industry with. The company has expanded its portfolio to include Sweet & Salty Kettle Corn and Movie Theater Butter, and recently launched Smartfood Delight, an air-popped popcorn with flavors of white cheddar and sea salt, and Smartfood Selects, a line of puffed corn, popcorn and popped chips in a variety of flavors.

“Consumers are becoming increasingly more aware of their snacking choices, which is why we created Smartfood Delight popcorn, answering the need for a new reduced-fat snack that doesn’t compromise on delicious flavor,” said Dave Skena, vice-president of marketing at Frito-Lay. 

“Great taste is a must, but consumers also demand smart options,” added Daniel Naor, senior vice-president of Growth Ventures at Frito Lay. “Smartfood Selects offer a variety of light-textured and airy snacks with smart combinations of herbs and spices, and all-natural ingredients.”

The founders of SkinnyPop Popcorn focused on creating a simple product with limited ingredients.

 

SkinnyPop sales popping

While SkinnyPop’s dollar and unit sales lag Smartfoods, the company showed an incredible amount of growth at 233% and 243%, respectively, from the same 52-week period a year ago. The Skokie, Ill.-based popcorn marketer had dollar and unit sales in the 52 weeks ended Aug. 10 of $88,558,984 and 23,371,768, respectively.

The dramatic increase may be attributed to its addition of two new ready-to-eat popcorn flavors to its portfolio in early January: Ultra-Lite White Cheddar and Naturally Sweet.

To further build the SkinnyPop brand and support continued innovation, TA Associates, a global private equity firm, announced a partnership with SkinnyPop Popcorn L.L.C. in mid-August.

“We are confident that we have found the right partner in TA Associates,” said Andy Friedman, co-founder of SkinnyPop. “TA understands growth company investing and we believe they can add significant value and resources to our business. TA will help us further solidify and build on our strong foundation.”

Andrew Friedman and Pam Netzky, the founders of SkinnyPop Popcorn L.L.C., focused on creating a simple product with limited ingredients. The popcorn is made with popcorn, sunflower oil and salt. With trends in gluten-free and dairy-free diets, the minimal ingredients in SkinnyPop set itself up for the large growth reported in I.R.I.’s data for 52 weeks ended Aug. 10.

In response to recent struggles, ConAgra is shifting its focus to make Orville Redenbacher’s more competitive at retail.

 

ConAgra closings sway sales

Popcorn dollar sales at ConAgra Foods, Inc. fell 18% in the 52 weeks ended Aug. 10 to $65,756,772, according to I.R.I. Unit sales also declined, falling 15% to 37,892,212.

The negative change was caused by a few factors, including the closing of multiple popcorn producing plants. In October, popcorn manufacturing facilities in Marion, Ohio, and a popcorn processing plant in Morral, Ohio, will shut its doors. The Ohio closings are part of ConAgra’s overall cost-savings plan that includes selling, general and administrative commitments recently announced. ConAgra is conducting a network optimization initiative to simplify and reduce costs in manufacturing, warehousing and distribution centers.

“Popcorn operations from those plants will go into other plants in the company that have similar capabilities,” said Monique Farmer, spokeswoman for Omaha, Neb.-based ConAgra.

The Marion facility produced Orville Redenbacher’s popcorn at the time. The popcorn brand had the ninth highest ready-to-eat popcorn sales during the 52 weeks ended Aug. 10 at $19,281,714. However, this was down 17% from a year ago, according to I.R.I. Elsewhere, ConAgra closed its Hamburg, Iowa, microwave popcorn facility, in October 2011, which also produced Orville Redenbacher’s popcorn. While the savings from these closings are being distributed elsewhere, the shuttering of the plants has had a negative effect on ConAgra sales.

ConAgra’s Crunch n’ Munch also has shown a decline in sales, despite being the fifth highest dollar sales of ready-to-eat popcorn brands. The brand showed smaller negative change at 2% to $33,370,304.

For the fiscal year ended May 25, ConAgra had income of $303.1 million, down 61% from income of fiscal 2013. In a June 26 conference call with analysts to discuss the results, Gary Rodkin, chief executive officer, attributed the shortfall to weaker-than-planned consumer foods volumes and significantly lower profitability in the company’s private brands operations, like brands like Orville Redenbacher’s and Crunch n’ Munch.

“To state the obvious we’re disappointed with these results,” he said. “We didn’t live up to our expectations, and the year and the (fourth) quarter were unacceptable. In my book there are no excuses for that.”

In response to its struggles, ConAgra is shifting its focus to make Orville Redenbacher’s more competitive at retail.

“This is a work in process, but we believe the strategy shift will improve our performance,” Mr. Rodkin said.
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