Packed with potential

Ordering a bag of crisps at the bar goes hand-in-hand with buying a pint for some consumers, but, as Dizziana Rossi finds out, pubs could do more to boost sales

With snacks chalking up annual sales of £100m in pubs, it is worth considering ways to make the most of selling bagged products.

Savoury lines are by far the most popular, accounting for 85% of the market compared to 15% for sweet snacks, according to UB Foodservice data from AC Nielsen. However, sales of crisps and nuts have dipped this year.

In a poll of 2,500 consumers, data from research company TNS reveals that there were 66.3m occasions when a bag of crisps was purchased in the pub during the year to May 2004, a decline of 1.5% on the same period in 2003. The consumption of nuts is also down by 1.6% to 24.9m occasions.

One possible reason for the decline may be linked to the rise of the gastro-pub, with improved menus stealing sales from snacks. Christian Rose, director of food for the Spirit Group, supports this view, saying: "I think one of the key factors within the Spirit Group is that we continue to improve our food offering. People are moving out of snacks and into bigger meals."

But some buyers remain adamant that food does not detract from the appeal of crisps and nuts, which, they argue, provide for a different type of occasion.

Sarah Barnfield, assistant purchasing manager at Mitchells & Butlers, says: "There is no crossover between food and bar snacks. If people want to go out for a meal, they will have a meal and not a bag of crisps."

Instead, some suggest that snacking might not actually be down in pubs, but simply evolving into a more sophisticated experience.

Jason Danciger, purchasing director at SFI, whose branded bars include the Slug & Lettuce and Bar Med, believes that more pubs are using snacks in varied ways that would not necessarily register on sales data. He says: "Crisps sometimes come as part of a platter and we also take cashew nuts and serve them with spices, so figures may not be showing this sort of consumption."

Poor merchandising is the most common reason given by buyers to explain a drop in sales. Some suggest licensees should treat snacks in the same way as pub grub, advertising which brands are available in the same way the menu does for dishes.

Christine Cross, marketing manger at JD Wetherspoon, says: "People need to see these products in order to buy them. We know from our trials that, where people have merchandised properly, sales are better." Her position is backed up by claims from PepsiCo UK that 67% of crisps and snacks are bought on impulse.

But with a crowded back bar, many licensees are struggling for space to put snacks anywhere other than under the counter. Suppliers are aware of the problem, but believe licensees need to do more to advertise brands and flavours. UB Foodservice, whose portfolio includes McCoy's and KP Nuts, produces a special guide, Cracking Snacking in the Licensed Trade, offering tips on displaying snacks in pubs. It advocates the use of clip strips, which simply hang from the ceiling, holding bagged snacks.

Chiltern Snacks, which makes Salty Dog crisps, is also considering a new branded bar-top display to position its products at the eye level of the customer ­ as well as branded beer mats. Buyers applaud this level of support, which can be tailored to suit the need of each pub. Mitchells & Bulters' Barnfield says: "The way these snacks are merchandised has to fit different types of outlets. Clip strips are standard and used in most traditional outlets, but in All Bar One, for instance, snacks are placed where the wine is merchandised at the back of the bar, in built-in shelf space."

Although the clear message is that licensees need to think more creatively when it comes to selling snacks, the good news is that it is the premium products with higher profit margins that consumers want. Paul Saxby, managing director at Jonathan Crisp, says: "This small part of the market is growing at a much faster rate than any other. This is good for two reasons: it introduces higher price points and higher quality, keeping both the consumer and the publican happy."

Reflecting a trend first seen in supermarket aisles, customers expect to see premium lines such as Walkers Sensations, Golden Wonder Skins and Kettle Chips in pubs. SFI's Danciger points out: "Consumers are willing to pay for premium products because they want to treat themselves. People work a lot harder now and they like to indulge themselves when they're out." Walkers' research confirms this, claiming the customer considers price after flavour and brand when buying a bag of crisps.

The popularity of alternative premium snacks such as Biltong's prime cuts of marinated beef is indicative of how much people are spending. David Willis, founder of Chiltern Snacks, recalls: "I remember 15 years ago someone trying to sell Biltong in the pub, but it was considered too expensive. Now people are willing to spend £1 for a bag."

When it comes to cracking the premium market, suppliers are finding it easier to make an impression than in the standard sector. As Barnfield says: "It's harder in the standard market. It's easier in the premium sector, where we've had Kettle Chips for a while but new entrants like Burts and Tyrrells have come in."

According to suppliers, packaging is what attracts customers to a higher-quality product. Willis says: "We have been lucky with Salty Dog because the packaging has really sold it. A premium product has to be good. It has to come in a decent size, with attractive packaging to capture people's attention first and then the taste has to match high expectations."

And crisps aren't the only snacks benefiting from a premium makeover. For stalwart nut brand KP, it is no longer a case of salted or dry roasted. This year, the range has grown to include jumbo peanuts coated in premium flavours. The 50g packs are available on the traditional hanging card format as well as standard cartons and come in Cracked Black Pepper and Mild Indian Spices.

Spirit Group's Rose believes nuts have the potential to cash in on customers looking for a unique selling point. He says: "It's all about texture and quirkiness, especially with nuts. Putting nuts on top of the counter and serving them warm in little pots is a great example of capturing different areas in the market place."