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SNYDER'S-LANCE INC (LNCE)

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Snyder Lance : continues its foray into 'better-for-you' foods

03/20/2015 | 06:10am US/Eastern

March 20--Like other snackmakers, Snyder's-Lance is looking to fill America's increasing appetite for healthier food options.

The creation of a leading U.S. snackmaker is the result of the 2010 merger of Pennsylvania-based Snyder's of Hanover and Charlotte-based Lance, which started in 1915 and for decades manufactured peanut brittle and saltines from its old facility in what is now South End.

Consumer dietary preferences historically have dictated how Snyder's-Lance does business -- from introducing low-fat snacks in the 1990s, to reduced sodium crackers in 2011, to its recently announced expansion into the growing gluten-free industry.

CEO Carl Lee said the mid-size nature of the company, known for Hanover's pretzels and peanut butter sandwich crackers, allows it to be nimble and quickly respond to emerging consumer trends.

"To be successful in the food industry, especially in the snack industry that really is fast-paced, you have to be moving very quickly," Lee said in an interview with the Observer.

As an example, Lee cited the snackmaker's recent announcement that it will debut a gluten-free sandwich cracker this spring. He said the crackers were "something that were just on the drawing board just months ago, and now they're going to market."

The timing mirrors a growing trend across the food industry. The gluten-free food market generated an estimated $8.8 billion in sales in 2014, an increase of 63 percent over the two prior years, according to market research firm Mintel.

To recognize emerging consumer trends and to develop new products, Snyder's-Lance opened a 60,000-square-foot, state-of-the-art research and development facility in Hanover, Pa., in 2013 that Lee describes as "probably the biggest thing that allows us to be nimble."

Capitalizing on the 'better-for-you' market

Snack-food consumption will grow approximately 5 percent by 2018, and the strongest growth in the category is in the better-for-you segment, according to the NPD Group, a global research firm.

"Food marketers and retailers can capitalize on the growing interest in better-for-you snack foods but it may require a paradigm shift," Darren Seifer, an NPD food and beverage industry analyst, said in a statement.

For Snyder's-Lance, this has meant making several mergers and acquisitions over the past 12 months, a year Lee called "transformative" in a recent earnings release.

Last November, the company increased its investment in an organic chip company called Late July Snacks. Earlier this year, the company announced a new division called Clearview Foods, which is focused on healthier snacks.

Last May, the company announced the sale of its Private Brands business, which makes cookies and crackers. (The after-tax gain from the sale was a boost to yearly profits.) Also that month, the company bought Baptista's Bakery, a Wisconsin private-label baked snack manufacturer known for its "better-for-you" snacks.

At the time, Snyder's-Lance said healthier foods made up about a quarter of its portfolio. But that was before the company bought Late July and announced its expansion into the gluten-free market.

In the company's most recent earnings call, when asked by an analyst how much of its business involves healthier foods, Lee said that the company's "longer-term goal is that one-third of our business would be kind of classified as 'better for you.'"

A changing company

To reflect these changes, Snyder's-Lance earlier this year introduced a new logo, a seed, which "really reflects what our focus is, and that is to grow a great company," Lee said in an earnings call last month.

Recent changes for Snyder's-Lance haven't been completely pain-free, however. When it sold its Private Brands business, the snackmaker said the change would include job cuts and reductions in the company's operations.

Ultimately, the sale proved to be beneficial to sales. Last month, the company reported its fourth-quarter 2014 earnings were $2.74 a share, more than the $1.13 a share the year before.

Sharing the snack-food market share

Snyder's-Lance isn't the only food company making new products billed as better options.

Coca-Cola recently launched a reduced-calorie version of its namesake soda called Coca-Cola Life, sweetened by natural sweeteners.

Frito-Lay, the largest snackmaker in the U.S., introduced Olive Coast kettle-cooked chips a couple of years ago.

Still, as consumers' interest in healthier fare grows, Lee said he doesn't see demand shrinking for other items.

"I wouldn't say it's waning. Snacking in general is just going to increase, but with it people are going to look for more and more variety," Lee said.

"People are going to look for nutrition in their snacks, but they're also going to look for a chance to reward themselves for a busy day or a long day."

Peralta: 704-358-5079;

Twitter: @katieperalta

___

(c)2015 The Charlotte Observer (Charlotte, N.C.)

Visit The Charlotte Observer (Charlotte, N.C.) at www.charlotteobserver.com

Distributed by Tribune Content Agency, LLC

© Tribune Content Agency, source Regional News

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