If you look at the data – the meat snacks category is currently booming – there are strong grounds for optimism, says David Lakey, VP marketing at Oberto, which claims to be the #2 beef jerky brand by volume behind market leader Jack Links.
“Jerky has grown 61% in dollars over the past five years and both meat snacks and jerky grew about 12% in dollars in 2014.”
Several factors are contributing to the renewed interest, Lakey told FoodNavigator-USA, from the protein craze and interest in the Paleo diet, to the disruptive influence of upmarket brands such as EPIC and KRAVE, which are designed to appeal to a new audience (women, foodies, athletes), and have changed perceptions of the category overall.
“Beef jerky is the ultimate healthy snack. It’s extremely low calorie, virtually no fat, high protein and very low carb, so it offers all the things people say that they want; we just need to get consumers to understand that, and that’s the challenge for the whole industry.
“For a long time meat snacks were associated with meat sticks – and they were known for having high fat and sodium and a poor ingredients deck, and if that’s still your impression of the category, it’s hard to change that.”
Beef jerky is low calorie, low fat, high protein and low carb – all the things consumers say they want
However, KRAVE’s meteoric rise shows that attitudes can change, he said, although it’s not clear how big the market opportunity is for ultra-premium jerky and bars.
“Market growth has attracted more sophisticated players to the category. I think what KRAVE has done is show the industry that there is a market for more culinary flavors, although it’s difficult to say how wide that market is. I think it’s certainly inspired us all to focus more on flavor development."
When it comes to marketing and formulations, he said, “All of the brands are positioned a little differently, and I think the marketing is getting more sophisticated and more informed by the data. KRAVE has done well in the natural channel and in grocery, whereas Jack Links is targeting the everyday snacker, largely male, on a lower income, people that shop at gas stations and Walmart.
“Oberto is positioned a little differently; we’re targeting physically active men and women with a little higher income that are interested in nutrition, and we sell well across multiple retailers from Walmart and Target to Dick’s Sporting Goods.
“The Oberto All-Natural customer profile is a little more balanced in a category that’s skewed male for many years and hasn’t worked very hard to attract new users.”
The firm’s new Heroes of Summer marketing campaign, for example, features inspirational men and women, and has had a direct impact on sales, he said: “Our velocities have grown significantly and many new retailers have stocked our brand for the first time or added more skus/flavors, so we’re really pleased with it.”
Retailers are starting to merchandise meat snacks better
As for growth, Oberto’s growth is outpacing that of the category overall, he said.
“Some of the category growth is from pricing – due to the rising cost of beef in particular – but there is still substantial volume growth in the mid-single digits.
“I think a lot of retailers are also starting to merchandise meat snacks better, and this alone is going to drive sales as meat snacks are largely an impulse purchase, so if you position them by the candy and gum and magazines near the checkout, you see a big increase in sales.”
Chicken is very under-represented in meat snacks
But while cleaning up labels (ditching nitrites, lowering sodium), adding more inspiring flavor profiles, and marketing products to women as well as men has changed perceptions, household penetration hasn’t changed much in recent years, suggesting that growth is still being driven by the same hardcore of heavy users, who are just eating more, said Lakey.
Not that there’s anything wrong with this, he noted, but there is potential to significantly broaden the consumer base because jerky ticks all the right boxes: it’s portable, high in protein, low in fat, and low in carbs, making it the perfect satiating, but low-calorie snack.
“We want to appeal to heavy users, light users and to new users. One way we’re doing that is with our new chicken strips. Chicken is the #1 protein in the US, but it is very under-represented in meat snacks, so we’re very excited about their potential.”
Beef prices
One of the biggest challenges right now is the rising cost of beef, said Lakey, who said some players have responded by reducing pack sizes while others have increased prices, but not enough to cover costs, so have taken a margin hit.
“Some players are also responding by buying lesser quality meat at a lower price, but we’re just crossing our fingers that US herds will be rebuilt."