 |
Improving Your Bottom Line With Sweet Heat and Hot Snacks
by Melissa T. Stock
The good news is that there are hundreds of different hot sauces and salsas on the market
to choose from. The bad news is that there are hundreds of different hot sauces and salsas
on the market to choose from. While fiery foods may have taken off a decade ago as a
trendy, quaint cottage industry, it has now grown into a category all of its own, complete
with serious competition, and what some believe is becoming a glut of product.
With new hot sauce and salsa manufacturers and products popping up every day,
diversification may be the answer to thriving or even staying alive in what some say is
becoming a overcrowded marketplace. So you ask, what else will work with my habaneros and
jalapeņos? Think about all the nibbling that goes on in between meals. With an estimated
$42 billion plus spent on snack foods in 1996, America's penchant for sugar and snacking
may translate to sweet success for the retailers, manufacturers, and distributors who put
their own spicy spin on this category.
It's All About Taste
Banish any banter about "bad" foods. Healthy may be hip, but it doesn't
really matter. Whether it be salty, sweet or crunchy, U.S. consumers love to snack.
While counting calories and fat grams may ease the conscience, careful eating won't calm
the cravings. Even though most people won't admit it, according to a Washington, D.C.
national survey of 2,965 American adults, "taste of the food is consistently more
important to consumers when selecting what to eat than is cost, convenience, nutritional
value or weight control." In fact, according to this survey, taste appeal was rated
as the most important factor in food choices at all three food purchasing occasions
included in the survey: buying foods for the home, as well as dining out for lunch or
dinner. Incredibly, both men and women participants in the survey, all of different
socio-economic levels, age groups and weight levels, "consistently rated taste appeal
the most important factor influencing their food choices."
Simply put, taste is the main temptation when it comes to in-between-meal treats. Those
hot chips, nuts and sunflower seeds can mean big bucks to small businesses. Even though
the snack food industry is dominated by giant corporations, many small companies are
flourishing by concentrating on speciality snacks, said Michael Nikolaou of Texas A &
M, in his 1996 paper on the Snack Food Industry.
Snacking The Night Away
According to Dave Hirschkopf of Dave's Insanity Sauce, he'd have been crazy not to
diversify his hot sauce business with his Insanity Snacks line. Products such as Dave's
Burning Nuts, Insanity Sausage, Insanity Beef Sticks, and Udderly Insane Cheese have been
key in capitalizing on the consumer recognition of the "Insanity" brand name,
and have also allowed him to move into a much larger category (snacks), which offers a
greater turnover of product. "We're always thinking, what else can we sell to this
account base?" says Dave. Unique taste and packaging, as well as focusing on the
future has led his company into the gift basket arena, and the competitive world of candy
and gift baskets. His burning brittles, spicy chocolate covered espresso beans and hot
jelly beans are positioned to do well, according to Dave, especially since he has hired a
sales manager for the line who formerly owned a gourmet distribution company.
What entrepreneurs like Hirschkopf have figured out is that no matter how good a hot sauce
may be, what is one person's heaven can be another's hell. Even if they love your product,
hot sauce may sit on a refrigerator shelf for what may seem like an eternity before a
refill is needed. In contrast, most snacks or candies are consumed in 30 minutes or less,
all in one sitting.
It certainly doesn't take higher math skills to see how increased product turnover and
repeat sales can perk up a bottom line in a hurry. Bill Marko, president and owner of
Arizona Pepper Products learned early on that his company could not survive on hot sauce
alone. In 1989 Marko came out with his first product, Arizona Gunslinger Smokin' Hot
Jalapeņo Pepper Sauce. While sales were brisk, his next two products were snack oriented:
Arizona Gunslinger Smokin' Hot Jalapeņo Stuffed Olives, and Arizona Gunslinger Smokin'
Hot Microwave Popcorn. While he admits the popcorn started out as a fluke--all the guys at
work kept pouring his hot sauce over the microwave popcorn they would eat during
breaks--once he figured out how to manufacture the product, he did some research and
realized that the popcorn market was, from what he could tell, a half-billion dollar
business. While he knew he could manufacture a great tasting popcorn, his decision to go
forward with the product was based on one fact: popcorn is quickly consumed, and then you
want more. Marko continues to diversify his company by adding one new product a year. His
current line includes an habanero pepper sauce, hot pistachios, a spice packet for chicken
wings, and a brand new hot barbecue sauce. He points out that while his product was the
only hot sauce in the Phoenix airport nine years ago when he started, there are now racks
of them. This perfectly illustrates why continuing to research and produce new and
exciting products may be one of the best ways to meet your financial goals.
Brian McKinsey of Cibolo Junction Food and Spice company, Inc. formulated his plan of
diversification because of his belief to never put all of your eggs in one basket. Only
three years old, his company now consists of more than 20 products, ranging from spicy
bread mixes to salsas, to preserves. He credits the combination of good timing, attractive
packaging and hard work with the fact that his company continues to grow. "We seemed
to enter the marketplace right when things were really taking off," he said.
According to McKinsey, at first, diversification came naturally as an offshoot of
manufacturing a variety of products that he liked. He began with the spicy mixes, then
diversified to include ready-to-eat products, such as preserves and salsas. While these
"instant gratification' products, as he calls them, may last for more than one
sitting, McKinsey still reaps more of the benefits of a higher turnover than with a
product that consumers have to fix themselves. He has further diversified with the
addition of his Urban Spice Distribution line, which sells all types of chiles and spices
both retail and wholesale. McKinsey plans to build a line in the snack food industry as
well. "You probably can't sell jars of salsa into a convenience store--they don't
have the rack space," he says. "However, fiery pretzels, that's a natural; easy
to grab and low fat."
Growing Their Businesses With Sweet Heat
Of course, the addition of chips, pretzels and popcorn aren't the only way to grow
your business. For the last few years, it has been generally accepted that the profile of
an average fiery foods consumer consists of a 40-something male, with a combined family
income of $50,000 or more. However, as hot foods become less trendy and more mainstream,
some retailers and manufacturers are working to promote "softer" items to the
many women who previously weren't interested in what they perceived to be macho, ultra hot
products.
Michelle and Ted Adams have been cultivating this niche for six years with their fiery
candy company. Windmill Candy was founded by Christell Sealy, Michele's mom, when she
decided to commercially produce her special recipe for Hot Jalapeņo Pecan Brittle. The
company's first buyer was a friend who put the brittle in her upscale gift shop in
Midland, Texas. Michele says she roped in her next 30 clients at the 3rd Annual National
Fiery Foods Show. Self-described as the original upper scale hot candy company, Windmill's
line currently includes Jalapeņo Pecan Brittle, Habanero Red Chile Brittle, a gummy
bear-like product called Chile Pepper Chews, and Blazing Jumbo Jelly Beans.
Michele has seen her marketing job get a lot easier as the country has embraced hot
products. While she maintains that she still does quite a bit of explaining about the
fabulous combination of sweet and heat when she pitches a new account, she says it has
become much easier to sell products since the fiery foods industry has grown so much.
"Our product is fun for everyone and it is still unusual, which helps." Just one
bite, according to Michele, and they are usually sold.
"Just a tickle" is how Cynthia Fowler of Southwest Spirit describes the heat
level of her Chocolate Raspberry Sauce with New Mexico Red Chile. Combining fruity, sweet,
and heated tastes is the way that Fowler plans to continue to grow her business and court
the many sophisticated palates who crave the hot stuff. In business for four years and
poised to turn the corner of profitability in the next few months, Fowler has positioned
her company to serve those who like it very hot with habanero and chipotle based produces,
as well as those who are more comfortable with only a hint of heat.
However, she admits that her direction is now toward products with less emphasis on heat
and more on creative, flavorful multi-use products. Her four new Spirited Sauces, as she
calls them, are perfect examples of how she is diversifying her product and client base.
These include Raspberries Rosemary and Thyme in Cabernet, Gingered Peaches and Bourbon,
Tropical Fruits in Beaujolais, and Pineapple Chipotle in Rum. Part of her strategy in
creating a high turnover product is to educate her customers about the many ways they can
use her sauces. "I have always supported my products with lots of recipes," say
Fowler. "I usually get more than twenty-five requests a week." With sales of her
salsa slowing down, and sales of her hot sauces and dessert salsas picking up, Fowler is
certain about the direction she is going with her business. "The Chinese have been
combining sweet with heat for thousands of years. My products are just a continuation of a
very long trend." Like wideleg jeans and lava lamps, what's old is new. And so it
goes in the Fiery Foods Industry.
Melissa T. Stock is the managing editor of Fiery Foods Magazine, and has written
more than twelve books on hot and spicy subjects.
Does Your Shop Need To Diversify?
While most hot shops have been around for five years or less, some like Gil's Gourmet
Gallery have much more experience to draw upon. In his presentation at the 1996 College of
Chile Knowledge on Opening Your Own Hot Shop 101, Gil emphasized the need to diversify a
shop and create traffic and buyers in order to survive. He suggested combination themes
such as a wine and hot shop, or a cigar and hot shop--anything to get people through the
door on a regular basis.
This notion is further supported by a September 1997 Consumer Watch Survey conducted by
Fiery Foods Magazine. We found that customers return to their favorite hot shops to
"find something new," and are attracted by a good variety of interesting
products.
Remember, a hot shop doesn't have to be all hot sauce. Diversifying your shop, allowing
customers to taste all of your products, and taking advantage of special events such as
the Superbowl, Fathers Day and Valentine's Day, may help you successfully navigate the
roller coaster ride of retail.
Snacks and Sweets Statistics
Per Capita Confectionery Consumption Figures*
YEAR POUNDS PER PERSON
1983 17.9
1984 18.9
1985 19.1
1986 18.4
1987 18.3
1988 19.2
1989 20.4
1990 20.1
1991 20.3
1992 21.5
1993 21.9
1994 22.5
1995 23.4
*Historical United States per Capita Consumption for Confectionary
Source: National Confectioners Association
www.candyusa.org
Holiday Candy Sales
In Millions
1994 1995 1996 1997 1998
Halloween $784 $850 $900 $950
Christmas $824 $841 $859 $945
Easter $800 $837 $875 $940
Valentine's Day $655 $665 $687 $709 $725
Source: Chocolate Manufacturers Association
www.candyusa.org
The Percentage of People Who Snack Between Meals At Least Once A Day
United States: 80%
Germany: 74%
United Kingdom: 69%
Brazil: 64%
Italy: 62%
Spain: 57%
Japan: 66%
France: 53%
Source: 3/3/97 Food Institute Report
http://www.facilitygroup.com
Canadians Becoming "Serious" Snackers
...Crest Canada says that Canadians are spending more and more on snacks consumed
outside of the home. In 1995, snacks counted for just over 24 percent of the total food
service market and this trend continues to grow...Canadians are eating out at least twice
a week, and supermarkets are reporting the sales of quick, convenient meals have increased
123 percent over the past 5 years. While Canada's grazing trend is not growing at the same
phenomenal rate as in the U.S., it is likely to continue its upward trend.
Source: Poultry Briefs, Ottawa, Ontario Canada
www.foodtrends.com
Ready&endash;to&endash;Eat Heat:
Supplying Parties with Hot Snacks
by Scott Barancik
Here's an important message for gourmet and hot shop owners: Ignoring the snacking needs
of Sunday football viewers can be harmful to your bottom line. Sure, you could continue to
let gridiron&endash;lovers gorge themselves on generic corn chips and
white&endash;bread baloney sandwiches bought last&endash;minute at the local
7&endash;Eleven. But why not fill fans' bellies with hot and spicy snacks from your
own store shelves, instead?
Relax. It won't be necessary to keep your doors open
'round&endash;the&endash;clock.
Whether your customers are hosting football, bachelorette, or poker
parties&endash;&endash;or merely feeding their own fiery
addictions&endash;&endash;the time for stocking
ready&endash;to&endash;eat, hot and spicy snacks is ripe. Foodservice 2005, a
recent study commissioned under the auspices of the National American Wholesale Grocers
and the International Foodservice Distributors associations, found that Americans
increasingly want healthy, high&endash;quality food that is out of the ordinary and
requires little or no at&endash;home preparation. At the same time, the study found,
today's consumers are better able to pay for such premiums.
While purists might argue that an industry which typically caters to home chefs should not
be hawking pre&endash;packaged, ready&endash;to&endash;eat snack replacements,
others believe that these types of items complement the home cooking experience. According
to Gil Tortolani of Gil's Gourmet Gallery in Sand City, California, "a lot of
[prepared foods] are things that people can't make at home, even if they wanted to."
To recreate Tortolani's garlic olives, for example, a person would need to import olives
from Spain, obtain 120&endash;grain vinegar (rather than the 50&endash;grain
variety normally found on grocery shelves, he says), and buy certain ingredients by the
drum.
Besides, let's be honest. What are salsas if not ready&endash;to&endash;eat foods?
Pre&endash;packaged, ready&endash;to&endash;eat snacks and foods are a nice
complement to the core hot shop business of sauces, salsas, spices, and raw ingredients
because they can increase walk&endash;in traffic and the frequency of repeat visits
from months apart to weeks or even days. Customers who purchase insta&endash;foods
return more frequently than customers who buy condiments or ingredients alone, and the
reason is fairly clear: "Hot sauces aren't bought on a regular basis. I mean, it's
not like you go through a bottle a week," says Margaret Laport, marketing director
for the National Food Distributors Association. By contrast, a family needs but a few
hours to reach the bottom of a bag of hot bagel chips.
Ready&endash;to&endash;eat foods also tempt impulse buyers in a way that, say, raw
peppers may not. "The people that normally go into [hot] shops are going in for
barbecue sauce," says Sharon Eisenbraun, owner of the Dallas, Texas&endash;based
manufacturer Apecka, Inc. "But if you set the pickles next to the barbecue sauce,
that gives customers something else [to buy]." Other strategic placements might
include stocking chips next to the salsas, and putting sweet snacks beside the cash
register, all of which can add up to extra dollars on the final sales ticket.
Another basic rule of retail applies not only to hot shops but to businesses of any type:
Don't stock a product unless you're sure people will purchase it. Free samples are a good
way to get at this question, and some manufacturers will provide bona fide retailers with
a free bag or jar of their product for this very purpose. Customers like samples, too.
"It always makes a huge difference when they have product tastings," says one
hot products devotee.
Shop owners should also be aware of trends in their customer's behavior. When Suzie
Tusman, owner of the New Hope, Pennsylvania hot shop Suzie Hot Sauce, observed the local
frenzy over football games, she decided to cash in on the weekly tradition. "On
Sundays, we get people buying [hot] pretzels like crazy, buying the chips, buying wing
sauce," she says. Janet Holland's Havana, Florida&endash;based Pepperhead
Quarters cleans up on football parties, too.
In fact, shop owners and their staffs must adopt a "party mentality" and be
prepared to make snack suggestions to customers hosting get&endash;togethers. Before
making a recommendation, they should also try to assess the customer's
priorities&endash;&endash;cost, health, ease of preparation, heat,
packaging&endash;&endash;and suggest products accordingly.
In some cases, additional efforts will be needed. A shop owner who wants to use snack
foods to bring in new customers, for example, might employ devices such as window signs
and radio advertisements. "If you go beyond your specific genre of product,"
such as ready&endash;to&endash;eat snacks, "you have to tell people you're
carrying them," says Ann Brody, a Bethesda, Maryland retail consultant and a former
gourmet shop executive. "You have to say, 'Hey, look what I got, buddy!' And you have
to say it in a way that appeals to [people]."
What it all amounts to is that you don't need a Harvard M.B.A. to sell snack foods. By
following simple, old&endash;fashioned retail principles, keeping up with trends, and
continuing to introduce not only more people to your products, but more products to your
people, your shop's party goods will appear to sell themselves. Both Tusman and Holland
sell enough ready&endash;to&endash;eat products to account for
one&endash;fifth of their total respective sales.
Given the right product line and a sound marketing plan, snacks and side dishes can lead
to higher revenues not only for retailers, but also for the manufacturers, buyers,
wholesalers, and distributors who channel such products. Although Tusman may have been
exaggerating when she said, "I think this country lives on snacks," her peers
might forgive her for thinking so. If they were to sell as many party&endash;ready
goods as she does, they might develop a similarly skewed outlook.
Scott Barancik is a freelance journalist based in Washington, D.C. and a Contributing
Writer at the Washington City Paper. This is his first article for Fiery Foods
Magazine.
Party To-Go
Snack foods can boost your business. And thanks to the foresight of manufacturers,
buyers, and distributors, these products are diverse in type and are readily available.
This brief, random list will give you an idea of what's out there.
Consumer Watch
This is a new feature for which we will conduct periodic surveys of consumer
preferences. If you wish to become a part of our survey pool, please e-mail your name and
address to (kellye@fiery-foods.com), or send the information, ATTN: Survey Pool, by fax to: (505) 298-3826;
or by mail to: Fiery Foods Magazine, P.O. Box 4980, Albuquerque, NM 87196. All responses
will be compiled and remain anonymous.
Here we asked a small group of hot food aficionados, who contacted us through our Web
site, about their hot shopping habits.
* Specialty shopping habits:
--71 percent regulary shop at gourmet shops or hot shops. Typical frequency: gourmet
shops--once a month; hot shops--once every two months.
* What keeps them coming back?
--Quality of merchandise--14 percent
--Looking for something new--29 percent
--Availability and selection--29 percent
--No response--29 percent (some did not answer this question because they do not have a
local hot shop).
--One respondant said that she goes to hot shops looking for "something new,"
and goes to specialty gourmet stores to find gifts.
* Types of products bought:
--Unusual ingredients for specialized dishes and meals that are prepared at home.
* Party fare:
--All participants have served hot and spicy food products in their homes to guests. Types
of products mentioned: stuffed jalapeņos, spicy dips, fried peppers, unique salsas.
* Word of mouth:
--71 percent would recommend their local hot shop to friends as a place to buy party
ingredients. Some did not have hot shops in their areas, so could not recommend them, but
said that they themselves drive long distances to find them.
* Suggestions for increasing hot shop visits:
--More variety--43 percent
--Samples and serving suggestions--29 percent
--Easier accessibility to shops--29 percent
* Interest in hot and spicy meals "to go"from hot shops:
--Very interested--29 percent
--Somewhat interested--29 percent (price and quality are main concerns)
--Not interested--43 percent (they prefer to prepare their own meals at home)
- Top of Page