Once a niche item, the pretzel is going mainstream. Supermarket sales reached nearly $448 million for the year ending Sept. 11, a 13.2% increase over the prior year. That increase was on top of a 12% increase in 1992.
Driving the category's growth are three tough competitors: Snyder's of Hanover; Frito-Lay, PepsiCo's snack division; and Anheuser-Busch Co.'s Eagle Snacks.
"Pretzels are growing because they have an excellent nutrition profile with less than one gram of fat per ounce and there's a lot of product innovation going on," says Al Rickard, VP-communications for the Snack Food Association. "Another reason is value. We're in an era of price competition coming off a recession. The price per pound for pretzels is much lower-about $1.80 per pound in 1992 compared to snacks in general of $2.66 a pound. That's a pretty hefty difference."
Consumers began rediscovering pretzels about 18 months ago.
Leading the pack is privately held Snyder's of Hanover, whose main business is pretzels. The company is recognized for its product innovation, particularly on the flavor front. Within the last 18 months, Snyder's has introduced three different flavored pretzels: buttermilk ranch, honey mustard onion and cheddar cheese. Its No.1 seller is the thick, sourdough pretzel, the most popular type in the category.
Snyder's relies on radio advertising and couponing in its strong regional markets in the Northeast and Midwest where spots convey the message that "Snyder's has a snack for every `Pretzenality."'
But it is up and coming Eagle Snacks that has increased its pretzel business by leaps and bounds in the last two years, reaching almost a 4% share from less than a 1% share a year ago. The company in 1992 expanded its line to include Eagle pretzel sticks, thin twists, mini-bites and Bavarian sourdough hard pretzels.
"Eagle has done well because we listened to consumers and watched the trends," says Kevin Bowler, Eagle Snacks president. "We noticed in 1991 pretzels, which used to be a regional product, started to have broader acceptance."
Eagle's Bavarian pretzel has become the "hottest growth product," says Mr. Bowler, who added, "It's a great companion product for a beer company."
Eagle's marketing efforts have focused on in-store merchandising strategies, starting with moving pretzels off the bottom shelf and up to what Mr. Bowler calls the "eye-level, buy-level" top shelves. TBWA, New York, is Eagle's ad agency.
Interestingly, Frito-Lay so far is the only national advertiser in the pretzel category. The company for the first time gave network TV support last summer to Rold Gold in a campaign starring Jason Alexander, who plays George on NBC-TV's "Seinfeld" show. The effort puts Mr. Alexander in humorous elevator encounters with women and Rold Gold pretzels. As he tries to make a favorable impression in the 30-second spot, he learns that Rold Gold pretzels are low in fat and full in flavor.
The campaign also includes a 15-second commercial for Rold Gold Pretzel Bits, available in garlic & herb sourdough and honey mustard sourdough flavors and testing in the Northeast. DDB Needham, Chicago, created Rold Gold's ads.
"We are treating pretzels like a core brand," says Frito-Lay. "We are going to be very aggressive in our pretzel growth."