US snack group Snyder’s-Lance intends to drive continued top line growth in its key brands and will ramp up investments in marketing and product development in the coming months.
The company, which yesterday booked a near 40% jump in first quarter net profit, has driven increased revenue and market share gains for its key snack brands: Snyder’s, Lance, Cape Cod, and Pretzel Crisps. Core branded sales were up 23% in the quarter, excluding the impact of last year’s IBO conversion.
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Commenting on the result during a conference call with analysts, president and CEO Carl Lee noted: “Our team grew our core branded sales, driving volume and revenue growth ahead of category and food industry trends.”
He continued: “Brand new sales growth continues to be a top priority and we gained market share in all four of our core brands. Snyder’s of Hanover, Lance sandwich crackers, Cape Cod and Pretzel Crisps, outpaced their respective categories delivering both volume and revenue gains for the quarter.”
In particular, Lee emphasised that The Pretzel Crisps brand, which was acquired last year, “raised the bar” on quality and innovation. In order to drive growth in the remainder of the year, Snyder’s-Lance is stepping up its innovation pipeline, Lee continued.
“We have a very robust pipeline of product innovations in 2013 for our core brands. Beginning, first of all, with Pretzel Crisps. Our new products continue to perform well as they reached new consumers and drive incremental eating occasions. It’s much more than a brand, it works very well as a platform today and for future growth,” he said.
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By GlobalDataMeanwhile, Lance sandwich crackers has seen the launch of Xtra Full sandwich crackers – containing “more peanut butter”. This line is performing “quite well”, Lee said. The group has also expanded its Cracker Creation line with a new graham-based cracker, launched its “very first” jalapeno sandwich cracker on its Captain Wafer base and developed Chocolate Nekot cookies, with both chocolate or peanut butter filling.
Innovation of the Snyder’s of Hanover brand has focused on tube packaging, while Cape Cod potato crisps have been boosted by new flavours and a focus on the low fat line up, Lee continued.
In order to leverage its new product innovations, Snyder’s-Lance has stepped up its marketing investment, Lee revealed.
“Starting in the second quarter, we’ve increased our investment in marketing and advertising to drive sales. Our advertising efforts will focus on core brands as we leverage TV advertising and online interactive media that reach new consumers. This is a very significant step as we’re excited about our incremental spending on our advertising and marketing and primarily, against our SOH brand.”
According to Janney analyst Jonathan Feeney, the increased marketing spend is likely underpinning the group’s full-year top and bottom line outlook, given the relative “softness” outside of the group’s core brands. “A planned ramp in marketing investment, beginning in Q2, is the likely driver for unchanged guidance on both the top and bottom line,” Feeney suggested.
The company did see a 1% drop in non-branded sales, but insisted that this reflects the move to raise prices and moves to strengthen profitability. Margin improvements were also driven by a reduction in supply chain costs and improved plant efficiency, Lee suggested.
The company yesterday reiterated 2013 earnings guidance of $1.16-1.25 per share and net sales of $1.781-1.813bn, up 22-32% and 10-12% respectively.
