K Kellanova

By Annie Gasparro 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (October 7, 2019).

As Americans grab for more snack bars, the biggest brands are getting overlooked.

Sales are falling for General Mills Inc.'s Nature Valley bars and Kellogg Co.'s Special-K bars, while snack-bar sales are rising overall. The divergence is the latest example of longstanding packaged-food makers missing a wave of sales growth for products much like their own.

Danone SA started losing market share to Chobani a decade ago when Greek yogurt gained popularity. Kraft Heinz Co.'s Boca veggie burgers haven't benefited from the sales boom for patties from Beyond Meat Inc. and Impossible Foods Inc.

Now a trend toward snack bars that are higher in protein and low in sugar is leaving older brands behind.

Caitlin Long, who works at a tech company in Chicago, said she is buying more Kind bars because their high fruit-and-nut content seems healthier than the milled oats and sugar in Nature Valley and Kellogg's Nutri-Grain bars.

"Kind bars pretty much kept me alive since my baby was born" four months ago, she said.

Americans are eating more snack bars and more snacks in general. Snack-bar sales in the U.S. -- including nutrition and performance bars -- rose 3.2% last year, according to research firm Mintel, outpacing overall packaged-food sales.

Sales for older cereal-and-granola bar brands, though, fell 3.7% in the year through August, according to Nielsen. As a result, older brands, including Nature Valley, Special-K and Nutri-Grain, that command the majority of snack-bar sales have lost market share.

General Mills said last month that U.S. retail sales of snack bars dropped 4% in its latest quarter. Chief Executive Jeff Harmening said in an interview that the Minneapolis company is investing in improvements such as a crispy-wafer Nature Valley bar and a Fiber One bar with more protein and less sugar.

"We are on the right track," he said.

Kellogg CEO Steve Cahillane has said the company's Special K bars are associated with low-fat diets that have fallen out of fashion in favor of high-protein and low-carbohydrate eating habits.

"We have to do a better job at innovating and making our foods relevant for today's food beliefs," Mr. Cahillane said about Special K bars at a conference last month.

Big companies have also acquired and invested in faster-growing brands. Hershey Co. last month purchased One, a maker of low-sugar, high-protein bars, for $397 million. Mondelez International Inc. earlier this year purchased a majority stake in the owner of Perfect Bar, a refrigerated, protein-rich product.

Kellogg in 2017 bought Rxbar, a protein bar made with egg whites and dates. Kellogg has put Rxbars in more stores, helping sales jump about 18% this year, the company said.

"Now it has all kinds of copycats," said Victor Lee, Rxbar's chief marketing officer. Epic, a smaller brand owned by General Mills, last year introduced date-and-egg-white bars that have a similar look and taste as Rxbar.

M&M's maker Mars Inc. in 2017 took a stake in the company that makes Kind bars that was estimated at more than $1 billion. The brand was one of the more successful ones to appear in recent years, but founder Daniel Lubetzky said that the introduction of similar products from other companies recently has taken a toll on Kind's sales. "There's not room for 400 whole-nut bars," he said.

Write to Annie Gasparro at annie.gasparro@wsj.com

(END) Dow Jones Newswires

October 07, 2019 02:47 ET (06:47 GMT)

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