Pretzel Crisps was founded by serial entrepreneurs Sara and Warren Wilson. Warren is the get-at-it-and-go person and Sara is the detail person. Together, they form the perfect "yin and yang" team that people write books about.
In the Beginning
The Wilsons' original creation was The Funnel Cake factory. They first opened a store in Paramus Park Mall in New Jersey, then they created a line of packaged funnel cakes for sale in supermarkets. Bagels were a hot market in the 1980s, so their success with Funnel Cake Factory's products led to the New York Style Bagel Chip Co. They sold the company to RJR Nabisco in the 1990s and once again turned their entrepreneurial zeal to a new creation—the world's first flat pretzel, Pretzel Crisps.
Here's what Perry Abbenante, Vice President of Marketing, has to say about the Wilsons' secrets to new product launch in the highly competitive snack category.
Tell Us Why Your New Product Launch Is Focused on the Deli?
Abbenante indicates that when Warren and Sara first developed New York Style Bagel Chips, they didn't have the capital available for expensive slotting allowances. "You know, the center of the store, the traditional snack aisle, is expensive. FritoLay and Snyders make it hard to get a toehold." But deli buyers operate differently. They view new products as providing value other than slotting to drive product sales, so the new product launch for Pretzel Crisps used that same distribution channel strategy.
Abbenante feels that people don't go to the deli for snacks. A deli is a place for appetizers, and therefore has way less competition. Pretzel Crisps created their own segment that no one else had thought of yet: flat pretzels that could be served as and in appetizers. Customers who are planning parties need a variety of appetizers, and they often think of the deli first. "We positioned Pretzel Crisps as an accompaniment for dips, cheeses, and deli meats," Abbenante says. "The snack aisle is thought of for 'the game' or just individual snacking."
What Do You Do Differently From the Competition?
"Our competition in the deli consists of brands like Stacy's Pita chips, New York Bagel Chips and Athens," Abbenante says. "Next, we're positioned as a pretzel cracker, more versatile than the traditional pretzel and without the filling of a regular pretzel. That leads us to be a healthy, better-for-you snack—no cholesterol or trans fat."
Pretzel Crisps are not really pretzels. The Wilsons don't compete directly with pretzels so they can direct their promotional dollars to markets that index lower for pretzels. "For example, California indexes lower for pretzels and higher for education, affluence and healthier lifestyles and attitudes, so California is a strong market for us and a better return on our marketing investment," explains Abbenante.
What Is Your Sales Pitch to the Retailer?
"We're lucky that we have someone on staff who was a former category manager…me!" says Abbenante. "I handled global buying for Whole Foods. I build the new product presentations. I anticipate the tricky questions that may come up. I know what a buyer wants. I had hundreds of products pass my desk every year."
Many food entrepreneurs simply don't know how to create a winning retail buyer sales pitch. You have to know what motivates a buyer to say, "I can sell this." A supermarket buyer needs to a road map for your new product launch and wants answers to questions like, "Why should I give you shelf space?"
In What Areas Did You Fail and What Did You Learn?
Abbenante says that Pretzel Crisps continues to monitor everything they do and that the Wilsons readily admit it when something does not work. "For example, we designed a smaller package for C-Stores and we found that the packaging colors and product flavors didn't work well for that distribution channel. The packaging was not "C-Store" friendly. It wasn't moving off the shelf. They immediately stopped, turned on a dime and repackaged and repositioned their 2-ounce line. It worked!"
How Do You Use Social Media in Your Marketing Mix?
Social media is a go-to tool and the Facebook Pretzel Crisps Page has over 100,000 fans. It's evidence of a strong following and it provides that all important "social word of mouth." Abbenante says that social media allows them to engage their customers frequently.
Pretzel Crisps (@pretzelcrisps) uses Twitter in an interesting and effective way to execute a social sampling campaign as well. In markets such as Boston, New York, and Washington D.C., they have their own people monitor sentiment on Twitter. Their teams listen for certain keywords across tweets. The search results on their keywords allow them to connect with potential brand fans and then deliver samples to their houses. Those people then retweet to followers about the experience. They have 100 million impressions.
Food Entrepreneurs Takeaway: Tips for a Successful Sales Pitch
As a former Whole Foods buyer, Abbenante knows what motivates the retail buyer to give Pretzel Crisps valuable shelf space. They're successful yet they're small in comparison to the major snack kings like Frito Lay. Abbenante didn't have a ton of cash at his disposal, but he was successful in this new product launch.
Many food entrepreneurs don't understand the cost-to-retail scenario—the fancier term is "retail value chain." There are middlemen in the retail distribution channel and each has a gross margin requirement. The rule of thumb is to multiply your product's cost of goods, basically the food, packaging, and labor, by three. This is a reasonable estimate of your expected retail price.
Abbenante urges food entrepreneurs to seriously address trade promotions, starting with a suggested retail price or SRP that can be supported in your category. Create a promotional calendar with multiple promotions to drive the all-important repeat purchase. New product development involves more than just the food. You must design your product financially to ensure that you have enough money built in for promotions. This makes for a sustainable and profitable food brand.
And always remember that the buyer needs to make money on your product!