Sales of 'grab-and-go' granola bars plunge as pandemic snacking turns salty

For Nomi Snacks, a Minneapolis granola bar maker, 2020 was supposed to be the year of new products, new investors and growth. Instead, the pandemic delivered its death knell.

"We had store expansions, new retailers and some new varieties for vegan or plant-based consumers all ready to launch," said Will Handke, Nomi's co-founder. "Then in March 2020, things took a pretty significant turn. It was a dramatic point."

Snacking increased among the bored and anxious as people worked and schooled from home, but the motivations for noshing shifted and so did the snacks.

Snack bars — a favorite of lunchboxes, commutes and on-the-go lifestyles — saw near-immediate declines.

U.S. retail sales plunged nearly 7% in 2020 after several years of moderate growth, according to IRI, a Chicago-based market research firm.

Despite a slow rebound over the past year, the segment is still marked by uncertainty and transition. Specialty players like Nomi, which makes refrigerated and gluten-free bars, were unable to hang on.

"As a startup looking to show growth trajectory, the timing couldn't have been worse," Handke said.

Even packaged food giants like Golden Valley-based General Mills suffered a 2% sales decline in its snacks division amid an otherwise frothy year.

"Snack bars are energy on-the-go and people haven't been on-the-go, so predictably the category as a whole has not fared well," General Mills chief executive Jeff Harmening told the Star Tribune this summer.

It's not that people weren't, and aren't, snacking during these strange times. In fact, data shows they are snacking more. But when, where and what they are reaching for has shifted.

Salty snacks, like chips and ready-to-eat popcorn, surged as screen time increased, a recent report by the NPD Group found.

Still, the changes in consumer whims have not been uniform.

"Snacking, more so than meals, is highly vulnerable to lifestyle changes," Melissa Abbott, a vice president at the Hartman Group wrote in an email. "Sudden changes in daily routines and general outlook on life can then have a strong effect on snacking habits."

Some people flocked to products with purported health benefits, like immunity-boosting or high-protein foods, including some snack bars. Others, particularly early in the pandemic malaise, sought comfort in indulgent sweet treats.

The pandemic also favored large, established food companies as many retailers and distributors reduced the number of products they sourced in favor of bulking up on their bestsellers.

Many small players like Nomi lost grab-and-go sales in skyways and convenience stores. Its New York City distributor, which supplies snacks to thousands of bodegas and small storefronts throughout Manhattan, cut one-third of its offerings — including Nomi's products.

"If you were a startup at that time, there was pretty much no way you would survive in that [bodega] business," Handke said. "Pretty much the only ones they were carrying were the big brands, like Chobani and Clif Bar that they could trust to sell."

There was also a flight to value as the economy convulsed with uncertainty.

"It didn't matter if you had lost your job or not, people were fearful," Handke said. "People went back to what they know. We were really a premium alternative."

Larger companies, with their diverse product portfolios and hefty balance sheets, can typically absorb short-term setbacks better than startups. So when the rebound arrives, they're ready for it.

Estimates for 2021 suggest a partial rebound in volume sales for snack bars.

"We started seeing some growth in bars and single-serve packs as people were grabbing for portion control later in pandemic lockdown," said Darren Seifer, a food analyst with NPD Group.

A year into the pandemic, Harmening of General Mills said its Nature Valley business had improved significantly compared to the rest of the snack bar category.

Looking ahead, NPD Group forecasts the snack bar category will actually grow 2 to 3% over the next two years, said Seifer, "but, of course, that depends on the delta variant."

Nomi and some other startups didn't have the cushion needed to survive the pandemic's economic whiplash.

After an initial two-week sales bump in March 2020 fueled by frenzied shoppers stocking their refrigerators and pantries, the small company's sales plummeted. Nomi lost a third of its revenue from 2019 to 2020, dashing hopes of raising additional capital to support its growth and future plans.

Nomi's five founders are recalibrating their dreams. Four already have found new jobs — some at other local food companies.

As for Handke: "I think I'm going to take a pass on the food industry for a while."