While food manufacturers have only recently entered the retail appetizer arena, restaurants have long been aware of the benefits of appetizers, which possess a high profit margin for most foodservice establishments and can have hidden benefits.

Nearly 80% of operators responding to a Land O'Lakes Foodwire survey, for example, said that appetizer orders stimulate other sales, such as additional drinks or desserts.

The appetizers also open the restaurant up to a relatively new type of diner, the grazer. Consumers as a whole, in fact, have shifted to more of a "grazing" style of eating, and this has led appetizers to become a hot menu selection. Three meals a day is no longer the thinking among much of America. That mentality has given way to four or even five meal parts per day and has also led to smaller meals, which are perfectly suited for appetizers.

The most popular appetizers for grazing include chicken strips with barbecue sauce, tortilla chips with a queso sauce, nachos, pizzas and quesadillas. Overall, appetizers with an ethnic flair have gained quite a following, due in no small part to restaurants, which have familiarized consumers with a diversity of concepts. This has not been a detriment, however, to the food processing industry. It has, in fact, been a boon, as food manufacturers supply more and more menu items and appetizers, in particular.

A New Arena

Anchor Food Products, Sysco's 2000 Supplier of the Year, has been successful in foodservice with its variety of appetizers. That success has spilled over into fast food as well, as Burger King has now adopted Anchor's Popperswin its lineup. The breaded, stuffed jalapeños are currently in 8,300 Burger Kings throughout the U.S. and Canada.

Though perhaps the most notable, the Burger King agreement is far from Anchor's first foray into foodservice. The Appleton, Wis., company sells its Poppers and other appetizers through Pizza Hut, Tom's Drive In, Arby's and Culver's restaurants, to name a few. With more than 1,400 customers per location daily, the Burger King account, however, gives Anchor its largest foodservice agreement by far and is helping an already-successful company, one that has seen sales grow from $40 million in 1992 to over $500 million, achieve even greater heights.

In addition to new customers, new products have been instrumental to Anchor's growth. For example, Anchor recently added Mexican-flavored choices to its Poppers line, more than one billion of which are sold annually. That consumer familiarity helped Anchor get in the door with Burger King. Once in the door, it was only a matter of time, as consumer tests exceeded the expectations of Burger King executives.

Appetizers have convinced a number of foodservice operators and can account for 10% of a restaurant's sales revenue but as much as 30% of its profits. In addition, 41% of appetizer orders are placed by those 18 to 24 years old, reports the Land O'Lakes Foodwire survey.

Frozen Handheld Entrees (Non-breakfast)
52 weeks ending December 31, 2000 % Change
$ Sales
versus Prior Year
Hot Pockets $223 million 12.0%
Lean Pockets $107 million 25.5%
Croissant Pockets $60.8 million 2.6%
Delimex Handheld $42.5 million 15.7%
Red Baron Pouches $41.1 million 0.5%
Foster Farms Handheld $36.0 million 10.1%
White Castle $35.6 million 5.7%
Tina Frozen Handheld Entrees $35.6 million 6.9%
State Fair $33.3 million 21.5%
El Monterey $31.0 million 22.5%

Source: Information Resources Inc./PF

Target for a New Audience

Frozen snacks may well be the domain where food companies can reach the teenage dollar, and Bagel Bites is certainly aiming for that consumer with its marketing agreement with skateboarder Tony Hawk.

As Neil Harrison, president and chief executive officer of Heinz Frozen Food Company, notes, "Tony Hawk's popularity among younger demographics makes him the perfect fit to deliver Heinz's message that Bagel Bites are a fun alternative to traditional snack foods. Our partnership with Tony reaffirms our commitment to making Bagel Bites the tween snack food of choice."

According to Richard Yoder, senior product manager of Bagel Bites, the agreement reflects a move by Bagel Bites to market directly to tweens--children between the ages of 11 and 15--and teenagers. The two groups represent the primary consumers of the product. In the U.S. alone, the tween population of 27 million people is responsible for $5.2 billion in annual sales of after-school snacks.

Teens and tweens are far from the only snackers, however. In fact, a recent survey by Tupperware found nearly three-quarters of Americans (73%) snack at least once a day, and 39% report snacking more than twice per day. By contrast, only 4% said they never snack at all.

How much can be gained from the average snacker? Nearly half (48%) of those surveyed reported spending an average of $5 or less a week on snacking. Nearly a third said they spent $6 to $10 a week, while 13% spend $11 or more on snack food in any given week.

Tupperware also found Americans were taking a more health-conscious approach to their snacking, and companies are beginning to take note of the need for healthy snacks.

Snack for Health

Feeding to that healthy snacker, the Fillo Factory has 14 natural foods snacks in its line, though a line extension is coming soon, according to Tony Falletta, vice president of marketing with the company. Fillo caters to the natural foods snacker with offerings such as organic spelt-flour-based fillo dough with spinach and tofu, wild mushroom and onion or vegetable medley fillings tailored for vegan customers, and Falletta says consumers have a reason be aware of the Fillo Factory.

52 weeks ending December 31, 2000   % Change
Brand $ Sales versus Prior Year
Bagel Bites $97.4 million 19.2%
Totino's Pizza Rolls $77.5 million 14.0%
Totino's Frozen Appetizer/
Snack Rolls $67.3 million -1.1%
T.G.I. Friday's Frozen Appetizers $46.1 million 181.8%
Poppers $39.3 million 24.3%
Farm Rich Dippers $14.9 million -22.1%
Chung's Frozen Appetizers $13.8 million 202.7%
Hot Pockets Frozen Appetizers $12.6 million -18.8%
Private Label $10.8 million 22.6%
Delimex Frozen Appetizers $8.98 million 94.6%

Source: Information Resources Inc./PF

"We have paid attention not only to the vegetarian market but the vegan market (nondairy, no eggs), while also applying as much organic ingredients as we can, including our spelt flour, which is organic. This organic spelt flour we turn into a fillo dough, which is between four and five one-thousandths of an inch thick. The (consumer) reaction has been good for us. Consumers are becoming aware that we are aggressive, and we are trying to bring more products to these types of consumers, so they have more selection."

Noting that Fillo's involvement in foodservice is "starting to grow," Falletta believes "natural is definitely the trend (in frozen appetizers and snacks).

"We will see what the fallout is on organic with the new ruling. I see more and more people in the natural food eating habit staying with it and looking at products that are refining ingredients. I also see people that are or were eating meat, pork, poultry, whatever, more likely moving over into substituting their meat dishes for vegetarian dishes.

"Mass market stores are starting to build the store-within-a-store concept, so that they are not losing that customer base. They are trying to keep everybody in there with a package in their hand and with a receipt in their hand when they come out the door."

To get that consumer purchase, Falletta says, "A lot of it has to do with packaging. You don't see too many new products in the marketplace. The hors d'oeuvres market is what it is and has been. Most of (the innovations) are in the kosher section, as far as I can see.

"Again, I look at the packaging as being the first persuasion. I think there's a great opportunity right now for companies to expand their line, to expand the horizon, due to the fact that consumers are becoming more educated--due to the Internet and magazines."

The Fillo Factory is not alone in bringing healthiness to the frozen snack sections. Discovery Foods offers a variety of chicken buns and Shu Mai dumplings, and Health is Wealth offers egg rolls and spring rolls in addition to its line of chicken-free nuggets and vegetarian Munchees. Health is Wealth has a number of new appetizers as well, including mozzarella sticks and meat-free Buffalo wings.

The sheer number of participants in the frozen snack/frozen appetizer category gives some idea of the strength of the sector. According to Information Resources, frozen appetizer sales were expected to reach $600 million in 2000. Furthermore, the market is expected to see annual growth of 10-20% for the next few years. PF

SIDEBAR - A Snack? A Meal? Probably Both Frozen Appetizer/Snack Rolls Sales in Supermarkets

Though widely considered a part of the frozen snack category, most manufacturers of frozen handheld items will waste no time in defining their products as a separate category. They may well be correct--if not at present, then at some point in the future if frozen handheld's double-digit increases continue.

Among the newer entrants to the growing category, Sara Lee brings a premium product to the frozen handheld category, which has continued to grow rapidly at over 11% versus a year ago, according to first-quarter statistics from Information Resources Inc. Its products may be new, but they have met with success.

Jenny Chan, marketing manager of Sara Lee's Calzone Creations, says, "Sara Lee began producing its Calzone Creations line in test market in 1999 and launched nationally in 2000. The classic Italian style and ham and cheddar are among our top sellers, and we believe the new pepperoni and three cheese will do equally as well.

"Variety is key in this category, particularly for people who are using it for a variety of occasions. The Calzone Creations are definitely for meal occasions, and consumers are using them for dinner, lunch and even breakfast."

The variety of uses plays a role in consumer purchasing decisions, as the added convenience can be a prime selling point. That convenience is making for a strong category, one that is estimated at $1 billion-plus annually and still has room to grow. Nevertheless, success can be fleeting, and companies realize the importance of innovation and adhering to consumer needs.

"Similarly to frozen pizzas, which have evolved to include a variety of crust types and toppings, handheld sandwiches will probably also deliver different flavors to consumers based on food trends, consumer desires and need. We know consumers are constantly on the go," says Chan, "so we are meeting their needs through things like calzones that can be made as everyday meals, making these occasions more special."