Bobo’s reaps rewards from retailers as it defies downward pricing pressure in nutrition bar category

By Elizabeth Crawford

- Last updated on GMT

Bobo’s reaps rewards from retailers as it defies downward pricing pressure in nutrition bar category
Despite downward price pressure in the nutrition bar category, Bobo’s continues to sell its organic oat bars for nearly three times as much as its competitors – helping it curry favor with retailers and earn prime in-store positioning that further boosts brand awareness and velocity, according to the company’s CEO.

“The nutrition bar category has lost a lot in the last few years because there has been deflationary pressure in 2015 and then it got worse in ’16 and even worse in ’17 with ten for ten sales and even 88 cent sales that really devalue the category for incumbent leaders like Lara Bar, Cliff and Kind. And as a result, the retailers on a monetary basis don’t reap that much,”​ TJ McIntyre, Bobo’s CEO, told FoodNavigator-USA.

He explained that the downward spiral is due primarily to the expanding distribution footprint of category leaders into lower margin retailers, such as Walmart and Costco “that are quick to race to the bottom from a pricing perspective.”

In response, he said, “conventional retailers like Kroger and Safeway inevitably have to follow and then to keep fair on a price point perspective even natural stores like Whole Foods and Sprouts are not going to want to be embarrassed with a price that is twice as high as in mass.”

Despite this pressure, McIntyre says that Bobo’s continues “proudly”​ to sell for $2.99 a bar across the county with 2 for $5 sales.

“It is not easy for our selling organization to hold at the higher price point, and we are well aware that as we continue to grow our brand and its distribution in different channels that there will be downward pressure on Bobo’s, but for as long as we are able to we want our national SRP to be $2.99 because that means a lot to the retailers in terms of maintaining their margins,”​ he said.

This paired with the brand’s strong velocity at shelf is prompting retailers to give the company more end-caps and in-store display support “to try and recapture the market that the nutrition bar category has lost,”​ he said.

Quality, protein and portion size allow higher price point

Bobo’s is able to command its higher price point from consumers because the bars are “higher quality and fresher”​ than many competitors, McIntyre said.

The bars also are able to tap into many macro trends, including growing demand for plant-based products, high protein and permissible decadence from nut butters.

“We launched our nut butter Stuff’d bars exclusive with Whole Foods last spring and then the rest of the market in the middle of summer, and that has done really well incrementally and it benefits from the protein trend and the nut butter trend,”​ McIntyre said, adding. “We are not trying to become a protein bar, but for consumers that are interested in six to seven grams of protein per serving, Bobo’s is there.”

Its larger 3-ounce size also allows it to serve as a meal replacement for some consumers, in addition to a snack for others – expanding its usage occasions, he said.

Reformulation cleans up ingredient deck

A recent reformulation that simplifies the bars’ ingredient deck and adds a product that many consumers view as a superfood could help the company maintain its higher price point and boost velocity going forward.

The company currently is swapping coconut oil for its prior blend of palm, canola and olive oils that were used as emulsifiers but which McIntyre notes was a turn-off for some consumers.

“Canola oil, right or wrong, is derided by the public for some of the perceived health benefits it has, and palm is intimately associated with deforestation,”​ he explained, but was quick to add, “all of our palm was coming from South America, but the consumers are hard pressed to really uncover where the source is, so we were receiving a lot of negative mail about canola and palm.”

At the same time, consumers were requesting the use of coconut oil, which McIntyre said, “reigns king in the fat universe, with a halo over it for a variety of reasons that we are going to be able to associate ourselves with.”

While the coconut oil is “far more expensive than the oil blend that we were using before, it is also organic and we know the consumers are going to reward us for it,”​ he said, adding, the reformulation “will give us another shot in the arm on the velocity basis because there is a lot of consumer craze around the type of oil they are using.”

The reformulation also improves the moisture of the bars over the duration of their shelf life – making them seem fresher for longer, McIntyre said. However, he added, the change does not impact the flavor of the bars so that consumers who love the taste of Bobo’s will not be disappointed.

Beyond the reformulation, the company has been busy innovating two new launches that will roll out in 2018, the first of which will debut at Expo West in March, McIntyre said.

“Aside from that,”​ he added, “we will continue to focus on our team. The motto at Bobo’s is bring people home and feed them like family and the way that we act with each other and our stakeholders is really indifferent from how the brand and products interact with all our consumers, and so that is also a job that is never really done.”

Ultimately, he said, “we want to create a best-in-class company not just by virtue of a beautifully formatted oat bar, but also how we carry ourselves and the friends we make and the examples we set.”

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