Innovation in Snyder's-Lance's Snyder's of Hanover Pretzel Pieces line helped drive sales.

CHARLOTTE, N.C. — Snyder’s-Lance, Inc. is overhauling its pretzel business in an effort to bring growth back to the category. Strategic investments for the Snyder’s of Hanover pretzel brand include innovation, increased promotional support and an integrated marketing campaign.

Carl E. Lee Jr., president and c.e.o. of Snyder's-Lance

“In the quarter, we held market share almost flat for Snyder’s of Hanover as a result of ACV expansion, improved display coverage and innovation on Pretzel Pieces,” said Carl E. Lee Jr., president and chief executive officer, during a May 10 conference call with financial analysts. “Market share trends have been improving over the recent periods. Our innovation plans are under way to drive brand and category growth.”

For the first quarter ended April 2, Snyder’s-Lance posted a net loss of $25,394,000, which compared with net income of $10,636,000, equal to 15c per share on the common stock, in the same period of the prior year. Adjusted EBITDA was $55,703,000, up from adjusted EBITDA of $38,424,000. Special items for the quarter included after-tax expenses associated with the acquisition of Diamond Foods, Inc., which Snyder’s-Lance finalized on Feb. 29.

Net revenue totaled $462,765,000, up 15% from year-ago revenue of $402,341,000. Results included one month of sales from Diamond Foods. Excluding the contribution of Diamond Foods, net revenue fell 0.7%.

Lance, Cape Cod and Late July posted solid revenue growth in the quarter.

“Lance, Cape Cod and Late July posted solid revenue growth; however, overall sales declined slightly due to food industry headwinds,” Mr. Lee said.

To spark growth in the sluggish pretzel category, Snyder’s-Lance is taking a page from its own playbook. The company previously revived its Lance sandwich cracker business with improved product formulation, packaging design and innovative new products such as gluten-free sandwich crackers.

“I think that there are a lot of parallels that we can draw,” Mr. Lee said. “I think, first and foremost, as the leader in sandwich crackers and the leader in pretzels, we really have an obligation, not only for our brand but for our retailers and the entire category. And so we take a long-term view of that. And we are willing to invest. We are willing to do the heavy lifting. We are willing to go through an extended packaging change, like we did on sandwich crackers, to make sure that we provide sustainable growth for the future…

Snyder's-Lance recently introduces gluten-free sandwich crackers under the Lance cracker name.

“We have a lot of confidence with having it rebound very quickly. And as we referred to, you’ve just got to be top-of-mind with consumers in all the categories because snacking is growing, but the options are also growing. And so you’ve just got to be top-of-mind with your consumers. And we expected to achieve the same results with Snyder’s that we’ve achieved on previous brands. It’s just a good core competency that I am very proud of our marketing and sales and manufacturing team for having developed, and now it’s part of our arsenal to continue to build our brands as we go forward.”

Recent innovation under the Snyder’s of Hanover banner include new Pretzel Pieces varieties such as s’mores and reduced-fat zesty ranch, Pretzel Pieces filled with peanut butter, organic mini pretzels and pretzel sandwiches featuring a fudge brownie filling. Early results of a new advertising program exceeded expectations, Mr. Lee said.

“What we’re seeing just overall is the frequency of the purchases across the entire category just needs a little bit of help and support, something similar to what we saw with sandwich crackers when we were making some adjustments there, and working our way through the renovation process,” Mr. Lee said. “So it really dates back to being the very first better-for-you snack. And being a baked snack versus a fried is still very good positioning with the consumers to continue to grow as a category.

Recent innovation under the Snyder’s of Hanover banner include organic mini pretzels and pretzel sandwiches featuring a fudge brownie filling.

“There has been a little bit of additional players in there, albeit very small and very early. But we really see just the category still having potential.

“And we welcome the innovation that others bring, because the more attention the category gets, the better off we are all going to be. And as the category leader, having others come alongside of us, and invest in innovation or invest in marketing, just helps the category, and we will benefit from that as well.”