General Mills Inc. is betting consumers will be sweet on a snack service — munchies regularly delivered by mail to home or office — just as they might subscribe to Netflix or a magazine.
Called Nibblr, the snack service launched in November is an unusual venture for the Golden Valley-based packaged foods giant. It features a direct-to-consumer business model, bypassing the packaged food industry’s normal distribution channel, supermarkets, convenience stores and superstores like Target and Wal-Mart.
And it involves the creation of a completely new brand and new product, the brainchild of a nascent innovation department within General Mills called 301 Inc.
General Mills launched 301 in an effort to generate ideas outside of the company’s traditional business segments — cereal, yogurt, convenient meals, etc. — which have their own innovation teams.
“Its role is to evolve new business models beyond the core things we normally do at General Mills,” said Martin Abrams, 301’s marketing director. “And the business model that was really intriguing to us was subscription.”
With Nibblr, consumers subscribe to a box of snacks that can be delivered weekly, biweekly or monthly. The number of deliveries — six boxes for six weeks, 12 boxes for 12 months, etc. — is up to the buyer. Each box contains four individually packaged snacks made mostly of dried fruit and nuts, about 70 percent of which are 150 calories or less.
The snacks come in 59 savory or sweet varieties, with such names as Coco’s First Date — almonds, dates and coconut — and Copa Cabana-rama: pineapple, mango, banana and macadamia nuts. Consumers can rate each snack from “love” to “no thanks,” and the ratings will determine how often they’ll get each item in future mailings.
Nibblr’s packaging is shaped like a candy box. “The design was very purposeful,” Abrams said. “It was designed to fit in the [office] mail slot.” While General Mills believes Nibblr will attract a broad audience, the market hot spot is women office workers, ages 25 to 35.
Abrams declined to disclose how many subscriptions General Mills has won so far, but said “the initial response has been great.” Mills has competitors in this market. The biggest appears to be Graze, which is up-and-running in the United States after operating a snack service in the United Kingdom for the past few years. Graze has deep-pocketed private equity investors behind it.
“There certainly is a rationale for a snack service,” said Rick Shea, a Chanhassen-based packaged foods consultant. Consumers are increasingly taking to the Internet to buy all sorts of stuff, through one-time purchases or subscription services. And subscription services exist for all sorts of products: shoes, cosmetics, razors.
In a direct-to-consumer service, one trick for General Mills is not to alienate its traditional customers, food retailers, Shea said. So, the company created a completely new concept rather than sell its popular in-store snack brands — Nature Valley comes to mind — through an online service.
Also, with mail-order food, the product has to be premium, Shea said, and Nibblr appears to be. “The economics don’t usually justify value products being sent through the mail.” The price per box of Nibblr varies by order quantity, with a range of $5.50 to $5.99, including shipping.
“If [General Mills] can establish that premium authenticity, they could develop a nice niche,” Shea said. “I don’t think it has the potential to be a large, large business — but who knows?”