Healthier fare is certainly not the only trend in packaged snack foods, but it is by far the most important and widespread one affecting convenience stores.
By Howard Riell, Associate Editor.
Salty snacks and chips is abuzz with activity: new products and line extensions, multi-million-dollar advertising and promotional campaigns and innovative in-store merchandising. When combined with the economic doldrums, pushing a need for more affordable options and the national debate on childhood and adult obesity, the snack category is sounding alarms in relation to Americans’ crusade to eat healthier foods.
At least it’s never boring.
The good news is that sales are booming. SymphonyIRI Group reported that for the 52 weeks ended March 18, 2012, dollar sales in the salty snacks category rose 9.01%, to just over $3.9 billion. Cheese snacks sales rose by 5.45%; corn snacks by 7.37%; pork rinds by 9.44%; potato chips by 10.83%; pretzels by 9.72%; ready to eat popcorn/caramel corn by 6.65%; and tortilla/tostada chips by 10.86%.
SymphonyIRI Group’s State of the Snack Industry Report for 2012 showed that snacking frequency is up. In 2009, 24% of respondents polled by the group said they had consumed snack foods three or four times per day. For 2012, that number was up to 43%. Those snacking five or six times per day doubled from 3% in 2009 to 6% in 2011.
Brands are helping to drive growth. In 2009, according to SymphonyIRI figures, 20% of those consumers surveyed said they searched for their favorite regularly-priced brands. For 2012, it had risen to 30%.
Health remains an important value for Americans, even when snacking. According to SymphonyIRI, 87% of those questioned said they were trying to eat healthier.
Chicago-based Technomic Inc. added its own research findings in March of this year, which show that snacking is gaining further traction, and “becoming a consumer lifestyle.”
American consumers, Technomic found, are snacking significantly more now than they were just two years ago. Almost half (48%) of consumers surveyed said they were now snacking at least twice a day, compared to 25% in 2010.
“Consumer research indicates that snacking is becoming a larger part of consumers’ daily lives,” said Technomic Executive Vice President, Darren Tristano. “Pressure from the nutritional disclosure legislation has prompted the foodservice industry to reduce calorie counts in meals. As a result, Americans are now more inclined to graze throughout the day, seeking snacks that provide fuel between traditional meal parts.”
Among the other findings in Technomic’s Snacking Occasion Consumer Trend Report:
• Impulse purchases of snacks are up from two years ago, as 62% reported that most of the snacks they purchased for away-from-home consumption were impulse purchases.
• More than 33% of consumers expect to eat more healthful snacks in the coming year, indicating greater importance for operators to offer and promote
The one subcategory that is beginning to stand apart from the others is meat snacks, said Christopher Clark, vice president of operations for the Snack Food Association (SFA) in Arlington Va. The association tracks movement of 12 snack food categories, including such favorites as potato chips, pretzels, popcorn, tortilla chips, cheese snacks, pork rinds and beef jerky.
“Nowadays you can get meat snacks everywhere, but there was a time when it seemed like you could only get jerky and a lot of those types of things in convenience stores,” Clark said.
Other salty snack subcategories are also drawing attention in the c-store channel and beyond. “One of the biggest trends that we saw this past year was that brands were back,” Clark noted. “Private label has been growing for a number of years, but it was brands that made a little bit of a comeback,” Clark said. Both branded products and private label are growing, but the growth in private label had been higher the past couple of years. In 2011, brands regained some of that territory.”
In terms of national trends, some of the biggest shifts SFA is noticing is the growth in so-called natural products. “This is particularly in tortilla and potato chips,” Clark said. “A number of brands have launched their own natural lines.”
Similarly, health and wellness continue to drive a lot of product marketing. “Another big trend we are seeing is a lot of snack food companies have been voluntarily reducing sodium levels,” Clark said. “It varies from product to product, but I think that if you were to compare, on average, a bag of a certain kind of potato chip 10 years ago versus now, you would probably see less sodium and even healthier oils. That is a response to the wellness trends.”
Seeds for Growth
Another subcategory that has been growing for years, Clark adds, has been nuts and seeds. The category, which includes national players, such as Planter’s, Blue Diamond, Emerald, Giant Snacks, David’s Seeds and Frito Lay, grew overall by about 5.5%. “That is a pretty good year-over-year increase,” Clark said. “Generally, snack foods do well overall even in recessionary times, but overall growth is usually 2%, 3%, maybe even 4%. So snack nuts are kind of leading the pack there.”
What’s unique about the convenience store channel, Clark pointed out, is its overriding persona as an impulse destination, which dovetails nicely with salty snacks.
“Impulse purchases are very important for snack sales and convenience stores do a wonderful job at providing customers a reason to come into the store every day,” Clark said. “Now, as the category continues to evolve with respect to merchandising, there will be some new opportunities to grow sales even more.”
Value, Recovery and Opportunity
“The rocky road to economic recovery is paved with opportunity, but navigating that road is complex, as nearly one-quarter of consumers struggle to make ends meet.” That was the message sent by Sally Lyons Wyatt, executive director of client strategy and insights for SymphonyIRI Group in her State of the Snack Food Industry report at SNAXPO 2012 in Phoenix. “Still, snack frequency is up, and snacks are playing an important role in both wellness-and indulgent-related food rituals. That these rituals are largely playing out at home and from home is a boon to snack marketers.”
Even though consumers are more conservative, they are snacking more today than just a few years ago. In fact, the number of consumers snacking three or more times daily has increased sharply since 2009, and consumers snack even more as they get older.
“Snack marketers are faced with huge opportunity as the U.S. population ages,” Lyons Wyatt said. “But, snack marketers need to proceed with caution in this fragile economic environment. Value is critical, so finding the right pricing lever is paramount to driving category growth, capturing share of snack spending and retaining and building customer loyalty. Yesterday’s strategies are being met with diminishing returns, and a new day is dawning for snack marketers.”
More than 70% of consumers are actively looking for the best value when buying snacks, and that pricing is a top consideration with 36% of consumers saying brand decisions are heavily influenced by price. “Plus, 90% of consumers are trying to eat healthier, and many view snacks as part of their overall dietary plan,” said Lyons Wyatt. It comes as no surprise 66% of consumers polled want retailers to clearly identify healthier products in the store.