- MARKET INSIGHTS
Salty snacks have fared very well amid the U.S. economic recession. Since 2007, total sales (in all channels) of salty snacks increased more than 15%. One reason for such strong sales is salty snacks, like pretzels and chips, offer greater value relative to many other snack options, such as cereal bars, nutrition bars, yogurt and fresh fruit. A serving of pretzels costs less than a quarter, while a nutrition bar or cup of yogurt costs four to eight times that amount.
Moreover, the poor economy has forced Americans to change their habits and inspired two trends, “eating in” and “brown-bagging it,” which have boosted sales of salty snacks. According to Mintel’s “In-store Bakeries--U.S., August 2009” report, 15% of adults say they are “taking bagged lunch/food to work more often,” and 17% say they are “buying more ready-to-eat foods.”
Salty Snack Segments
Mintel divides the salty snacks market into eight separate segments: potato chips; tortilla chips; snack nuts and seeds (including corn nuts); popcorn; pretzels; extruded cheese snacks; corn snacks; and other. Potato chips and tortilla chips are the two largest segments, with FDMx market shares of 29 and 21%, respectively. Both segments performed strongly during 2007-09--potato chips sales increased 22% and tortilla chips 18%-- driven largely by an increase in meals eaten at home (as opposed to restaurants) and packed lunches.
Snack nuts/seeds is the third largest segment in the salty snacks market, accounting for just more than 15% of FDMx sales. Nuts and seeds experienced lackluster growth of 5% during 2007-2009. Nuts are high-priced, relative to most other snacks, and cost-conscious consumers were forced to cut back or switch to less expensive options.
The popcorn (up 17%), pretzel (14%) and cheese snack (20%) segments all grew strongly during 2007-2009. Popcorn, in particular, benefited from a rise in at-home movie nights and game nights resulting from the recession. Corn snacks lagged behind, growing 9% over the review period.
Sales of other salty snacks increased 12.9% during 2007-2009. One reason for such robust growth is that many products in this segment, including leading brands, like SunChips and Chex Mix, are perceived as better-for-you compared to other salty snacks, which has helped drive sales.
The recession has led to a decline in meals eaten out. According to Mintel’s “Tea and RTD Teas U.S., February 2009” report, nearly six out of 10 respondents agree: “Because of the economy, I am spending less at restaurants than I was last year.” The “eating in” trend is good for sales of salty snacks, which are often served with meals or as appetizers, when entertaining at home.
While the lagging economy has had a positive impact on salty snack sales, at the same time, it has led to an erosion of brand loyalty. A recent study on CPG brand loyalty among American shoppers, conducted by Catalina Marketing’s Pointer Media Network in conjunction with the CMO Council, analyzed the individual buying patterns of more than 32 million consumers in 2007-2008, across 685 leading CPG brands. The results would alarm any brand manager: for the average brand in the study, 52% of highly loyal consumers in 2007 either reduced loyalty or completely defected from the brand in 2008. The bottom line: consumers are willing to give up their favorite brands to save money.
More than nine out of 10 adults surveyed by Mintel report eating some type of salty snack on a regular basis (at least two times per month). Potato chips are the most popular salty snack, consumed by seven out of 10 respondents. Snack nuts, seeds and tortilla chips are also widely popular, consumed by roughly six out of 10 respondents.
Respondents aged 18-24 have the highest usage rate among adults, at 95%. Usage of most types of salty snacks declines with age, dropping off around age 55, when kids are out of the house, and aging adults begin to focus on managing their health. One exception is snack nuts and seeds, well-known as heart-healthy snacks, usage of which actually increases with age.
The average adult eats salty snacks 4.8 times per week. Usage frequency is highest among young adults aged 18-24, who report eating salty snacks an average of 5.3 times every seven days--nearly every day of the week. Frequency drops off dramatically at age 65, falling to an average of three snacks per week.
Kids and teens are heavy users of salty snacks. The Experian Simmons NCS shows that 96% of children aged 6-11 eat potato chips, and 94% eat popcorn. Some 94% of teens aged 12-17 eat some type of salty snack. In terms of usage frequency, kids and teens are on par with adults, eating an average of 4.8 salty snacks per week.
Continuing Snack Trends
Mintel’s consumer survey reveals demand continues to grow for healthier snack offerings. More than seven out 10 women--who are typically the primary grocery shoppers for their families--say they are interested in healthier versions of salty snacks, such as baked and whole-grain snacks. Young adults aged 18-24 are also prime targets for better-for-you snacks: 75% of respondents aged 18-24 say they are interested in healthier versions of salty snacks.
Americans are becoming more aware of how much sodium they are consuming. More than four in 10 respondents say their family’s diet is “too high in sodium,” an indicator that snack makers should focus on the sodium content. Though consumers are interested in healthier snacks, taste remains a barrier for many. Half of respondents agree that “lower fat and lower sodium versions of salty snacks do not taste as good as the original versions.”
In response to consumers’ demand for healthier snack foods, the biggest trends in new salty snack products include natural and organic, low- and no-sodium, whole-grain and baked/no-fat snacks, as well as portion-control packaging.
Hot and spicy flavors are a growing trend in the potato chip, tortilla chip, snack mix and nut segments. In addition, amid a troubled economy, many brands are introducing large, value-size packages of popular snack favorites.
The non-chocolate confectionery industry has not fared as well as its chocolate counterpart in recent years. Without the mystique of premium products, sales have sagged in most segments. Candy competes not only with chocolate, but also with gum and mints, in traditional “impulse areas” of the store. As the front end expands to include a wider range of snacks and drinks, candy is losing ground to other snacks that, until now, have not been as accessible.
The market is a mature one--even though some imaginative products have come to market in recent years, candy has serious competition from other sweet flavored goods.
New products help boost sales in some segments, such as chewy candy, but other segments, such as hard candy, have not found a loyal audience.
Childhood obesity has become a major issue, and there have been concerted efforts to cut back on marketing junk food (including candy) to children. Not only have marketing efforts been curtailed, but there has been a movement to make candy less accessible to children by limiting vending in schools, encouraging parents to provide healthier snacks and helping children to reassess their eating patterns and choose more healthful snacks.
Sugar Confectionery Segments
Mintel divides the sugar confectionery market into eight separate segments: chewy candy; seasonal candy; novelty candy; hard candy; licorice; sugar-free/diet candy; nut and coconut candy; and caramel/taffy apple kits and dips.
Top brands of chewy candy (Skittles, Starburst) appeal to consumers of all ages and, as such, are the biggest-selling segment. The chewy candy segment also includes a range of brands that appeal to kids and teens, who tend to consume more candy than their adult counterparts. Seasonal candy is also popular, and brands with Easter and Halloween packaging or flavors are likely to continue to be popular, as these holidays retain their importance as “candy-giving” occasions.
Sales of hard candy have declined steadily. This segment is one that has trouble finding an audience. While kids like lollipops and associated hard candy (Ring Pops, Push Pops), the general trend is away from these candies. Part of the problem is positioning: at the front end of the store, hard candy sold in rolls (e.g., LifeSavers) has been pushed out by other impulse items, ranging from gum and breath mints (the most likely substitutes) to chocolate bars, salty snacks and beverages.
When choosing a sweet snack, candy is not necessarily top-of-mind for consumers. Mintel asked respondents how they best satisfy their sweet tooth, and only 23% of respondents cited non-chocolate candy as a food they typically choose. Ice cream is the top choice for 62% of respondents, and manufacturers of non-chocolate candy have co-branded with ice cream manufacturers to put candy into ice cream, thereby providing consumers with two sweet treats in one.
Other popular sweets can also be combined with candy: baked goods (cookies, cakes, pies), such as chocolate chip cookies, can include non-chocolate candy pieces (e.g., peanut butter, toffee), while pudding can be topped with candy. Manufacturers of candy can find ways of combining more sweet options, in order to increase candy’s profile.
Some 65% of respondents buy candy for themselves or for others. Besides buying candy for their own consumption, the next most likely recipient is another adult in the household. Kids are third. Candy purchase incidence declines with age--the youngest respondents are the most likely to buy candy, either for themselves or for others, while respondents aged 55+ are the least likely to do so.
More than half of respondents (55%) who purchase non-chocolate candy for personal consumption do so on impulse. A further 28% go to a store specifically to make a non-chocolate candy purchase, because they have a craving for it. Only 29% put candy on a grocery shopping list to make sure they are well-stocked.
Some 21% of respondents who buy non-chocolate candy for themselves or for others strongly agree or agree that they like trying new flavors, while only 10% strongly agree or agree that they like the flavors of sugar-free candy. Just 9% strongly agree or agree that sugar-free candy is as good as regular candy. There is a lot of interest in a wide variety of new candy concepts, but the interest skews to younger and ethnic respondents.
Present and Future Opportunities
Making chocolate upscale and exclusive was the paradigm shift that rescued the chocolate industry, which--like candy--was mature and not growing. Interest in premium products changed all that and reinvigorated the category.
One place to look for ideas is Europe, where small candy stores abound, making signature, non-chocolate sweets, such as fruit pastes and caramels. Packaging, too, is an element of premium products, and European packaging has long been recognized as sophisticated and innovative.
American chocolate manufacturers have been able to adapt recipes and packaging popular in Europe; non-chocolate confectionery could consider following suit, in order to attract consumers who have until now found candy to be too child-focused. Another way to appeal to adults is to provide more sophisticated flavor notes in candy products. Both hard candy and chewy candy could benefit from a move away from the standard lemon, orange or grape flavors that have become “old hat” to many consumers.
Innovations in beverage flavors can provide inspiration for the candy industry. The growth in popularity of pomegranate, açaí and other fruits used in juice drinks, energy beverages and other beverages can transfer to innovations in the candy industry.
Not all candy is sweet. At least, that is the case in other countries. Spicy candy, flavored with chili or tamarind, is popular in Mexico, India and China, while cinnamon and herbs are used to flavor candy in many other countries. Vegetable candy from Europe includes those flavored with carrot, tomato and pumpkin. Developing a line of vegetable-based sweets—or candy with fruit and vegetable flavoring--is a novel departure, but not so unusual, when one considers the growing number of fruit and vegetable juice blends currently on the market. pf
Kat Fay is a contributing editor with Mintel International, a consumer, media and market research company with offices in Chicago and London. Mintel’s Global New Products Database (GNPD) is the company’s source of global product intelligence. This article draws from Mintel’s reports, “Salty Snacks--U.S., August 2009” and “Sugar Confectionery--U.S., June 2008.” Please visit http://reports.mintel.com for more information or call Mintel at 312-932-0400.
www.PreparedFoods.com -- Type in “snacks” or “candy” in the searchable database
www.jbox.com/SNACKS -- Selection of Japanese snacks gives readers an interesting overview of the industry in that country
http://bit.ly/9hOhab -- Thai sweet snacks, with photos
Going Global: Snacks
Foods targeting specific demographics have emerged, as Frito-Lay demonstrated with its Men’s Snack in Japan. The product had a flavor of barbecued meat with sweet and hot sauce, specifically targeting men. Similarly flavored, though without the target specificity, Orion Food introduced Red Wine and Beef Steak Flavored Crisps in China. The Orion Potato Wish branded product was free of artificial colorings, preservatives and sweeteners. Likewise free of artificial colors or preservatives, Jalapeno Potato Snacks were otherwise completely unlike the Orion and Frito-Lay products; suitable for vegetarians, the Simba Ring-A-Ring brand from Venkataramana Food in India had no cholesterol or trans fat.
A number of snack introductions were designed for microwaving--and not necessarily solely popcorn. Bofrost’s Microwave Chips in Germany were crunchy, thin potato chips designed for microwave heating, while halal-certified Tom Yum Flavored Crispy Seaweed in Thailand was rich in calcium and iron. The S. Kijwatana Foods product was microwavable, as well, and free of MSG.
Several popcorn introductions also drew notice for their flavors. Russian consumers saw a variety of flavors from Goryachie Krendeli Sever’s Corin Corn brand: vanilla popcorn, a salted option, one with cheese flavors and another promising to be “creamy.” In Portugal, meanwhile, the Popz brand of microwave popcorn added a sweet variety, while Japan’s Tohato expanded its line with a limited-edition green tea and brown syrup flavor of its Caramel Corn, containing 100% matcha green tea powder.
For German consumers, Funny-Frisch’s Light Oven Crisps added a bell pepper flavor. The baked snacks promised 65% less fat, were prepared with pure sunflower oil, had no flavor enhancers and also came in a Crème Fraiche flavor.
PHOTOS COURTESY OF MINTEL’S GNPD