Tom Vierhile, Datamonitor

* Use of whole grains continues to rise.
* Gluten-free acts as a catalyst for snacks.
* Chocolate takes a sales dip, while savory snacks go up.
* Omega-3 health claims show continued momentum.

Economists like to say a rising tide lifts all boats. An economic rebound in 2010 should have put wind in the sails of confectionery and snack makers, but that is not quite how things turned out. The confectionery market's boat took on water in 2010, with new product launches in the U.S. dipping 6.4% vs. 2009's counts, according to Datamonitor's Product Launch Analytics.

Most of the pain was concentrated in chocolates, with launches sliding 15.9% in 2010, though chewing gum was not far behind, with a 14% drop in new stock keeping units, says Product Launch Analytics. Sugar confectionery, a market that includes hard candies, mints, gummy candies and more, did chart a gain in new items of 11.4%, but it was not enough to compensate for declines elsewhere.

The savory snack market's boat proved more seaworthy, with a surge of new products pushing the market ahead by 32.9% in 2010. Growth was led by popcorn, with launches sprinting ahead 146.9%; processed snacks chalking up an 86.4% gain; and potato chips up 75.9%, per Product Launch Analytics. Even nuts and seeds gained, with launches 10% ahead of 2009.

Popcorn's 2010 expansion was mainly a flavor story, with ideas borrowed from beverages, cookies, candies and meats. Varietal wines inspired Angelic Gourmet's Artisan Chardonnay Flavored Specialty Popcorn Made with Wine. Wintertime flavors, like Egg Nog and Gingerbread, were featured with Popcorn Expressions Premium Flavored Popcorn from Signature Brands. Unpopped popcorns also got the flavor message, with bacon-flavored J&D's Bacon Pop Microwave Popcorn. 

As prolific as popcorn was, the most consequential trend of 2010 was in chips--where the big news was a move beyond potatoes and corn as ingredients. Adding fuel to the fire was the market's embrace of gluten-free products. Among savory snacks, some 22.7% of 2010's product launches made a gluten-free claim, way up from the 14.7% of launches making the same claim in 2009.

Nobody knows how long the gluten-free mania will last. Market watchers remembering the low-carbohydrate fiasco, which had one of every five new foods making a low-carb claim in 2004, would probably adopt more of a "wait and see" attitude. But, if gluten-free does prove to be a fad, its most lasting legacy may be acting as a catalyst toward developing chips based on black beans, sweet potatoes, brown rice, popcorn, chickpeas and more.

Hummus has rocked the dip market, and in the process, inspired unique chips, like Boulder Natural Foods' Boulder Canyon Tortilla Style Chip made with Hummus & Sesame. This gluten-free chip is claimed to be the "perfect blend of hummus and spices." Target's Archer Farms line was also on-trend, with its Archer Farms Hummus Chips made with chickpea flour.

One advantage of using novel chip ingredients is the ability to make health claims not ordinarily seen in the market. Most traditional potato or corn chips cannot make the high-fiber and -protein claims articulated by Mediterranean Snack Foods' Cucumber Dill Baked Lentil Chips. Gluten-free, these chips have 70% less fat than potato chips. Also making a high-fiber claim are Beanitos Black Bean Chips, in a new Pinto Bean & Flax Chips variety.

Flax is an ingredient on the rise--as food formulators add the seed for its unique taste and texture. A case in point is Snyder's of Hanover Eatsmart Naturals Multigrain Tortilla Chips featuring flax, quinoa, sesame and chia seeds. Flax also enables some products to make omega-3-related claims. In fact, the high-omega-3 health claim was one of the few fortification claims to show upward momentum for savory snacks in 2010. 

According to Product Launch Analytics, 3.4% of 2010's U.S. savory snack launches claimed to be high in omega-3s, up from 2.5% of entries in 2009. Moreover, omega-3s expanded into popcorn in 2010, with Pop Weaver Microwave Popcorn made with Canola Oil hailing the presence of omega-3s.

Brown rice, rice and rice flour were other unusual chip ingredients. The latter, along with Arborio rice and whole-grain brown rice flour, combined to create New York Style Risotto Chips, billed as the first rice snack inspired by risotto. Light and crunchy, each serving of chips has 11g of whole grains, providing 13% of the recommended daily allowance. Snack makers are ramping up the use of whole grains in product formulations, with 10% of 2010's savory snack launches made with whole grains, up from 6.4% in 2009.

Brown rice mixed with oat flour added up to a new fiber-rich chip with 55% less fat than the leading potato chips. That is the story with Kellogg's Blue Ginger Multi-Grain Brown Rice Chips, sold in a Sour Cream & Scallion flavor. Kellogg claims the entry is part of a "new generation of chips that will help you think differently about snacking."

Popped corn may also have potential outside of the popcorn category. Such is the theory behind PopCorners Popped Corn Chips, which are air-popped with real corn, look like bumpy tortilla chips and claim to represent "the new shape of popcorn." Popcorn Indiana's Chip'Ins All Natural Popcorn Chips are similar.

While grains, seeds and beans inspired many new types of chips, fruit has not had the same luck. Frito-Lay's 2006 launch of Flat Earth Baked Fruit Chips was expected to be bullish for fruit-based chips, but, for the most part, Flat Earth has fallen flat.

That is not to say companies are not trying. Shearer's Foods new Tangos All Natural Tortilla Chips in a Blue Corn & Berries flavor feature real blueberries, strawberries and cranberries. Said to be high in antioxidants, they are among the 1.9% of savory snack launches from 2010 making a similar health claim.

Sweet-tasting chips have always been a harder sell, since hot, spicy and salty flavors are so ingrained. This explains the garlic and cilantro flavors for Wal-Mart's World Table Spiced Sweet Potato Chips, a launch that could be among the first wave of sweet potato-based chips. Time will tell if snack makers embrace the sweet potato as a more healthful alternative to regular white potatoes.

Faced with competition from other types of chips, one might expect potato and tortilla chip makers to pull in their horns. But, the opposite happened in 2010--with bolder, spicier, in-your-face flavors and few apologies to health critics. Maybe that is why Datamonitor sees tortilla chips and potato chips enjoying 5-7% sales growth in 2011.

Target's Archer Farms brand out-innovated many with unique General Tso, Macaroni & Cheese and Greek Inspired potato chips. Frito-Lay turned up the heat with its Doritos 1st Degree Burn Blazin' Jalapeno, 2nd Degree Burn Fiery Buffalo and 3rd Degree Burn Scorchin' Habanero Tortilla Chips. Frito stayed hot with Tostitos Artisan Recipes Tortilla Chips, in flavors like Fire-Roasted Chipotle.

Snack chip makers did make some concessions to health-aware consumers and government regulators. High sodium levels for processed foods were a major concern in 2010, and Frito-Lay addressed that with Lay's Lightly Salted Potato Chips and Fritos Lightly Salted Corn Chips. Each has 50% less sodium than their regular cousins.  Reduced-sodium and -salt claims did gain traction in 2010. According to Product Launch Analytics, 2.6% of 2010's savory snack introductions made a "low-salt" claim vs. 0.4% in 2009.

A few other 2010 launches pointed to new market directions. General Mills' Fruit Roll-Ups Simply Fruit Rolls, with "more than 90 percent real fruit juice and fruit," illustrated processed snacks aiming to look less processed. Emerald Breakfast on the Go! Trail Mix saw trail mix go after the breakfast meal occasion, an untapped opportunity. Ritz Munchables Pretzel Thins blurred the line between snacks and crackers, with a pretzel-like exterior and a cracker-like interior.

No review of snacks would be complete without a look at innovative packaging.  Compostable packaging was a sore point in 2010, with Frito-Lay pulling its unique, but extraordinarily loud, 100% compostable SunChips bag. Hopefully, noise issues will not dog Boulder Canyon Natural Foods, which touted a compostable package for its Kettle Cooked Potato Chips, with bags made from wood pulp sourced from plantations that have Forest Stewardship Council (FSC) or similar certification.

The year 2010 was not a banner year for confectionery products, but it did see the market addressing consumer concerns. One key concern (especially among women) was calories, an issue addressed with candy bar alternatives and new packaging wrinkles. Even so, just 3.8% of 2010's new confectionery launches in the U.S. claimed to be low in calories, down from 5.2% in 2009.

On the packaging side, Kraft Foods' Milka Chocolate Bar in a Resealable Wrapper lets one eat part of the bar at a time, saving the rest for later. Mars' Snickers 2 to Go Candy Bar uses "twist wrap" to reseal the bar's wrapper, since a single "bar" consists of two small bars. The same packaging was used for Snickers Peanut Butter Squared, another two-piece bar.

This "piece" approach to bars was also reflected with Nestle Noir Chocolate Tablet Bar, a Canadian offering with break-away pieces of chocolate in a unique wave-like shape. The new shape tries to turn a negative (portion-control) into a positive (enhanced sensory appeal), with a tongue-friendly shape.

Wrapped candies are another way to control calories, without wringing the fun out of eating chocolate. Given obesity concerns, wrapped candies could be primed for a renaissance--good news for Godiva Chocolatier's Gems, which are bagged and wrapped candies in Caramels and Truffles.

Wafer-type chocolates are another way to cut the calorie count. Personified by Mars' Twix brand, wafer bars proliferated, with 2010's 3 Musketeers Truffle Crisp Bar sporting a calorie count of just 170 for a two-bar pack.

Wafer bars, like Kit Kat or Twix, have been perceived to be "better-for-you" than traditional candy bars, but even they can go on a diet. A few months ago, Mars unveiled a new version of Twix in Europe called Twix Fino, with a third fewer calories than the original Twix. To achieve this reduction, Mars ditched Twix's traditional biscuit base for Fino, substituting a wafer base.

An even more aggressive approach to weight loss was employed by Ador Chocolate Bars, a UK launch in 2010. These bars contain a proprietary, branded extract of pine nut oil appetite suppressant, to help consumers lose weight.

Ultimately, candies are a treat; the more exotic, the better. The high end of the market tends to set flavor trends, like the growing use of floral ingredients. Imported from Belgium is Dolfin Chocolate, in flavors like Dark Chocolate with Violet. Lemon Berry Rose is a new flavor for Gnosis Chocolate's new Handmade Raw Organic Chocolate. 

For the mass-market, caramel was a flavor to watch with Milky Way Simply Caramel, from Mars, while Nestle put some cash behind its Wonka brand. Wonka Exceptionals chocolate bars, pieces and more attempt to take the brand in more of an upscale direction than has been the case.

Two of the most unusual new chocolates of the year were Komforte Chocolates Ramen Noodle Artisan Chocolate Bar and Baru Chocolate Paired Almond Dragees. The former has ramen noodles for a unique crunch, while the latter combines milk chocolate, roasted almonds and black olives for a one-of-a-kind flavor.

Chewing gum introductions plunged by double-digits in 2010, but unique launches made up for the shortfall, explaining why gum is expected to be the top sales grower in confectionery in 2011, with 5.6% expansion projected. Wrigley 5 React debuted as a gum with a flavor that tastes different to each person. Cadbury Adams' Stride Shift Flavor Changing Gum staked a claim as the first-ever, flavor-changing gum, in flavors such as Citrus to Mint.

Dessert flavors, like Key Lime Pie for Wrigley Extra Dessert Delights, took a new flavor direction. Meanwhile, Cadbury Adams' went functional with Dentyne Pure, with NeutraFresh to neutralize bad breath. The firm's new Trident Vitality took functionality up a notch with Rejuve, Vigorate and Awaken flavors.

Sugar confectionery launches grew in 2010. Hershey's Ice Breakers Frost were said to offer a frosted coating for a powerful cooling sensation and a mint center for long-lasting fresh breath. More medicinally oriented were EvoraPlus Probiotic Mints, the "first probiotic mints for complete oral care."

One of the strangest sugar confectionery launches seen in 2010 was Poprs Make Yogurt Sing! Magic Pop'n Crystals. When mixed into yogurt, these crystals change the color of yogurt and also pop for a new sensory experience.pf

Tom Vierhile is director of Datamonitor's Product Launch Analytics, which is part of the firm's Consumer Markets Knowledge Center located at www.datamonitor.com. Vierhile has over 20 years of experience in new consumer packaged goods reporting and analysis and holds an MBA from the State University of New York at Buffalo. He can be reached at 585-396-5128 or tvierhile@datamonitor.com.
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