Snack Food Industry Trends
Search for Low-Carb Flavor Impacts Industry
Overall consumption of traditional savory snack products in the U.S. remained fairly consistent between 2002 and 2003. However, sales within individual categories varied significantly. Popular diets, changes in the retail sector, weather patterns, hectic lifestyles and other demographics all affect U.S. snacks sales.
U.S. retail savory snack sales for 2003 were $23.5 billion, which represented a 4.5% increase from the previous year, according to the joint Snack Food Association (SFA) and Snack Food & Wholesale Bakery magazine’s 2004 State of the Industry Report (SF&WB, May 2004). Yet the pork rind category experienced a 36.8% increase over the previous year to reach 107.8 million pounds. It is speculated that most of that growth was due to the popularity of high protein/low-carb diets.
Low-Carbs Impact Food Trends
Despite the fact that 75% of the population has never tried a low-carb diet, the impact of high-protein/high-carb diets is huge. Through April 9, 2004, more than 600 new low-carb food and beverage products were introduced, according to Mintel’s Global New Products Database. That is up from 289 new low-carb product introductions in all of 2003.
Although the impact of low-carb diets is being felt throughout the food industry, some people are beginning to question their staying power. Speaking at the Food Marketing Institute’s (FMI) 2004 annual convention, Eric Bost, U.S. Department of Agriculture’s (USDA) undersecretary for food, nutrition and consumer services, said that low-carb diets are a fad that will fizzle out just like the low-fat diets of the 1990s. He explained that the problem with fad diets like low-fat and low-carb is that people tend to overdo it. He added that the USDA’s focus is on educating consumers to make better food choices, control portions and exercise.
Echoing that sentiment, Dean Rotbart, executive editor of LowCarbiz, stated during a January 2004 Low-Carb Summit in Denver that he thinks we’re on the downside of the roller coaster and that there would be ups again, but not as high.
Also agreeing with this view, NPD analyst Harry Balzer said in NPD’s Carbohydrate Consumption Patterns Report, “Low-carb diets are a fad, just like the low-fat craze of the late ‘80s and ‘90s. The question is, how long will it last? In the meantime, every manufacturer will put out their version of low-carb products, and Americans will try them because that’s what we do, we like to try new things.”
Balzer noted that even though the low-carb trend does not represent a structural change in the way Americans eat, food companies might want to follow this trend for now. However, he cautioned, “If that means selling a burger without a bun, that’s fine. But don’t go reformulating your bun, because this won’t last.”
U.S. sales of snack/granola bars rose 15.9% in 2003, due in part to a host of low-carb bars entering the market. Total U.S. sales in supermarkets, drug stores and mass merchandisers (excluding Wal-Mart) were $1.9 billion, according to Information Resources, Inc. (IRI). The food-bar market in all outlets is $3 billion and expected to double by 2007, according to The U.S. Market for Food Bars, a report published by Packaged Facts.
Slim-Fast, PowerBar, Promax and Clif Bar, Inc. have all launched low-carb bars. Prior to its launch of a low-carb bar, PowerBar conducted research in July 2003 to determine what men and women desired most in carb-control bars. The company found that women want indulgent taste, low calories, appropriate size for snacking and added nutritional fortification. Men, on the other hand, are not as concerned about taste. Rather, they want a low-carb bar that delivers protein and a lot of calories to satisfy their hunger.
Plano, Texas-based Frito-Lay announced in January that it was launching a new line extension of Doritos and Tostitos that has less than half the carbohydrates of its top-selling tortilla-chip brands. The new products, Doritos Edge and Tostitos Edge, have 6 net carbohydrates, 10 protein and 3 gms. of fiber.
Impact of Nutrition & Health Issues
The interest in the low-carb and high-protein diets is driven by a desire to lose weight. Currently, more than 61% of U.S. adults are overweight and 21% are obese. Media attention to obesity continues to escalate. In the first quarter of 2004, 8,218 articles appeared in U.S. newspapers and newswires (based on a Lexis-Nexis search), compared to 4,465 for the first quarter of 2003.
Recent research by The NPD Group, Port Washington, N.Y., revealed that kids are choosing healthier snack-oriented foods, like granola bars, yogurt and fruit. In its “Snacking in America Report,” The NPD Group noted that salty snacks are the most popular snack among kids ages 2 to 12 and among teens. Teenagers choose granola bars as a snack nearly six times more per person in 2003 versus 1999.
“We are seeing some evidence creeping into the national eating data that NPD collects that suggests we are slowly moving toward a healthier diet,” Balzer said. “We saw it as we tracked the percentage of overweight Americans drop for the first time in six years in our Eating Patterns in America Report, and now we are seeing some changes with the choices kids are making.”
The report also found that children under 18 account for 27% of all snacking in America, with boys eating snacks more often than girls. The NPD group credited food companies with providing healthier snacks.
The 2004 SFA Membership Survey included the question, “What is the most significant trend or issue that will affect the snack industry and your company during the next five years?” The question was open-ended. Respondents mentioned obesity more than any other trend.
The snack-food industry has responded to concerns about nutrition and health with a mix of strategies. One of these is responding to consumers’ renewed interest in low-fat products. After reaching a peak in the late 1990s, sales of low-fat products decreased for several years. At the height of the low-fat market in 1997, low- and no-fat potato chips accounted for 10% of total category sales. In FMI’s 2004 Trends Study, half of all shoppers said they are most concerned about fat content, compared to 20% who are watching carbohydrates. The study also found that overall concern with nutrition declined from 53% the previous year to 45% in the 2004 study.
Although demand for low-fat products remains less than for low-carb product, interest is increasing. Dollar sales of low-fat foods increased 2.8% in 2001 and 4.5% in 2002, after decreasing 5.7% in 2000 and declining 8.3% in 1999, according to IRI InfoScan.
Another low-fat food product that now can be marketed in the U.S. is microwave popcorn. The U.S. Food and Drug Administration (FDA) announced in May that it had approved the use of olestra in prepackaged, ready-to-heat popcorn such as microwave popcorn. The original FDA approval of olestra in savory snacks included ready-to-eat but not microwave popcorn.
Popularity of ethnic foods has increased over the past 20 years. As Americans have become familiar with more diverse flavors in their overall eating, they’ve looked for these flavors in snack-food flavors. Although traditional cuisines are still the most popular, Americans are savoring a wide array of cuisines.
In a 2002 RoperASW survey, 63% of American said they enjoy Chinese cooking, 62% enjoy Italian, and 55% Mexican/Tex-Mex. In the same survey, about 25% of Americans said they enjoy Cajun cooking, 19% Spanish, 17% French, 17% Japanese, 15% Greek, 15% Middle Eastern, 14% California, 14% Thai, 12% German and 11% Caribbean.
Some examples of snack incorporating ethnic flavors or representing popular cuisines include:
Herr’s Salsa & Lime Tortilla Chips (Herr Foods Inc.) are advertised as having a fiesta in every chip.
Shearer’s Margarita Lime Tortilla Chips (Shearer’s Foods, Inc.) offer an intense lime flavor with a hint of tartness.
Extra Crunchy Kettle-Style Hot & Spicy Jalapeño Potato Chips (Snyder of Berlin, a division of Birds Eye Foods) offer exciting Mexican flavors.
Tom’s Taco Flavored Tortilla Chips (Tom’s Foods, Inc.) capitalizes on the popularity of Tex-Mex cuisines.
Pringles Spicy Cajun Potato Crisps (The Procter & Gamble Co.) is one of eight flavors of regular Pringles.
Mrs. B’s Southern Style Cajun Hot Potato Chips (Golden Flake Snack Food Co.) are seasoned with a special recipe of Cajun hot seasoning.
Poore Brothers Habanero Intensely Hot Potato Chips (Poore Brothers, Inc.), are described on the packaged as “made with fiery habanero peppers, these chips are not for wimps.”
Route 11 Taro Chips (Route 11 Potato Chips) are made from taro root, a very distant and tropical cousin of the potato. This root is native to Southeast Asia, and in one variety or another has spread to the Caribbean, South America, Central America, Africa, the Pacific Islands and East Indies.
Archer Farms Thai Potato Chips (Target Brands Inc.) combine a pleasing blend of soy sauce, chives and spices with the hearty crunch of our homestyle chips.
Archer Farms Italian Potato Chips (Target Brands Inc.) combine a savory blend of aged parmesan, garlic and spices with the hearty crunch of homestyle chips.
Ming Tsai Blue Ginger Asian BBQ Potato Chips (Target Brands Inc.) incorporates an exotic balance of tangy and sweet Asian flavors with a hint of spice.
Whether flavored or plain, snacks are consumed both with meals and at other times. In a 2002 survey, the most popular snacks for the afternoon were chips/pretzels at 56%; popcorn/seeds/nuts 47%; cookies 47%; crackers 46%; and snack/granola bars 36%. The top snacks for evening were popcorn/seeds/nuts at 61%, followed by chips/pretzels 57%; cookies 50%; fresh fruits/vegetables 39%, and crackers 38%, according to IRI InfoScan Reviews.
Salty snack are also being eaten with meals. A NPD study found that in 2002, salty snacks were the seventh most-popular in-home lunch items. Sandwiches topped the list.
Snacks are popular with Americans because they are fun foods that offer convenience, exciting flavors and great taste. Snacks trace their origins back hundreds of years and, as part of a well-balanced diet, snacks can continue to be enjoyed for hundreds of years into the future.
Editor’s note: The article is based on a presentation given by SFA V.P. of Communications Ann Wilkes at the general session of Efficient Collaborative Retail Marketing’s (ECRM) Snack & Beverage Conference, July 12, in Orlando, Fla.