2013 State of the industry Reports on Snacks:
Our 2013 State of the Industry report on snacks focuses on new snack products, the perspective of snack manufacturers and product leaders and market sales.
Snack manufacturers are dipping into a new wave pool of offerings for consumers, including better-for-you options, exciting flavors, exotic combinations and packaging enhancements.
For those snackers out there interested in dipping their chips into new waters, er, dips, there will be plenty of products from which to choose. Global Industry Analysts Inc. expects global sales of snack foods to increase 7% annually to reach a whopping $334 billion by 2015.
According to Highbeam.com, in the late 2000s, there were a reported 454 establishments involved in manufacturing potato chips, corn chips and similar snacks, with shipment values exceeding $44 billion. Industry-wide, employment totaled nearly 32,000 workers in 2009. The average manufacturing facility generated $167.6 million in sales and employed 78 workers. California, Texas, Pennsylvania, New York, and Illinois were the leading manufacturing states; however, New York was responsible for the bulk of production, or more than $43 billion of industry shipments.
Manufacturing of the potato chips and similar snacks category held 47.4% in market share, followed by potato chips and other potato-based snacks manufacturing, with 16.7% in industry share. Meanwhile, tortilla chips manufacturers garnered 15.9% in market share, with shipments valued at $144.3 million.
Others included corn chips and other corn-based snacks manufacturers, with shipments totaling $30.8 million and popcorn, already popped (except candy-covered) manufacturers with $18.1 million in shipments.
With shopper sentiment rebounding this year, figures supplied to us from Information Resources, Inc., (IRI) show the top potato chip category brands floating on top of the snack category, though a few felt a pinch from some of the new popped crisp product introductions. Still, the category remains a strong swimmer in the snack pool, with an amazing $6.7-plus billion in sales. Market growth is expected to accelerate, with an anticipated compound annual rate of 6% for the five-year period of 2010-2015, says Transworldnews.com.
“One trend is all about popped items,” reports Roya Rohani-Cuetara, vice president of marketing at Classic Foods, San Francisco. “Competition is definitely increasing, but so is our motivation to continue to excel in this product category. We just launched our new Risi Papas Caseras, line, which has bilingual copy in English and Spanish on the packaging and complies with the food label regulations in the U.S. and Mexico. We also just launched Savory O’s (Puffed Onion Rings) and Bandits Bounty (White Cheddar puffs). We also have great new items for our private-label clients.”
Most agree that health and wellness are the most compelling factors in today’s food products environment. They’re also among the hardest on which to capitalize, notes IRI Consulting’s new executive briefing, “What’s in Store for Health & Wellness.” Growth trends indicate that a number of products with individual health and wellness claims have recently experienced declining sales, says IRI, but evidence indicates that products providing a holistic approach, advance general health and well-being and focus on factors that impact health and wellness will achieve long-term, sustainable success. They’re also gaining better market traction.
“We believe in health for generations to come,” Rohani-Cuetara says. “Our pledge is to create healthier choices without sacrificing taste for our consumers.”
Crossover of tacos and tortilla chips
When the Taco Bell Doritos Locos Taco became Taco Bell’s most successful product launch ever, with more than 375 million sold in one year, Taco Bell and Frito-Lay North America kept rustling the waters on the retail side with the creation of Doritos Locos Tacos (DLT) Tortilla Chips as a limited-time item last April.
The move was proof that tortilla chips are big business in America. U.S. tortilla/tostada chip retail sales totaled $4.2 billion, according to Chicago’s market research firm IRI, with Doritos encompassing 43% of sales at $1.8 billion.
“The tortilla chip category remains the second-largest snack category, but growth has been slowing in favor of new, nontraditional snacks with healthier ingredients and attributes,” explains Laura Setzfand, vice president of marketing for Boulder Canyon Natural Foods, Boulder, Colo. “Gluten-free chips with beneficial nutritional profiles are [also] showing positive growth.”
Popping up on a shelf near you
Keith Dalziel, assistant marketing manager for Food Should Taste Good, a division of Minneapolis-based General Mills, goes one better: “The current trends show us that corn and tortilla chips are the largest and the highest growth segment in the natural/organic chips and pretzel snacks space. In the last year, there has been a high degree of competitive activity. New entrants and innovation are the primary drivers of change.”
He says much of the category growth is coming from new segments, such as bagel and pita chips, puffed snacks, popcorn and pretzels, in addition to the established corn and tortilla chips segment. And unlike their basic counterparts, today’s pretzel introductions are showing up at the pool, sporting new shapes, flavors and fewer calories. Pretzels are moving out of the shallow water, thanks to consumer demand for bolder flavors, variety and better-for-you ingredients.
New format developments and production technologies are also being perfected for tortilla chips, such as Tyson Deli’s new Mexican Original tortilla chips, created for deli operators and new cutting dies are being used to create new tortilla chip shapes. Popping technology that uses pellets, instead of frying, lowers the calories and fat yet keeps the crunch and flavor. And manufacturers are meeting the challenge of producing healthier tortilla chip profiles to accommodate the increasing demand for nutrition and cleaner labels.
Some of the cleverest packaging structures are also helping put certain snacks on the high dive: In April, IRI’s list of 10 top new food product introductions of 2012 included Orville Redenbacher’s Pop Up Bowl popcorn, which features a bag that transforms into a self-contained serving bowl. Consumers want exciting, new options to satisfy their quest for hunger, nutrition and indulgence across the day. They have reached beyond the traditional snack aisles for different options, says Sally Lyons Wyatt, executive and general manager for client insights at IRI.
The brand also has a new ready-made popcorn in place to gain leverage on the microwavable brands. ConAgra’s Orville Redenbacher’s ready-to-eat popcorn is available as an air-popped version, with “half the fat of regular potato chips.” While microwave brands still lead the popcorn category in sales, the segment grew just 0.84% in the 52 weeks ending March 24, according to IRI. This compares with 11.5% growth over the same period in the ready-made segment, which soared to $671.6 million. And speaking of popcorn, Frito-Lay recently introduced Cracker Jack’D, which hones in on “on-the-go” adults, in Buffalo Ranch and Spicy Pizzeria flavors.
Also when it comes to popcorn, the flavor of summer this year is choice, and popcorn manufacturers are serving up plenty of options to consumers. From unique flavor options to healthier fare, consumers can spend every poolside day trying something new. Many companies are turning to international flavors as inspiration for new popcorn offerings. With new products and new companies joining the market every year, vendors must find a way to make their snacks stand out in the already crowded popcorn pool. While butter and salt are nice, manufacturers know now that the way to make sales waves is with bold and unique flavors.
Thus, competition has taken on a very different twist, and competitive juices are really flowing. To develop ways to grasp the rays of light shining through the economic clouds, snack marketers must view the industry through new sunglasses.
“Consumers have become much more aware of unnatural and nonGMO ingredients and are demanding healthier and tastier alternatives,” says David Israel, CEO of POP! Gourmet Popcorn, a Seattle company that offers the POP! lite series of air-popped products that have a mere 40 calories per cup. The company has added Fire Corn Jalapeno Popcorn to its lineup. The product is infused with real jalapeno spices. And its new Rub with Love Popcorn line comes in African Peri Peri Chinese 12-Spice and Smoky Barbeque and Northwest Cheddar varieties.
Bold, meaty flavored chips and extra-spicy meat snacks including Hispanic and Asian spices are trending as manufacturers try to excite millennial tastebuds, according to analysts at Euromonitor International.
“In Mikesell’s case, this includes flavor profiles that match specific tastes from those regions,” states Luke Mapp, director of marketing at Mikesell’s Snack Food Co., Dayton, Ohio. “We’ve introduced two ethnic-inspired flavors with Reduced Fat Tuscan Spice (2012) and Bold Jamaican Jerk (2013); and our customers have responded very well to both. The hot tends are a combination of both the ethnic influence as well as better-for-you options. And there is a lot of experimenting going on with different forms of root vegetables to different grains.”
Steak-flavored potato chips as well as barbecued rib and hot dog flavors are coming into play, driven by consumers’ adventurous side and desire to travel. Jalapenos and other chili variants are heating up the meat snack segment, and so is turkey jerky.
Tabasco flavor is floating the boat of Utz Quality Foods lately. Utz fans who favor the hot, peppery punch of Tabasco will love its new snacks, such as Utz Spicy & Wavy Tabasco potato chips, Tabasoco cheese curls, Tabasco butter popcorn and Tabasco cheese popcorn—all spiked with the original flavor of McIlhenny Co.’s Tabasco Sauce.
The new snacks were released in June to retailers where Utz products are sold. The Hanover, Pa., company says it’s excited and enthused to extend the bold, one-of-a-kind lineup to its customers. “The Utz brand has always prided itself on finding new, creative flavor combinations, and offering fresh and delicious products to our customers,” says Chuck Tullis, vice president of corporate brands. “Our line of Tabasco-flavored snacks is an exciting adventure into a world of intense flavors that really pack a punch—one that is sure to have our customers reaching for more.”
Sticking out from the crowd
Another new/old item, snack sticks, are making a significant comeback, as Pringles and even French’s are launching potato sticks. Pringles version comes in Honey Butter, Cheese and Pizza, while French’s is relaunching crunchy “sticks with a kick,” made from 100% real potatoes in a Buffalo flavor (see the Chips article in this issue).
Pringles Stix are now on shelves from Kellogg Co., Battle Creek, Mich. A playful twist on the original Pringles potato crisps, Pringles Stix promote spontaneous snacking, thanks to their fun, playful shape, crispy texture and great taste. They’re available in an eight-count box of single-serve pouches and a 70-count resealable bag.
Snack sticks are also coming back at French’s Flavor Ingredients, a division of Reckitt Benckiser. This time, French’s is unveiling French’s Potato Sticks made with the dry version of Frank’s RedHot Cayenne Pepper Sauce for plenty of zesty flavor.
Oddly enough, with loads of protein and low carbs, the pork rind segment has benefitted from consumers’ focus on healthier eating. And consumers’ continued focus on flavor trends are impacting this segment. “We continue to see solid pork rind growth in mass and convenience stores, but sales are flat in grocery,” says Mark Singleton, vice president of Rudolph Foods, Lima, Ohio. “With mass sales growing, there could be a shift in dollars spent in other channels. For example, there has been more than 6% sales growth in the convenience channel. The word is getting out that pork rinds are a low-carb, high-protein snack.”
Consumers on high-protein/low-carb diets, in particular, have turned to pork rinds as a snacking solution. Because more consumers are discovering the protein benefits of pork rinds, the demographic for these products is expanding. “Consumers are realizing that these products are a good diet supplement due to the high protein and low carbs,” says Laddie Fulcher, vice president of Turkey Creek Snacks, Thomaston, Ga.
Nuts about nuts, mixes
The proliferation of portable snacks has also impacted the nuts, seeds and trail mix segments. Consumers snack more often during the day rather than eating full meals, and with the continued focus on more healthful eating and functional ingredients, cleaner labels and allergen-free products have also become more prevalent. The evolution of Americans’ palates, being more sophisticated encourages nuts, seeds and trail mix marketers to come up with unique and innovative flavors and a wider selection of products. Nut snacks in particular are having a huge surge in popularity, due to the increasing consumer awareness of their heart-healthy and general nutrition benefits.
Erika Cottrell, vice president of marketing for Sahale Snacks, Seattle, says consumers want each snack they consume to be a delicious, healthy option. “Busy shoppers are paying closer attention to nutrition facts, portability and portion control, which have become purchase decision drivers,” she says.
Some of the standouts among these products include tree nuts, which are growing in overall global popularity demand as a snack, a culinary ingredient and processed-food ingredient. “U.S. exports of tree nuts are at record levels,” says Sara Tidhar, founder and owner of Santé Specialty Foods, Santa Clara, Calif. “People are more aware of the health properties of nuts, so they are becoming more of a primary ingredient in the meal. People also are eating nuts for breakfast and using it as a focal point in their cooking, as well as seeking these products out as a go-to snack.”
Today’s nuts, seeds and snack and trail mixes offer more flavor options and an increased focus on hot and spicy varieties. With the new twists on snacks this year, consumers have plenty of healthful choices throughout their day. Today, it’s about mixing the functional with fun and flavor.