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Soup-To-Nuts Podcast: What snacks are hot and where consumers are buying them is evolving

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By Elizabeth Crawford

19-May-2017
Last updated on 23-Jun-2017 at 10:44 GMT2017-06-23T10:44:21Z

Soup-To-Nuts Podcast: What snacks are hot and where consumers buy them
Soup-To-Nuts Podcast: What snacks are hot and where consumers buy them
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US consumers are snacking more than ever, according to IRI data, but an analyst for the market research firm warns that CPG companies shouldn’t take this upward trend for granted because while many shoppers reach for packaged products to satisfy their growing habit, competition also is heating up from quick and limited service restaurants.

According to IRI’s Sally Lyons Wyatt, snacking continues to be one of the biggest trends shaping the food and beverage industry with most Americans reaching for something small to munch on about three time a day on average. And while that sounds like a lot, it is nothing compared to the 14.2% of Americans who eat five or more snacks a day – a whopping 2 point increase from last year, which Wyatt characterizes as “crazy.”

Part of what is driving this upward momentum are American’s on-the-go lifestyles, and also nutritionists educating US consumers about the value of eating smaller meals more often. This has resulted in some untraditional snack times, such as a spike in snacking from 5 am to 7 am, and blending of mealtimes, such a linner (lunch and dinner) and brinner (breakfast and dinner).

Consumers can find snacks anywhere and everywhere

As consumer demand grows, more venues are stepping in to meet the need – creating increased competition for traditional retailers, but also more opportunities for manufacturers.

“I have seen a lot of specialty stores pop up around the US, the candy stores that have sweets and snacks,” along with innovative vending machines, the movie theater and even home improvement stores, she said.

Increasingly, this also includes quick or limited service retailers and restaurants, which could be considered a threat to CPG manufacturers, but also an opportunity.

“There is definitely some momentum in their favor,” Wyatt said noting Technomic data that estimates quick and limited serve restaurants have increased almost 4% in 2016. She also pointed to a snacking survey she does that found 42% of consumers go to quick and limited serve one to two times a week, which is up 3 points from the prior year, and 11% go three or more times a week, which is up four times from the previous year.

But are they a threat? “I think if you are in retail, no matter what, I think all of the different venues are a threat. But then you just have to carve out where you want to play,” Wyatt said.

While those numbers are for all food and beverage, not just snacks, Wyatt says it is safe to assume that a portion of that business is going to snacks as many of these locations are offering more mini-meals and snack-type options on their menus.

Ecommerce is coming

Another emerging outlet for snacks sales is ecommerce, which Wyatt says may be small now but won’t stay that way for long.

“Ecommerce is legit,” Wyatt said. “There are more and more consumers leveraging ecommerce, more and more retailers engaging in ecommerce, and although the sales for snacking are small on average – probably 2% of sales are online except for maybe bars were at 7% -- it is totally ready for the highway and growth between now and 2020. So, we are estimating the tipping point is coming and when it comes you will go from 2% to 10% extremely fast.”

Wyatt says consumers are drawn to ecommerce for snacks in part because it is easy to set up renewal subscriptions that send snacks to their doorsteps on a regular basis so they never run out.

Top trending snacks

As for what consumers are snacking on, Wyatt says the fastest growing categories year over year reflect the larger trends of fresh, healthy and transparent. But at the same time, indulgent snacks are holding their own.

Wyatt said in terms of growth, smoothies are at the top of the list followed by refrigerated appetizers and snack rolls and snack-sized produce. On the indulgent side the big growers are baked cakes and donuts on the refrigerated side, as well as refrigerated dips, and chocolate covered salted snacks.

Looking at snacks through the slightly different lens of raw growth, not just percent change, reveals a very different answer to the question of what consumers are snacking on. From this view, salty snacks are the winner, as are ice cream, sherbet and cookies.

While these results may appear conflicting at first glance, Wyatt says they make sense together considering most consumers are looking for balance in their diet. She said consumers want nutritious options, but they also still want the occasional treat as a reward.

Drilling down beyond large category trends, Wyatt says that product attributes, such as protein, also play a pivotal role in what snacks consumers buy.

Flavor also is a big influencer on consumers’ snack selection, and in particular global flavors are trending, Wyatt said.

Packaging innovation

Because snacks are all about eating on-the-go, sharing and portion control, how they are packaged also influences shoppers’ purchasing decision. In this regard, Wyatt says she has noticed two trends.

The first is resealable packs that allow consumers to share within one household and portion out how much they want, and the other is an emergence of tins, which are durable and sustainable, Wyatt said.

Three takeaways

While this is a lot to take in, Wyatt said there are three major take-away points for companies competing in this quickly evolving snack space, including:

  1. Enhance your channel strategy and zero in on ecommerce;
  2. Embrace activities with retailers to deliver on consumer needs and provide personalization; and
  3. Innovate with new ingredients, packaging “and anything in between” to stand out from the competition.

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