Mintel sets out opportunities for snack makers
manufacturers need to focus on a number of opportunities if they
are to avoid the pitfalls, according to a new report by Mintel.
Published last month, the report values the market for these goods at $9.8bn in 2007, a four percent decline in constant terms since 2002. The market, which is calculated through sales in food, drug and mass merchandiser (FDM) outlets - excluding Wal-Mart - has seen a general decline in consumption of pretzels, corn and tortilla chip snacks, cheese snacks and popcorn, all of which were down 6 percent since 2003. Potato chip consumption remained stagnant. According to Mintel, the main threats to the market are competition from healthier alternatives outside the category, and demographic shifts. "Americans, in general, have become more health-conscious, making it more difficult for them to rationalize munching on chips that are high in fat and low in nutrients," said the report, which revealed that 60 percent of salty snack eaters say they are interested in healthier alternatives to traditional salty snacks, such as pita chips and crackers. In addition, the growing minority population in the US may open new opportunities for food manufacturers, but it also impacts sales of traditionally successful products that may not appeal to the differing tastes of this population group. The two main minority groups - Hispanic and Asian - are growing in number but are less likely to buy three of the five salty snack segments investigated by Simmons data, which formed the basis of the Mintel report. Some 35 percent of Hispanic households and 37 percent of Asian households were found to buy pretzels, for example, compared to 58 percent of all households surveyed. However, despite the challenges facing the category, its "immense size" remains proof of its importance, and manufacturers must focus on finding ways to avoid the pitfalls facing the market, said Mintel. The market researcher identified seven areas of opportunity. These include extending better-for-you offerings to include a new focus on calories. For example, an air-puffed format could mean fewer calories per bite allowing 100-calorie packs to be bigger and, seemingly, more satisfying. In addition, manufacturers can promote salty snacks as "delicious and fun meal components," said Mintel, which suggests running a campaign to 'take back lunch' demonstrating salty snacks as an ideal sandwich complement, or positioning salty snacks as a "dinnertime essential". Snack makers can also explore ways to meet consumers' desire to snack while doing activities such as working on the computer, text messaging, or driving. These include innovation in packaging that could make snacks 'snap on' to a desk, or having napkins packaged with single-serve bags of the messier snacks. Mintel also recommends engaging families through dinnertime traditions - such as 'National Nacho Night' - and health-oriented messaging. For example, consumption of nuts is lower in households with children, yet nuts offer protein that kids need, it said. In addition, manufacturers can penetrate Asian and Hispanic households via new flavors and culturally appropriate marketing promotions. Another opportunity is to diversify into other types of snack foods. For example, the category leader, Frito-Lay, aligned with Oberto's Meat Snacks in 2000 and bought Stacy's Pita Chips in 2006. Finally, the report suggests experimenting with more indulgent offerings to keep non-health-conscious consumers engaged and differentiate a brand in an era of health-oriented recipe changes, said Mintel. Indeed, although the launch of better-for-you options have greatly supported the salty snack category, Mintel notes that not all consumers are health conscious, and points out that many indulgent brands on the market are also growing, such as Lay's Kettle Cooked chips (up 33.3 percent from 2004-06), Tostito's Scoops (up 46.7 percent) and Fritos Flavor Twists (up 16.9 percent). The two largest segments of the salty snack market continue to be potato chips and tortilla chips. Combined, these segments represent almost 49 percent of sales in FDM channels, excluding Wal-Mart. Snack nuts and seeds, which grew 2.9 percent from 2004-06, remain the third-largest segment, representing 16.4 percent of sales in 2007. Popcorn, which was hit hard by the low-carb diet fad in 2004, has regained traction with consumers, appealing to them on the basis of its wholegrain content, said the report. Frito-Lay remains by far the market leader in the category, with $4.7bn in salty snack sales representing nearly half of the market. Kraft Foods is the second largest manufacturer of salty snacks, though the company only held 5.9 percent of the FDM market in 2006 with $567m in sales. Mintel's Salty Snacks - US - August 2007 report forecasts that category sales will reach $10.6bn by 2012.
