The growth in snack foods is being driven by more in-between meal eating, Millennials who seek bolder flavors, and products with some sort of health positioning.
Sweet and savory snacks experienced a 4% current value growth in the United States in 2012, according to research from Euromonitor International (Table1). Such growth is a positive for snack producing companies and the category is expected to see compound annual growth rates (CAGRs) of 2% and 1% in constant value and volume terms, respectively, over the forecast period to exceed $38 billion by 2017.
Table 1. Sales of Sweet and Savory Snacks Category by Product Type: % Value Growth 2007–2012
Euromonitor categorizes the “Sweet and Savory Snacks” category as the aggregation of fruit snacks, chips/crisps, extruded snacks, tortilla/corn chips, popcorn, pretzels, nuts, and other sweet and savory snacks. Products that fall into the other category include sunflower seeds, fruit and nut mixes/trail mixes, seaweed snacks, meat snacks, fish snacks, and pork scratchings (pork rinds).
Key Growth Drivers
Sweet and savory snacks continue to see strong growth rates across nearly all of its various categories, driven by the rapidly expanding trend of eating between meals, especially among Millennials (generally defined as 18-34-year-olds).
Another contributing factor is continued flavor innovation that consistently matches the taste preferences of younger Millennial consumers, who prefer bolder, spicier flavors than their parents. Finally, the ability of new products to position themselves as a healthy or relatively low-calorie option for hunger cravings between meals has proven to be very effective in attracting dieters or other health-conscious consumers.
According to Euromonitor, health-positioned items have returned to the forefront of growth for snack products. New products such as Popchips and Skinny Pop have proven to be incredibly fast growing brands in their respective categories, and both these brands have largely stressed the relative healthiness of their products compared to their competitors. Skinny Pop popcorn strongly positions itself as an incredibly low-calorie snack, while Popchips has long stood by the slogan of “never fried” and “never baked”.
Jerky is expected to drive sales of other sweet and savory snacks, growing 7% in current value terms and making it one of the fastest growing categories. Meat products have been finding a great deal of success lately due to extremely effective marketing to its core audience, male consumers. In addition, consumers recently began viewing protein as an effective appetite suppressant and energy booster and that has helped jerky market itself as a smart snacking option.
Unit prices continued to rise in 2012, increasing by 3%. Besides the usual trend of rising commodity prices, the category has also continued to move to small pack sizes that better fit the needs of frequent snacking in between regular meals. In addition, new successful products such as Popchips and Skinny Pop have a much higher unit price by weight compared to the rest of their respective categories, which has put further upward pressure on unit prices.
Microwave popcorn accounted for 35% of value sales of total popcorn in 2012, while ready-to-eat popcorn accounts for the remaining share. In volume terms, however, microwave popcorn comprises a much higher percentage of total retail sales as ready-to-eat sells for significantly higher unit prices. This difference in unit pricing became even stiffer in 2012 with the continued growth of healthier ready-to-eat popcorn, like Skinny Pop. However, this increasing difference in unit prices might be offset slightly by the recent release of Orville Redenbacher’s Pop Up Bowl, an innovative new product which is designed to allow the consumer to use the bag as a bowl after cooking it in the microwave.