Move Over, Chips and Dip

The snack food segment is smackin’ with new opportunities. As the lines between meals and snacks continue to blur, a new generation of heartier, more savory, and at times meatier alternative snack and mini-meal options is evolving.

Smart marketers looking to expand their business base beyond the teen and young adult snack-fueled segment are targeting aging Boomers with healthier options, gourmet concepts, and natural/organic treats. And, for the first time, there’s foodservice action, too, as McDonald’s, Burger King, and others capture afternoon and evening day parts with hot n’ hearty snacks and high-end chefs send customers home with “out-takes,” gratis mini-morsel munchies for the next day’s treat.

At the same time, traditional snack foods are finding new opportunities in the main-meal segment, accompanying more breakfasts and suppers and reversing a drop in lunchtime consumption. According to the NPD Group, chips ranked No. 8 on the “Top 10” list of dinner side dishes last year. One-third of snack foods were eaten with a meal, 12% instead of a meal, and 56% as a snack. But the largest potential exists in the alternative snack segment, as customers worldwide seek new options to savory snacks and chips, opting for mini-meal-like items large enough to feel satiated but small enough to squeeze out the guilt.

According to Roper Starch Worldwide, only one in five Americans eat three meals/day, down 10 points since 1989; 55% eat two or three meals/day plus a snack or two, up 9 and 6%, respectively. But we’re not talking about a grazing lifestyle here. In fact, 87% of American families eat their main meal together on weekdays, up 6% since 1986, and 85% on weekends. We’re talking about creative, but supplemental, snacks designed to meet today’s convenience standards: “little or no preparation time,” “packaged to be eaten anywhere,” “single serve,” and “requires no refrigeration.

The UK’s Leatherhead Food RA estimates the alternative snacks market in the United States, Japan, Australia, and the leading European markets of France, Germany, and the UK at $14.4 billion, an increase of more than one-third in a three-year period. The U.S. has the most developed market—worth nearly $10 billion—which can be divided into five major areas:
• Hot snacks, including frozen and chilled appetizers, pita pockets, and dim sum, reached $639 million, up 13.7% (IRI data). Watch for breaded hot international cheeses such as McCain’s Moore’s International Toasted Brie Provençal and Alpen Swiss Rye, Delimex taquitos, and Tombstone’s Mexican-style pizza to soar. Worldwide expect pasta and snack noodles to take off, already a 430-billion-Yen business in Japan.

• Meat snacks saw the largest gains in the $20.7-billion savory snack category last year, with jerky—such as Goodmark Foods’ Pemmican sweet mesquite beef jerky and Lowrey’s Big Beef Spicy Smoked Sausage—jumping 31.7% to $1.7 billion. Pork rinds were second, up 21.8% and $512 million in sales! Keep an eye out for mini-sandwiches like Owen’s new Snackwiches™ —egg and cheese–enrobed biscuits—and a pizza taco version, too.

• Fruit, vegetable, and nut snacks showed great promise, with dried processed fruit topping $857 million in sales (up 5.6%), and snack nuts—spurred by strong cholesterol and vitamin E promotions—adding $1.3 billion (up 7%) to the bottom line. Expect new exotically flavored and icing-coated almonds, as well as novel entrees such as Blue Diamond Growers’ Nut Thins, a nutritious snack cracker from rice and nuts.

• Dairy snacks, including hand-held dairy novelties, cheese, and miniaturized desserts, have been among the most creative, topping $1.8 billion in sales, while functional dairy snacks hit $246 million. Watch for creative marriages of fruit and dairy, such as Dole’s new Fruit Dips creamy fruit bars, Sunfresh’s Mini-Moo-Moo cups of fromage frais cheese for kids, Dannon’s la Crème which lifts the taste barrier for want-to-be yogurt snackers, and Sunnydale Farms’ By Nature, the first refrigerated ready-to-eat organic pudding.

• Nutrition and breakfast bars combined topped $1.2 billion, with functional bars contributing $860 million and growing 25–40% annually since 1997. Watch for a new generation of cereal bars, such as Kellogg’s International Milkrunch, a fortified cereal bar made with Frosted Flakes and milk, and for diabetic and weight-control bars seeking to control glycemic index and satiety.

Nutrition Business Journal estimates the functional snack food market at $1.6 billion by the end of 2001, $2.8 billion by 2005, and $4.8 billion in 2010. Snack foods—which now represent 7% of the total U.S. functional foods market—are the fastest-growing segment, up 30% in 1999, 20% in 2000, and an estimated 18% in 2001. About 60% of functional snacks are sold in the mass market and 40% in the health/natural channel. Other functional snack food categories, though smaller than the bar segment, have experienced their fair share of new product introductions, especially hard and bar candies, crackers, and snack cakes.

Whether designed to substitute as the “fourth meal” of the day, to satisfy a sweet tooth, or to help maintain weight, snack foods will continue to break some new and very lucrative ground. With 70% of consumers saying they eat pretty much whatever they want, the demand for a diversity of snacks will remain on the front burner.

by A. ELIZABETH SLOAN
Contributing Editor