Within the snacks sector, there are trends towards, healthier, sharing and premium. Staying in is making moves to become the new going out and provides opportunities for growth.
According to United Biscuits UK, the bagged snacks market is currently worth £2.1bn and is growing at a healthy 7%. This growth has been driven by the healthier and adult premium segments, which are growing by 8% and 9% respectively. Sharing bags are growing by nearly 9% and are benefiting from the big night in trend.
Helen Warren-Piper, marketing director of bagged snacks at UBUK, says: “The bagged snacks category continues to be one of the most dynamic in the total snacking market, and is stimulated and grown by both new product development and regular advertising support.
“As one of the largest crisp brands in the UK, the McCoy’s range is continually supported with TV advertising, flavour innovation and nutritional improvements to maintain its sales growth.
“While the current financial uncertainty has seen people cut their spending on the high street and eating out, this has not been the case for bagged snacks as consumers see savoury snacks as inexpensive treats to eat at home. The strong growth in the adult/premium sector and sharing bags in 2008 shows that consumers are willing to indulge themselves and their friends with a range of tasty crisps and snacks. To meet this demand United Biscuits is launching a completely new range of Phileas Fogg products, which includes crisps, tortillas, poppadoms and nuts.”
UBUK has re-launched Phileas Fogg, supported by national TV advertising and a packaging redesign to help increase stand-out on shelf. UBUK has also reduced the saturated fat content in McCoy’s crisps by a further 30%.
Nick Stuart, commercial manager of UBUK, says: “The wholesale channel continues to be extremely important for United Biscuits as it is a primary route to market for reaching independent retailers and publicans. With the total impulse bagged snacks market accounting for £413m in sales and in growth, it is extremely important that we respond to what wholesales need to help sell our products.
“UBUK has enjoyed a strong year for total route to market, with many of our bagged snacks range delivering significant growth. McCoy’s was up +9%, supported by some strong NPD and limited edition ranges, KP Nuts grew +4% in the channel, driven by the new Baked and Seasoned range, while Skips continued to be a firm favourite, growing +8% in wholesale.”
According to Procter and Gamble, the crisps and snacks market value is growing +2.3% year on year. Pringles has seen several innovations in the last few years.
Paul Lettice, trade communications manager at P amp;G, says: “Pringles Rice Infusions took the crisps and snacks market by storm in July 2007 delivering over 45% of NPD sales for the category and in February 2008, Pringles launched into the huge single serve market with Pocket Pack and Rice Infusions Bite Size. With this success and as large sharing leader, Pringles Select is set to revolutionise the large sharing market. Pringles Select will establish Pringles as a true mega brand offering a fantastic new premium taste experience to consumers and driving profit for the retailers.
“As the crisps and snacks market gets ever more diverse, leading brands such as Pringles have to ensure that they offer consumers a wide variety of snacking solutions and investing into booming segments such as ‘better for you’ and ‘single serve’. We are also changing our core business to reflect changing tastes and snacking attitudes. In the market quality is a key consideration for consumers and we are committed to ensuring that Pringles maintains its spot as consumers’ favourite savoury snack.”
Adding to the Pringles range is the launch of Pringles Zesty Lime ‘n’ Chilli in a 155g large sharing can.
According to PepsiCo, the total crisps, snacks and nuts category is worth £2.04bn, growing at +7% and impulse snacking is worth £4.2bn per annum. Crisps and snacks are the only category within impulse providing growth, at +3.8%.
Kirk Tanner, vice president of impulse sales at Walkers, says: “The UK’s love of bagged crisps, nuts and snacks is as strong as ever as manufacturers ensure they meet today’s macro trends of health and wellness, need to treat and value for money. Consumers believe they deserve the occasional treat as part of a balanced diet, but at the same time expect it to boast real food values. Furthermore, shoppers now expect similar levels of ingredient provenance and environmental credentials from their favourite crisps and snacks as they do from other foods. If crisps, nuts or snacks can deliver all this, in a convenient format and taste fantastic, consumers feel they are getting true value for money.”
Snack A Jacks re-launched in 2007 with a new logo and packaging aiming to position itself as especially for ‘women with attitude’. In January of 2008 the brand benefited from a television campaign and the launch of two popcorn flavours, Salt amp; Vinegar and Chocolate.
Snack A Jacks has team up with Touchstone Pictures for the release of Confessions of a Shopaholic and is offering consumers the chance to win a share of £100,000.
Jenny Watson, marketing manager for Snack A Jacks, says: “The Confessions of a Shopaholic promotion offers retailers a great opportunity to capitalise on the consumer trend towards great tasting, better for you, on the go snacks and the UK’s love of shopping. It’s a perfect fit for Snack A Jacks and we’re expecting the chance to win a few little luxuries to have huge appeal, further consolidating Snack A Jacks as the UK’s number one better for you great tasting snack.”
This month PepsiCo has unveiled Red Sky Potato Chips, designed to target the premium sector of the crisps, snacks and nuts category. Red Sky boasts 100% natural ingredients and the pack has as much as possible sourced from sustainably managed forests.
Kirk Tanner, vice president of impulse sales at Walkers, says: “Sharing formats offer impulse retailers the biggest opportunity for incremental sales. The investment we are putting behind the brand is a further statement of our commitment to sharing and to the opportunity it presents to the impulse channel. We know staying in is the new going out and consumers are looking for high quality sharing products like Red Sky. We are confident this new product will drive consumers into store – it will be the biggest and most important new product launch in the sharing category this year.”
PepsiCo is also running the Walkers Do us a Flavour promotion, and its six finalists have been chosen. Consumers can now vote for either Chilli amp; Chocolate, Crispy Duck amp; Hoisin, Builder’s Breakfast, Cajun Squirrel, Fish amp; Chips and Onion Bhaji, with the final winner being announced in May. The winner will receive £50,000 and 1% of the profits and the runners-up will all get £10,000.
Tanner adds: “We have had a fantastic response from consumers since the new flavours have been available and they are already voting in their thousands. The TV campaign is set to create massive consumer demand and will drive even more consumers into store to buy and try all six flavours.”
Andrew Slamin, marketing director of Kettle Chips, says: “Year on year the total crisps and snacks market is showing reasonable growth of 7.8%. The premium sector however is growing at a stronger rate (+11.1%) with this being driven by the Kettle brand.
“Kettle Chips has been a major driver of category growth over the last year and has been the fastest growing top 20 bagged snack brand for three years running. Stocking Kettle Chips represents a fantastic opportunity for wholesalers to capitalise on the consumer trend towards better quality snacking options with no artificial colours, flavours or preservatives or added MSG. We believe consumers will continue to trade up to more premium crisps and snacks with added value through healthier ingredients and less processed offerings.”
The Roasted Tomato amp; Basil flavour from Kettle Chips is designed to link into barbecue occasions. The green and red bag aims to create stand-out on shelf.
Slamin adds: “Developing our position within the wholesale/cash and carry channel has really driven growth with independents (+49.5% year on year). Both impulse and sharing formats are experiencing good growth. The launch of Kettle Chips 40g has driven trial and repeat purchase has followed (+25.8% in independents year on year).”
Lucy Overton, category manager of Ryvita, says: “With sales of healthier products growing faster than the total category within both crisps and biscuits, retailers must ensure that healthier options are available in their snacking categories to meet consumer needs.
“Health awareness is a significant issue, with 80% of respondents in a recent survey stating that healthy eating is important to them. Within this, fat is the biggest concern with 45% of respondents in a Nielsen survey claiming to monitor fat on a daily basis. There is a move towards naturalness in food with 68% consumers preferring foods that our natural.”
In May last year Ryvita launched Ryvita Limbos, which Ryvita says has 90% less fat than regular crisps. The baked snack has no artificial colours or preservatives, is available in a single pack format in three flavours. This year Ryvita had an image makeover across some of its portfolio, including Ryvita Minis, which has been given a new look, designed to reflect the honesty and openness of the brand.
Overton, adds: “The wholesale channel is extremely important to Ryvita and is a vital route to market for the independent trade. We are working to increase the provision of healthy snacks to this channel.”
Referring to the Nature Valley TV adverts, Ed Culf, marketing director of General Mills UK, says: “At a time when people are vowing to keep resolutions to ‘do better this year’ we’ll be reminding them that Nature Valley is wholesome and packed with natural wholegrain oats. The principal objective of the TV campaign are to raise awareness of the brand and to drive people in-store to buy it.”
Last year General Mills added Roasted Almond to its range of Nature Valley Crunchy Granola Bar range.
Culf continues: “Our consumer insight programme tells us that whole foods such as nuts are high on the agenda for an increasing number of people looking to supplement their diet. This flavour will broaden the consumer appeal of the brand and drive incremental category growth as it will attract shoppers looking for a healthier snack bar with a nut based flavour. It complements the existing Nature Valley range perfectly.”
Anthony Wilkinson, senior brand manager for Fridge Raiders at Kerry Foods, says: “Fridge Raiders is continuing to outgrow the market with excellent growth across all retail channels. Using a delivered wholesaler allows us to distribute Fridge Raiders to a huge number of key retailers while maximising shelf-life, a key determinant for the success of a chilled snack product.”
The chicken breast snack is designed for out of home and on the go consumption. Each pack contains 125 calories, low carb, high protein and 10% fat.
Wilkinson adds: “On-pack price marking remains the most simple and effective vehicle to guarantee implementation and visibility, while price reductions continue to drive trial and attract new consumers who are on the look out for different products.
“The success of Fridge Raiders essentially boils down to a consumer truth about raiding the fridge. Over the last several years, there has been a shift away from formal eating in favour of grazing and eating out of home. Fridge Raiders has met a consumers need for a meaty snack that can be grabbed on the go.”
Kepak Convenience Foods says the cash and carry sector will play a pivotal role in the UK’s £116m hot snacking category during 2009.
Aoife Kenny, convenience business unit controller at Kepak Convenice Foods, says: “Retailers are actively seek hot snacking products in cash and carry outlets, as the category provides retailers with an incremental profit opportunity. Kepak Convenience Foods has a 95% share of the impulse hot snacking market with over two thirds of retailers now stocking the market-leading Rustlers range. This is no surprise when you take into account that Rustlers outsells its closest competitors by 18:1.
“The Rustlers brand is now stocked in the majority of cash and carries, making it even easier for retailers to stock the market leading brand.”
Jack Links has launched X Bites and X Sticks into the market. The dried, seasoned sausages with only 27% fat are designed to appeal to a wide-ranging market.
Michael Ollerup, European managing director of Jack Links, says: “Our new products will push meat snacking into the forefront of the vending market and will add incremental growth to the category by offering consumers a lower fat alternative to traditional meat snacking products. Our sausages have less fat than leading competitive products, with no compromise on quality or taste. The other differentiator is that our products do not feature an outer skin and this format has researched very favourably with consumers.
“The packaging was developed so that busy consumers can ‘rip and tip’, allowing the snack to be conveniently opened and eaten with one hand. This makes the range perfect for vending and it will help to offer snacking alternatives that meet the growing demand for healthier alternatives to traditional snacks.”
Nigel White, general manager of brands for Pork Farms, says: “The Pork Farms brand is category leader worth in excess of £80m with strong emotional loyalty. So our task is to build on this strength while broadening the overall appeal of the category. The most significant insights that the brand review identified, were that people see our products as highly sociable foods, associated with good times and togetherness, and that we needed to communicate more clearly the natural, wholesome food values that Pork Farms represents. The packaging uses natural colours and sociability cues to achieve this, under the tag-line ‘Get Together with Pork Farms’.”
Pork Farms used to go to wholesalers though a third party, but is now going directly to wholesalers and White hopes this will help provide better deals and promotion. Pork Farms also has telesales activity and a sponsorship link on TV in the summer months.
According to Pilgrims Choice, it is the UK’s number two cheddar brand, now worth £72m, with year on year growth of +60%
Hannah Fordred, marketing manager for Pilgrims Choice, says cheese sales are growing in value and volume.
She adds that the wholesale channel is very important as it provides access to end users and an extension of the distribution network.
Fordred adds that it is important to provide theatre is depot, with POS, T-shirt give aways, samples, demo days and telesales.
=== wholesale perspective ===
Total category sales grew by 3% during the year. Sales growth was slow up to the middle of the year with a step change in growth accelerating from the start of the school holidays mid July, especially in the foodservice members, and cash and carries performed strongly in the last quarter.
Both Walkers and KP achieved modest growth with a combined share of category sales of 80%. Red Mill, P amp;G and Seabrook’s all enjoyed 20%+ growth.
Corn sales were driven by Walkers focus and activity on Doritos but its reluctance to support Walkers standard bag crisps with cash and carry promotional activity resulted in lower sales and share. Both KP and P amp;G with their McCoy’s and Pringles brands took advantage and grew sales and share. Healthy snacks achieved great growth but this is still only a very small contribution to category sales but remains a great opportunity for the independent sector. Nut sales were very disappointing but performed relatively well given the sales decline in pubs of -8.9%.
Our catering customers influenced by the on trade base buy more carded snacks and nuts than our retailers who also buy into NPD and flavour extensions more easily.
The declines in the on trade and restaurants worsened towards the end of the year, reflecting the general difficulties faced by their industries. The improved performance in the second half of 2008 has been maintained in January 2009 and it is anticipated this will continue throughout the first half of the year. This will set up the opportunity to further improve when we start lapping the improved performance from July.
From a strategic perspective our joint business plans are well advanced with all the key suppliers which collaboratively make optimum use of our combined resources and investment.
We are planning to grow sales in the category by over 10% in 2009 and will achieve this by focusing on our normal strengths of service, availability and competitiveness. Coupling this with building on the opportunities around bigger bag size, premium brands and exciting range developments, like Walkers Do us a Flavour, will deliver the growth we are looking for.
The credit crunch will no doubt take its toll on the independent sector just as it has on the financial services and the high street. This is why we need to sharpen our focus on the best retailers and catering customers.