After years of spectacular success the snacks category in 2005 was beginning to look like a Premiership football team with a few of its star players past their best and slipping towards relegation. Even with Gary Lineker leading its attack, the major star in the category, Walkers crisps, was firing blanks and Golden Wonder was notching up losses which finally dragged it into receivership early in the New Year.
But the speed with which Golden Wonder’s brands were snapped up, together with a pound;20m relaunch for Walkers crisps, suggests 2006 should see a marked improvement.
Tayto, the Northern Irish crisp producer, bought the Golden Wonder manufacturing facility at Scunthorpe and brands including Golden Wonder, Golden Skins, Golden Lights and Ringos, for an undisclosed sum
John McQuaid, national sales manager for Tayto, says that while the company will seek to explore opportunities for Tayto brands in Great Britain, it will not do so if it overlaps in areas where Golden Wonder was strong.
“Golden Wonder has an extremely strong heritage and its brands remain strong in a number of key areas. Golden Wonder crisps perform well in Scotland and Ringos in the north west. We would be crazy not to use these strengths.”
United Biscuits UK (UBUK) acquired Golden Wonder brands Nik Naks and Wheat Crunchies, boosting its value share of the bagged snacks market to 17% and strengthening the company’s position as the number two savoury snacks supplier in the UK.
Paul Graham, UBUK impulse trading director, comments: “We are delighted to bring the Nik Naks and Wheat Crunchies brands into the UBUK portfolio. They offer a strong alternative to more mainstream bagged snacks and complement our existing brands, allowing us to offer a range of savoury bagged snacks to suit all consumer tastes. With the expertise and investment we can put behind the brands, we are confident we will drive sales, and we therefore urge retailers to continue to support Nik Naks and Wheat Crunchies to share in that success.”
With the total snacks market valued at just under pound;2bn, and Walkers’ share of the category valued at around pound;1bn, Walkers has a massive influence over the overall market’s performance. After a slide in sales of Walkers crisps last year PepsiCo has relaunched the brand, backed by a pound;20m advertising campaign to communicate the updated brand to consumers.
PepsiCo UK wholesale director Andy Thompson comments: “Over the years consumers needs have changed and so have we. That’s why with the increased focus on the importance of a healthy lifestyle, consumers now want convenient foods that not only taste great but are also better for them. With the significant changes we have made as part of the relaunch, we have responded to consumers’ needs and new Walkers are now better for them.”
Walkers identified key consumer health concerns as the levels of saturated fat and salt in their food. The relaunch initiative, which has been in the planning for five years, has set out to address these concerns, but retain the Walkers taste. By using a new type of oil, Sunseed, levels of saturated fat have been reduced by 70%, so that a pack of Walkers crisps now contains less saturated fat than half a chocolate digestive biscuit.
Levels of salt have also been reduced by 25% so that a pack of crisps now contains the same amount of salt as a slice of bread. Walkers has also announced the introduction of three new flavours to the range: Spicy Chilli, Cheddar Cheese and Lamb Mint.
While crisps sales were sagging last year, Walkers’ Potato Heads brand, launched in January 2005, was a major success, winning the FWD Gold Medal for the Best Grocery Brand and The Grocer Top Products Award as the best bagged snacks launch of 2005. It became a top 10 brand within six months of launch and a pound;30m brand within a year.
This has been followed up by the launch of new Cheese Heads in January, extending the Heads brand into the currently under-performing baked snacks segment. This followed the insight that children over index in snacks, and women and kids account for 70% of the baked segments volume. Thompson comments: “The popularity of Potato Heads has shown that mums want healthier snacks, but they want their kids to be happy too. Cheese Heads will provide them with another great tasting snack they can give their kids without feeling guilty.”
Another recent success for Walkers has been the introduction of a new range of bloke’s crisps and nuts in 2005, under the Nobby’s brand name. With advertising featuring pop legend Noddy Holder, the brand has grown strongly since launch, and is set to receive pound;4m advertising spend in 2006.
PepsiCo UK also owns Quaker snacks, which has been experiencing strong sales growth. With their core proposition of containing less than 10% total fat they are well placed to capitalise on the increasing popularity of better-for-you snacks.
Sales of the Quaker Snack-a-Jacks brand are currently strong, with the brand valued at pound;46.4m, and new products launched at the start of 2006, such as Mini Bagels and Mini Breadsticks, are aimed at attracting incremental sales.
UBUK is also investing significant sums in developing healthier options and promoting its portfolio of bagged snacks. Three mega-trends have been identified within the market – healthier, pleasure and making life easier – and activity and marketing support will target these.
With KP Nuts, the UK’s number one nuts brand, UBUK has plans to revitalise the nuts category in 2006 with a programme of new product development, improved packaging and a new design.
The nuts market is worth pound;195m and has increased 14.3% year on year as consumers buy nuts more often and increasingly consume them as a healthy snack. With 23% household penetration, KP Nuts is valued at pound;33m and has 16.7% share of the total nuts market.
UBUK is investing in new packaging for its KP Nuts brand to drive the quality message on its core range and communicate the larger sized nuts. KP Nuts will be packaged in thicker film, highlighting health messages and quality within the new design.
KP Nuts also aims to invigorate the nuts category with the introduction of new Multipacks. UBUK is the first manufacturer to introduce multipacks within the snacks category. Consumers will be able to choose from multipacks of Original Salted Peanuts, Variety, Chocolate Mixes, Treat and Simply.
KP Nuts Treenuts is a new premium range of nuts launched last month. The three variants – Roasted Salted Cashews, Roasted Salted Pistachios and Honey Roast Cashews and Peanuts – are available in sharing bags and handypacks.
To target the healthier sector, UBUK is launching KP Nuts Simply, a new range of Tropical Mix and Summer Mix, available in 75g handypacks and multipacks. KP Nuts Simply is a range of unsalted nuts mixed with fruit. Highlighting the products’ natural ingredients and taste on pack allows consumers to clearly see the functional benefits at point of purchase.
UBUK’s Hula Hoops has a 3.2% share of the bagged snacks market and since February they are 50% lower in saturated fat and 10% lower in sodium. Using a blend of sunflower oil, Hula Hoops will show its “Healthiest Ever” credentials on front and back of pack. This activity builds on UBUK’s launch of a lower sodium version of Hula Hoops, Shake2Salt, giving greater choice for consumers looking for a reduced sodium snack. Further innovation will result in the launch in April of Hula Hoops Ridges available in four flavours in packs of two grab bags and multipacks. The new products and healthier message will be backed by a pound;1.2m advertising campaign in May and June.
Continuing the ridged theme, UBUK is this month launching McCoy’s Special Tortillas, which it claims will be the first ridged tortilla.
They will be available in 175g sharing bags and 40g handypacks in three different flavours and will be backed by a pound;3.5m TV advertising campaign starting in May.
New flavours are also being introduced into the McCoys range with Tex Mex, Wild West and Sunday Roast variations.
Skips will also be enhancing its healthier credentials further after a 20% reduction in sodium last year. Since February, using a blend of sunflower oil, Skips are 50% lower in saturated fat and contain no artificial colours, flavours or MSG.
UBUK is looking to ignite the healthier bagged snacks category with the launch of go ahead! Crispy Bites. The healthier bagged snacks market is worth pound;60.7m and is expected to continue expanding in 2006 as consumers seek healthier snacking alternatives. New go ahead! Crispy Bites are light potato and rice snacks, available in three flavours: Sweet Chilli, Chicken Herb and Mature Cheese Pickle. Available in multipacks of four, the vibrant and bold design clearly highlights the low calorie and fat content on pack.
Paul Graham, UBUK impulse director, says: “UBUK is maximising its category expertise and consumer insight to drive innovation and growth into the bagged snacks category. This underpins our commitment to lead the UK snacks market by providing quality new products and formulations which will stimulate strong growth and boost retailer profits.”
Like Walkers Crisps, Procter Gamble’s Pringles Dippers is another snack product being relaunched with a new look. The new package has been designed to help consumers differentiate Dippers from the classic Pringles base range. Paul Lettice, Procter Gamble’s trade marketing manager, comments: “Pringles is relaunching its Dippers range as part of an on-going brand strategy to bring excitement into the snack market.
Range clarity will help consumers navigate the Pringles fixture so they can easily select their preferred Pringles product. Retailers can help meet consumer needs and generate more sales and profit by stocking the core SKUs (stock keeping units) to suit their shoppers’ requirements.”
Another dipping option has been introduced by Real Crisps with the launch of Chip ‘n’ Dip. It comprises 45g of Real Crisps’ hand-cooked, lightly salted crisps in a tray with a dip. There are two dip options with Spiced Salsa or Honey Mustard.
Real Crisps sales and marketing director John Mudd says: “As a company we have always investigated ways in which to extend the Real Crisps brand and to offer dips with our crisps is a natural progression. What we have in Chip ‘n’ Dip is a real first to market product and it’s one we believe will do well, with expected sales of more than pound;1m in the first year.”
Sun Valley has also been active in NPD and in developing its existing range. It has launched Pretz, a range of low fat pretzels. There are two varieties, Worcester Sauce flavour and Sour Cream Onion flavour, and the product has already won listings in Bestway and Batleys. Like many other snack companies, it stresses the products low salt and fat content. With only 3.5g of fat per pack and 0.35g of saturated fat, it says the snacks are also low in calories, coming in at just 125 Kcal per pack. Sodium in the Worcester Sauce flavour is 0.5g per 30g bag.
Also new from Sun Valley are 40g bags of its You Are What You Eat range, which was previously only available in 100g resealable packs. Marketing manager Jonathan Barr says: “These new bags open up the market to us even more and we have interest from convenience outlets and forecourts. Esso and BP have recently signed up to stock the new range and we expect more to follow.”
First Quality Foods is another company launching into the healthy snacks market. The Mighty Seed is a combination of toasted sunflower and pumpkin seeds blended with a savoury seasoning of either sour cream and chive or sweet honey and mustard in a resealable 65g tub.
Another variant on the healthy snacks market is Jerky Group’s Rocking JC beef jerky. In the US the beef jerky category is worth around $1.2bn and Jerky Group predicts it will reach pound;35m in the UK within five years. It has just added Teriyaki and Peppered to its range in 25g and 57g bags, and claims the product is high in protein but low in fat with just 5% fat content.
=== Buyer’s viewpoint ===
To have a huge focused spend, such as the Walkers relaunch, is going to have a positive effect on almost any category within our store base, so it will certainly drive the category into growth. In addition, all suppliers are supportive when compared to their share of the category.
Premium and innovative products are performing best, although there is always a need to keep focus on the core range. I’m looking for a new offer, something different, but there are too many “me too” products out there.
The Golden Wonder situation has not affected the category here. The service levels have remained as they were and the range has also remained within AW. I am interested to see what UB is going to do with the range that is listed through our depot during the coming months.
=== Buyer’s viewpoint ===
The category is performing well, and had a particularly strong Christmas. Most of the NPD launched in 2005 – such as Nobby’s, McCoy’s Specials and the Redmill 10p relaunch – performed very well.
Looking ahead the market share commanded by Walkers will have a significant effect on the category performance. A successful relaunch is planned, with exceptional execution in Booker.
There are additional grounds for optimism because all the majors are very supportive and capable of driving sustainable growth.
=== Buyer’s viewpoint ===
Bagged snacks’ performance is currently reasonably good, but health issues really are coming through. There will be a challenge ahead and this will certainly impact on the impulse sector and also in the multiples, where multipacks will be hit as schools ban certain snack products.
Consumers want healthier options, with lower fat and lower salt, so manufacturers will have to develop acceptable alternatives, which they are beginning to do.
I hope Walkers’ crisp relaunch will help the market. It’s going in the right direction and, while it probably won’t bring growth back, it’s bringing some excitement to the category.
The real opportunity lies in premium and healthier options. The Golden Wonder situation hasn’t affected us yet, but a lot of retailers have had to delist their products and I expect there to be a detrimental effect long term.