MANY of the food industry’s product categories may be suffering from falling sales values as discounters, fierce competition and consumer price sensitivity all contribute to food price deflation.
But savoury snacks looks to be a category that has bucked the trend and is set to continue to do so.
According to the Snack Foods Market Report produced last year by market intelligence provider Key Note, which analysed sales figures from 2013 and the firm’s own commissioned research in 2014, the category had shown good growth and appears to have a number of underlying strengths that make continuing growth likely – for the next few years at least.
Key Note found that the retail market for savoury, bagged snacks increased in value by 5.8% in 2013.
And even though there have been major inroads made by private label and discounter products in many other types of foods the analysis firm found that snacks sales “continue to be driven by brand trust, with this loyalty forming the basis for exploiting current trends.”
In NEMS consumer research, specially commissioned by Key Note in June last year, 69.5% of respondents said brand trust was a driving factor in the regular purchase of snack foods.
The three most popular brands were Walkers, Doritos and Pringles.
That means, Key Note suggested, that major snack brands owners such as PepsiCo (Walkers/Doritos) and Kellogg’s (Pringles) have vital brand power that increases the likelihood of a return on investment in their new product development activities.
Market-leading manufactures are able to reinforce that advantage with aggressive pricing strategies, in-store promotions and high expenditure on marketing initiatives, all of which help build further brand awareness.
NPD is of prime importance in the snacks market, Key Note suggested. There’s currently a high demand for healthier snacks and new flavours, which it reckoned both maintained volume sales of potato crisps and offered potential growth for snack nuts and other savoury snacks.
Last year’s NEMS research found that 54.4% of respondents wanted to regularly purchase healthier snack foods, and more than half were also keen to try new products. Manufacturers of all sizes have attempted to exploit those demands, Key Note said.
Tyrrells for instance had introduced a range of vegetable crisps, it noted. Burts had launched a new spicy chorizo favour of potato crisp.
But those brands, argued Key Note, although increasingly popular, remain less established than lines from the market leaders.
And that was a substantial disadvantage considering the overriding importance of brand trust in the snacks market, it suggested. The analyst reckoned Walkers’ Pops, a healthier form of potato crisp, and Kettle’s vegetable crisps, were likely to outsell lines from smaller rivals.
“The popularity of savoury snacks in the UK ensures that new trends regularly emerge, providing manufacturers with new avenues for growth in an extremely competitive marketplace,” Key Note said.
“When combined with the highly established level of brand awareness and loyalty, there are strong foundations for further growth among the established brands operating in this market.
“However, heavy investment is required to fully exploit these opportunities and this is likely to lead to ongoing market consolidation, as manufacturers of all sizes are forced to accept slimmer margins. Despite this, consumer interest in snacking between meals is yet to peak, with convenient food solutions becoming increasingly popular among a busy consumer base.
“Key Note therefore forecasts five-year growth of 21.2% between 2014 and 2018.”
•Key Note Snack Foods Market Report. Price £575 www.keynote.co.uk
