How has the current relentless obsession with healthy eating affected the huge crisps and snacks sector? Is it crunch time for easy pickings? Jaq Bayles reports
The nation&'s favourite bagged snack has had a rocky ride media-wise over the past year, thanks to a continuing obsession with health and obesity. Yet crisps still took a 42.6% share of the £1.3bn crisps, nuts and snacks category [TNS 52 w/e 26 March 2006].
The total category has grown in value
3.3% in the past year, according to TNS, yet Spencer Playle, crisps and snacks buyer at Sainsbury, reckons 2006 will be tough. &"Only 2% revenue growth is forecast,&" he says. &"The World Cup should see sharing sales improve with snacks in decline and crisps in slight growth, driven by promotions.&"
However, he has been impressed by the actions of the major players in the health arena, in which most growth is being seen. &"Suppliers have responded well to the challenges around healthy eating with many
improving the nutritional content of many of their existing offerings and aiming much of their NPD towards the healthy sector.&"
Walkers remains way ahead of the pack, with Pringles sitting in second place and Walkers&' Sensations maintaining its third place in a category that attracts 96% of households an average of 30 times a year.
Multipacks - the biggest sector - continue to represent a growth area with crisps in the format up 2% and multipack snacks growing at 5.4% year-on-year.
One of the big stories of last year was the demise of iconic brand Golden Wonder, parts of which were scooped up by UBUK (Nik Naks and Wheat Crunchies) and Tayto, which took on the own label business. But while the dominance of Walkers has been blamed as a key contributor to the crisp company&'s failure, its problems ultimately stemmed from lack of investment and a failure to consolidate its cost base.
Says Playle: &"Walkers is obviously market share leader, but it was not them who deflated the own label crisp market or who drove Golden Wonder&'s overall strategy.&"
He adds that the collapse of Golden Wonder should not be seen as an indicator for the category. &"The fact that the entire business has been sold, albeit in parts, suggests other suppliers believe they can make the constituent parts profitable. In Scotland, Golden Wonder remains very strong and Tayto&'s experience of driving a regional brand can only help that position.&"
Northern Ireland-based Tayto Group, which also acquired Golden Wonder&'s manufacturing plants at Scunthorpe and Corby, says the acquisition provides &"a timely and accelerated growth opportunity&".
Sales director John McQuaid says Tayto will be looking to realise the potential of Golden Wonder crisps in its Scottish heartland where he says the brand remains a strong challenger to Walkers and is particularly popular in the impulse sector.
&"It is too early to be specific about the
precise level and type of support we will be placing behind either the Golden Wonder or Tayto brands as we continue to integrate and evaluate the potential of the combined portfolio. However, it is true to say that we will be playing to our strengths and developing the range through a combination of good planning, tailored marketing support and remaining competitive.&"
UBUK customer marketing director Mark Sugden adds: &"Our share continues to grow and it&'s not all driven by the acquisition of Golden Wonder. We are primarily a differentiated snacks player and have a strong crisps brand in McCoy&'s. Mini Cheddars, Hula Hoops, Nik Naks, Skips are all unique in terms of what they look like.
&"We created some very strong brands in an environment that does have a strong number one. You have to have strong brands that you are prepared to invest in.&"
But he thinks the prevalence of large multipacks has been detrimental. &"If you have bought huge multibags two weeks before, you don&'t buy again.&" And he thinks multipack strategies are responsible for the decline in everyday crisps because they have taken consumers out of the everyday sector.
&"We have chosen not to create huge multi-bags - instead we provide variety and choice. We have to continue to invest time and effort and dedication in the healthy area across the whole portfolio.
&"The major retail partners look to us to bring real category expertise. We have invested in knowledge, insight and understanding shoppers and creating supportive relationships with retailers.&"
In terms of trends, TNS research shows that sharing bags have seen a reverse in fortunes from last year, declining by 3.4%. But Budgens trading manager for snacks Rowan Winter disagrees. &"We are definitely seeing growth in sharing as a category concept and I think that this is because consumers are opting for a big night in with a DVD, drinks and snacks instead of an outing to the pub.&"
She adds: &"It&'s a developing opportunity that is set for further growth as smoking regulations tighten up.&"
Phil Norminton, PepsiCo sales strategy director, reckons sharing is the peak growth category, driven by indulgence. He says category invigoration is needed, adding that &"as leader it is incumbent on us&".
But it&'s not all about crisps. Although still a relatively small category with an 18.3% substantial share, nuts has seen a 15.2% year-on-year increase [TNS 52 w/e 26 March 2006].
Duncan Hill, commercial director at Trigon Snacks, which makes Planters, says: &"We have witnessed strong growth within the UK nut market this year, fuelled by added-value products. The multiples have really capitalised on the demand while the convenience sector was unable to do so because of a lack of relevant offerings.&"
Savoury snacks is the only sector in the category that has lost out during the past year. Sales are down 1% to £516.3m, but it still commands 39.1% of the market.
Jerky
The retailer's view
The retailer's view
Research Notes
Soundbites
The suppliers's view
Beef cut out to make an impact It's not that long ago that beef jerky was so misunderstood by retailers that it wasn't uncommon to find it stocked in the petfood aisle of the supermarket. But the past year or so has seen a real change as consumers have finally started to cotton on to the low fat, high protein benefits of a snack that is a dietary staple in South Africa and the US. Americans eat more jerky than they do some brands of crisps, and the category there is worth about $2bn, according to Rockin' JC's group sales director James Newitt. Where the US leads, the UK often follows. Newitt points out that consumers over here are starting to look for alternatives to standard crisps and bagged snacks: "To a certain degree a lot of people have had enough of crisps. We are now in a very exciting market - jerky is healthy, it's new and is full of flavour. The 57g pack works as a starter snack and shoppers will buy it with fruit as opposed to crisps." He also points to the low fat credentials of jerky, which enable it to tap into current health trends. The company recently redesigned its packs to highlight the product's 5% fat content. Supermarket buyers also seem to believe that jerky has a positive future. Rowan Winter, trading manager for crisp and snacks at Musgrave Budgens Londis, says: "I think we will continue to see more innovation in this category as most of the products are low in fat and this is what consumers are looking for at the moment. "The meat snacking category is currently small but it's growing fast and it's being driven by beef jerky." The category's profile was enhanced last year by the entry of Nobby's Cuts, a range departure for PepsiCo's successful bloke brand, which originally started out in nuts and crisps. Newitt acknowledges that "it's good for the category that Nobby's is coming in", but PepsiCo's sales strategy director Phil Norminton takes a more cautious view. "Jerky is very small, and the price per unit is very high," he says. "We are exploring the category at the moment, looking more at where we can take Nobby's." What Norminton does see is Nobby's Cuts filling a niche in the snacks market by bridging the gap between snack foods and food eaten at mealtimes. "Our research tells us that blokes want something filling and tasty to eat between meals. Crisps or nuts aren't necessarily always enough, but fast food can be too much," he says. "Nobby's Cuts can provide a great tasting snack that will satisfy hunger without stopping people enjoying their lunchtime or evening meals." Ernst Sattler, MD for Europe at jerky rival Jack Link's, estimates the UK meat snacks market to be worth more than £50m, with beef jerky a £2m chunk of it. He believes that the category will grow in the coming years with the advent of new players - something that he says it has so far lacked. The Jack Link's range comprises four 25g and 100g beef jerky variants in original, peppered, teriyaki and sweet & hot flavours, along with less traditional beef steak nuggets in original, peppered and teriyaki variants that have more bite-size appeal. "Per packet we cost more than crisps, but if you compare the difference between what you pay for potatoes and crisps with the difference between meat and jerky, we are cheap. People are still willing to pay for premium," he says.
Healthy snacks are packet picks ducers have been innovating in nuts by "blending, enrobing and enriching", while seed and nut mixes are also finding their way on to the shelves. "The criteria that dried snack consumers now want are health, enjoyment and practicality," he says. "But Whitworths' research shows up to 85% of impulse stores don't offer healthier snacking. That's going to be the next big explosion. "We are doing a lot of work in the high street and service stations with stands and connect strips. Different snacks need to attract new consumers. Our figures are small, but growth is phenomenal. Without availability in the impulse sector, growth will be limited." Companies have even been blending crisp and fruit formats to offer consumers greater variety. Applesnapz produces a range of baked crisps made from fruit and vegetables, such as crunchy carrot cubes, apple crisps with natural strawberry flavour and apple cubes. The company says the products, which contain less than 1% fat, offer a healthy alternative to potato crisps and questions why the bigger players haven't entered the segment. One of these, PepsiCo, has turned its attention to different snacks and recently entered the popcorn category with launches under its low-fat Quaker Snack-a-Jacks brand. Phil Norminton,PepsiCo sales strategy director, explains: "The ready-to-eat popcorn market is worth £16.1m, with some 23% of consumers eating popcorn monthly but only 5% eating it weekly. Snack-a-Jacks popcorn is an innovative and exciting way to capitalise on the popcorn opportunity and to extend the Snack-a-Jacks brand. "Our research suggests the product will bring incremental sales to the healthier snacks category." Pretzel maker Union Snack also believes there is a market for more products than standard crisps, but predicts that no brand will succeed simply by being promoted as a low fat alternative. Brand manager Jen Scott says: "Products must also deliver on taste and fulfilment. Consumers are looking for an optimum balance between the health foes - fat, salt and flavour ingredients. Union Snack has responded to this demand by creating lower fat baked snacks that still taste great and satisfy hunger." Scott says the company's Penn State pretzels are experiencing double-digit sales growth because they deliver on satisfaction while being less than 10% fat. Crispbreads and ethnic snacks are also making an impact, with some of the big players making a move. This month UBUK launches Brie & Onion Toasts and Black Olive & Pesto Crostini, as well as crackers and poppadoms under its Phileas Fogg brand.
Spencer Playle
Crisps and snacks buyer Sainsbury New product development in the crisps, nuts and bagged snacks category overall is still very strong, with a continuous flow of new lines planned throughout the next 12 months. The key to growth this year - and next year as well - will be a combination of tackling the decline in sales due to health issues by making the better-for-you sector more robust, and cleaning up standard crisps and snacks with recipe changes. Continuing to nurture the premium and indulgent sectors, which are already seeing good value growth, will be another priority. The current level of products purchased on promtional deal will become a bigger issue and is the greatest long-term threat to the category. Retailers also have a part to play in ensuring that own label is given the focus it deserves, and it is important that we differentiate using our own brand. Recent success stories, such as Real Crisps and Kolak, suggest there is room for new players, albeit in fairly targeted markets.
Rowan Winter
Trading manager for
snacks, Budgens Own-label crisps, nuts and snacks are definitely dying out in the convenience sector and at Budgens we have taken out all our own-label crisps and snacks. Some of the traditional snacking brands are experiencing a substantial decline in sales and will have to adapt their products if they want to remain big players in a changing crisps and snacks market. Manufacturers such as PepsiCo, with its Walkers brand and Sensations sub-brand, along with UBUK, which owns brands such as McCoy's and Hula Hoops, are adapting their ranges accordingly by reducing the levels of saturated fat and salt in their products. They have also introduced healthier ranges, such as Go ahead! and Cheese Heads, as part of a growing consumer preoccupation with healthy eating. The meat snacking category is currently small, but it is growing fast and is being driven by beef jerky. I think we will continue to see more innovation in this area.
Rowan Winter
Trading manager for
snacks, Budgens With an annual value of £1.3bn, the take-home crisps, nuts and snacks market represents a leading category for shoppers in the UK. More than 96% of UK households bought into the category over the latest 52 weeks. Each one of these did so an average of 30 times, spending just under £56 per household over the course of the year. Multipacks, which represent the largest sector within the category, are experiencing growth in both crisps and snack formats compared with last year. Multipack crisps are in 2% growth, with multipack snacks performing even more strongly by showing a 5.4% increase, which is helping to drive momentum in the category. Key brands performing strongly this year include Walkers Doritos, UBUK's Hula Hoops and McVitie's Mini Cheddars. New products have also contributed to sector performance, with high-profile debuts from Mini Pringles and Walkers' Cheese Heads. However, sharing bags, the other major format across take-home crisps and snacks, has experienced a reversal of fortunes from last year. It has recorded a 3.4% decline, mainly driven by the fact that fewer households have made purchases from the sector. The continuing appeal of nuts means the category has again experienced double-digit growth, thanks to an increasing number of people buying goods from the sector more frequently, and at a higher average price. Traditionally, the 12 weeks leading up to and during Christmas are very important to the nuts market, typically accounting for a third of all sales. However, nuts' share of the total crisps, nuts and snacks sector outside the Christmas period is on the increase, suggesting that snacks are starting to have more of an all-year-round appeal among consumers. There has been no change within the pecking order of the top brands, with Walkers Crisps remaining firmly the number one, well ahead of its closest rival Pringles. Walkers also sits in third place with its Sensations brand, demonstrating that PepsiCo clearly dominates the sector. Among the supermarkets, Tesco has proved the most successful in the category, capturing more than a quarter of consumers' annual spend on take-home crisps, nuts and snacks. Asda and Sainsbury follow, with Morrisons trailing just behind. Discounters are also tapping into the demand for snacks, and the impressive performance of Aldi, Lidl, and Netto should also be noted. James Spicer, TNS Worldpanel
Rowan Winter
Trading manager for
snacks, Budgens ?"There's no doubt that Walkers is a dominant force but there is more than enough room on the shelves for alternative snacks. Red Mill offers tasty baked corn snacks and not fried crisps, so we increase choice rather than directly competing with some of the larger players." Sarah Nunn Marketing manager, Red Mill Snacks ?"Nuts are still predominantly own label, but there are a lot of recipes and options available. If you split the market into peanuts, premium nuts and mixes, KP does very well in what is its core heartland of salted and dry roasted. But other areas growing faster are those in which KP does not have a presence. About 85% of its sales are in traditional nuts, which is not a growth market, so there are great opportunities for other players to get in there and develop things." Duncan Hill Commercial director, Trigon Snacks ?"New product development is critical to the growth of the bagged snacks category and Hula Hoops Ridges, with its unique texture and exciting flavours, provides real product differentiation in the category." James Mayer Trading director, UBUK ?"Consumers seem more willing to trade off some measures of enjoyment for the important benefits of lower fat and salt products. This is not new in itself, but it would seem to have changed decisively the frame of reference for evaluating the qualities of a new crisp and savoury snack product. " Paul Beresford Cambridge Market Research ?"I don't think the monopoly of Walkers is damaging to the category or the market. It's probably more damaging to themselves - how do you create differentiation in a market you dominate? Gary Lineker comparing bread with biscuits and crisps has done the category good, because people are looking at other products now. There's an emerging trend for more premium products with better health credentials in the main crisps aisle. However, that will shrink a bit and growth will be in better-for-you categories." Peter Wilson Marketing director, Kettle Foods ?"New entrants have demonstrated that consumers are prepared to pay a premium in the crisp category. We want to see the growth of Sensations. We have listened to our consumers' needs and are confident that the changes we are making will return the brand to its initial growth levels. It is about a £100m brand." Phil Norminton Sales strategy director, PepsiC
Jen Scott
Brand manager,
Union Snack The trend for healthier products is one that has longevity because the concerns of the consumer are here to stay. The strongest overtly healthy and diet brands tend to be the own label ones, such as Tesco Healthy Living, Sainsbury's Be Good to Yourself and Asda's Good for You. However, these could see a decline as shoppers seek a more balanced snack and move to products offering a taste and health balance. In the current climate where people are under pressure to be healthy, it may be difficult to persuade people to snack more often. However, as snack times become more precious, consumers will cherish them and will be prepared to pay a little more for premium or added-value products. A lot has been made of the changes in the fat used by major snack suppliers, such as the switch to Sunseed oil in Walkers crisps, but the consumer is not falling for that. Customers' knowledge should not be underestimated - the actual fat content of products is going to be the long-term health trend.
The nation&'s favourite bagged snack has had a rocky ride media-wise over the past year, thanks to a continuing obsession with health and obesity. Yet crisps still took a 42.6% share of the £1.3bn crisps, nuts and snacks category [TNS 52 w/e 26 March 2006].
The total category has grown in value
3.3% in the past year, according to TNS, yet Spencer Playle, crisps and snacks buyer at Sainsbury, reckons 2006 will be tough. &"Only 2% revenue growth is forecast,&" he says. &"The World Cup should see sharing sales improve with snacks in decline and crisps in slight growth, driven by promotions.&"
However, he has been impressed by the actions of the major players in the health arena, in which most growth is being seen. &"Suppliers have responded well to the challenges around healthy eating with many
improving the nutritional content of many of their existing offerings and aiming much of their NPD towards the healthy sector.&"
Walkers remains way ahead of the pack, with Pringles sitting in second place and Walkers&' Sensations maintaining its third place in a category that attracts 96% of households an average of 30 times a year.
Multipacks - the biggest sector - continue to represent a growth area with crisps in the format up 2% and multipack snacks growing at 5.4% year-on-year.
One of the big stories of last year was the demise of iconic brand Golden Wonder, parts of which were scooped up by UBUK (Nik Naks and Wheat Crunchies) and Tayto, which took on the own label business. But while the dominance of Walkers has been blamed as a key contributor to the crisp company&'s failure, its problems ultimately stemmed from lack of investment and a failure to consolidate its cost base.
Says Playle: &"Walkers is obviously market share leader, but it was not them who deflated the own label crisp market or who drove Golden Wonder&'s overall strategy.&"
He adds that the collapse of Golden Wonder should not be seen as an indicator for the category. &"The fact that the entire business has been sold, albeit in parts, suggests other suppliers believe they can make the constituent parts profitable. In Scotland, Golden Wonder remains very strong and Tayto&'s experience of driving a regional brand can only help that position.&"
Northern Ireland-based Tayto Group, which also acquired Golden Wonder&'s manufacturing plants at Scunthorpe and Corby, says the acquisition provides &"a timely and accelerated growth opportunity&".
Sales director John McQuaid says Tayto will be looking to realise the potential of Golden Wonder crisps in its Scottish heartland where he says the brand remains a strong challenger to Walkers and is particularly popular in the impulse sector.
&"It is too early to be specific about the
precise level and type of support we will be placing behind either the Golden Wonder or Tayto brands as we continue to integrate and evaluate the potential of the combined portfolio. However, it is true to say that we will be playing to our strengths and developing the range through a combination of good planning, tailored marketing support and remaining competitive.&"
UBUK customer marketing director Mark Sugden adds: &"Our share continues to grow and it&'s not all driven by the acquisition of Golden Wonder. We are primarily a differentiated snacks player and have a strong crisps brand in McCoy&'s. Mini Cheddars, Hula Hoops, Nik Naks, Skips are all unique in terms of what they look like.
&"We created some very strong brands in an environment that does have a strong number one. You have to have strong brands that you are prepared to invest in.&"
But he thinks the prevalence of large multipacks has been detrimental. &"If you have bought huge multibags two weeks before, you don&'t buy again.&" And he thinks multipack strategies are responsible for the decline in everyday crisps because they have taken consumers out of the everyday sector.
&"We have chosen not to create huge multi-bags - instead we provide variety and choice. We have to continue to invest time and effort and dedication in the healthy area across the whole portfolio.
&"The major retail partners look to us to bring real category expertise. We have invested in knowledge, insight and understanding shoppers and creating supportive relationships with retailers.&"
In terms of trends, TNS research shows that sharing bags have seen a reverse in fortunes from last year, declining by 3.4%. But Budgens trading manager for snacks Rowan Winter disagrees. &"We are definitely seeing growth in sharing as a category concept and I think that this is because consumers are opting for a big night in with a DVD, drinks and snacks instead of an outing to the pub.&"
She adds: &"It&'s a developing opportunity that is set for further growth as smoking regulations tighten up.&"
Phil Norminton, PepsiCo sales strategy director, reckons sharing is the peak growth category, driven by indulgence. He says category invigoration is needed, adding that &"as leader it is incumbent on us&".
But it&'s not all about crisps. Although still a relatively small category with an 18.3% substantial share, nuts has seen a 15.2% year-on-year increase [TNS 52 w/e 26 March 2006].
Duncan Hill, commercial director at Trigon Snacks, which makes Planters, says: &"We have witnessed strong growth within the UK nut market this year, fuelled by added-value products. The multiples have really capitalised on the demand while the convenience sector was unable to do so because of a lack of relevant offerings.&"
Savoury snacks is the only sector in the category that has lost out during the past year. Sales are down 1% to £516.3m, but it still commands 39.1% of the market.
Jerky
The retailer's view
The retailer's view
Research Notes
Soundbites
The suppliers's view
Crisps and snacks buyer Sainsbury
Trading manager for
snacks, Budgens
Trading manager for
snacks, Budgens
Trading manager for
snacks, Budgens
Brand manager,
Union Snack
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