Sector Trend Analysis – Savoury snacks in the United States

Market trends

In 2017, savoury snacks in the United States (U.S.) continued to see growth in both retail value and retail volume sales, with compound annual growth rates (CAGRs) of 3.2% and 1.5%, respectively, from 2013 to 2017. This growth is largely due to changing household sizes and growing preference for convenience and bold new flavours.

According to Euromonitor, there is an increase in consumer preference for snack foods over traditional sit-down meals. This change is now boosting demand for single-portion, portable, and healthier snack products. Convenience continues to be a key factor in consumer preference for certain snacks over others. For example, consumers are shifting away from microwave popcorn brands to less fresh, pre-popped brands. Following this trend, average unit price in savoury snacks grew by 1% in current terms in 2017 (Euromonitor International, 2018).

Younger consumers are having a notable impact on snack innovation as manufacturers are continually revolutionizing snack products with bold, spicy flavours that appeal to them. Health concerns also impact snack innovation. Future category growth is expected to be driven by consumer interest in healthy and indulgent snacking.

Snacking has become an accepted way of eating for most consumers, despite being blamed for rising obesity rates. In the U.S., two-thirds of Americans snack between meals. Manufacturers are developing baked, popped, wholegrain and seeded salty snacks as rising obesity rates encourage consumers to choose healthier options for snacking occasions (Category Insight: Salty Snacks, Meat Snacks and Popcorn, 2014).

For snack manufacturers to bring successful products to market, they must provide "something new", be it a flavour or a texture. A growing number of consumers have a liking for flavours that are increasingly sweet, strong/bold and sour/tangy, which signals an opportunity for snack brands to innovate beyond salty/savoury varieties. In the U.S., 35% of chip eaters say that a new flavour would increase their chip purchases; a further 37% prefer innovative flavours (for example, sriracha, truffle) over traditional (for example, onion, vegetable) (Category Insight: Salty Snacks & Fruit Snack Mixes, 2017).

According to Mintel, in the U.S., 94% of consumers snack at least once a day, while more than 50% are likely to snack two to three times a day. As snacking is replacing traditional meals, 33% of consumers are snacking on healthier foods more than ever before. In Mintel research, younger consumers are more likely to snack than older consumers and are also more likely to be emotional snackers than functional snackers.

Flavour continues to be a major focus of salty snack innovation, but brands have also been exploring the "platform" of the snack - the base on which flavours are built. Recent new product launches show how the building blocks of the salty snack category have moved beyond the traditional potato, rice and corn to grains and vegetables, and even to organic (Category Insight: Salty Snacks & Fruit Snack Mixes, 2017).

Sector analysis – retail environment

In 2017, savoury snack products saw a 3.2% increase in retail sales with a closing total of US$46.6 billion in the U.S. Savoury snack products are also expected to increase at a CAGR of 3.5% from 2018 to 2022. The strongest-growing category is vegetable, pulse and bread chips, with a CAGR of 9.1% from 2013 to 2017. It is expected to maintain the second-strongest growth in the next forecasted period, with a projected CAGR of 4.8% and value sales of US$1.2 billion by 2022. This growth will stem from a continued shift towards ready-to-eat brands with health-focused positioning.

The second-fastest growing snack category is "other savoury snacks" (largely dominated by high-protein meat snacks and trail mixes), with a sales value of US$5.7 billion in 2017 and a CAGR of 5.4% from 2013 to 2017.

Popcorn was the third-fastest growing category, with a 5.1% increase in value sales of US$3.0 billion in 2017. This category is expected to reach US$3.9 billion by 2022, with a CAGR of 6.0% from 2018 to 2022. Growth will largely stem from health-positioned products and innovation with stronger flavours that consumers enjoy.

According to Euromonitor International, savoury snacks are facing increasing competition from foods which are both healthy and convenient. High levels of innovation in other snack food categories are posing a threat to savoury snacks. At the same time, there has been dramatic growth in meal kits like Blue Apron and HelloFresh, which deliver pre-portioned ingredients and easy-to-prepare recipes directly to consumers, making it easier than ever to cook a healthy meal at home. In addition, supermarkets and convenience stores continue to innovate with freshly prepared foods and foodservice offerings, providing instant meal solutions which are healthy and perfect for grab-and-go occasions.

The strongest-growing savoury snack category is vegetable, pulse and bread chips, with a compound annual growth rate (CAGR) of 9.1%, followed by other savoury snacks (CAGR: 5.4%) and popcorn (CAGR: 5.1%) from 2013 to 2017. Vegetable, pulse and bread chips reached US$953.3 million retail sales in 2017, representing 2.0% of total savoury snack sales (US$46.6 billion) in 2017.

Snack products made with innovative base ingredients (for example, vegetables and grains) are likely to meet the demand of consumers who look for healthier products with transparent ingredients. The North American market in particular has seen a number of interesting launches in 2016 such as broccoli-/Brussels sprout-/spinach-based snacks. Seaweed snacks, such as seaweed thins or crisps, are likely to appeal to the 77% of U.S. snack consumers who prefer ready-to-eat snacks over those that must be heated or prepared (Category Insight: Salty Snacks & Fruit Snack Mixes, 2017).

Meat snacks were also critical to growth in "other savoury snacks" as consumers continued to gravitate towards meat snacks as high-protein, minimally processed offerings which are highly portable.

Likewise, in retail volume sales, vegetable, pulse and bread chips had the highest compound annual growth rate at 8.2% from 2013 to 2017, reaching 67.6 thousand tonnes in 2017 (1.6% of the total 4.3 million tonnes in savoury snack volume sales). For the same period, tortilla chips had a compound annual growth rate of 3.6%, while for savoury snacks the CAGR was 1.5%.

Popcorn is forecasted to have the highest compound annual growth rate in the snack category at 6.0% from 2018 to 2022, reaching US$3.9 billion in 2022, representing 7.2% of total savoury snack sales (US$55.3 billion) in 2022. Vegetable, pulse and bread chips are expected to have a compound annual growth rate of 4.8% from 2018 to 2022. The compound annual growth rate of savoury snacks is forecasted to increase to 3.5% over the same period, a higher rate than its CAGR of 3.2% from 2013 to 2017.

It is expected that in volume sales, tortilla chips will have a 2.5% compound annual growth rate from 2018 to 2022, reaching 973.7 thousand tonnes in 2017. Vegetable, pulse and bread chips are projected to have a 2018-2022 compound annual growth rate of 2.4%.

Competitive landscape

PepsiCo Inc. led the snack sector with a 39.1% market share in 2017 and a steady compound annual growth rate of 0.3% from 2013 to 2017.  However, Snyder's-Lance Inc. is the fastest-growing company in the sector, with the highest CAGR from 2013 to 2017 (9.7%), and increased its market share from 3.3% in 2013 to 5.5% in 2017.

With its Keebler Foods subsidiary, Kellogg ranked second in savoury snacks  with a share of 6.4% in 2017. This share is primarily due to its two powerhouse brands, Pringles and Cheez-It, which held a combined value share of 4.6% in savoury snacks in 2017. According to Euromonitor International, in February 2017, Kellogg announced that it abandoned the direct-store-delivery (DSD) method of distribution for its snacks and would instead sell through retailer warehouses. The change effectively surrenders control of distribution for Kellogg's snack brands (as DSD provides direct support and service within the store), leaving it up to the retailer. DSD is more costly, however, and this move will help improve Kellogg's margins by an estimated 15 points.

Snyder's-Lance ranked third in savoury snacks with a value share of 5.5% in 2017. Its first ever multi-brand snack pack was launched in May 2017 with a clear better-for-you positioning.

Mondelez International ranked fourth in savoury snacks with a value share of 4.9% in 2017. The company competes exclusively in savoury biscuits. While Mondelez's share in savoury biscuits remained flat over the past five years, its share in savoury snacks as a whole fell as savoury biscuits lagged behind general growth in savoury snacks (company shares CAGR of −2.4%, retail sales CAGR of 0.5%, from 2013 to 2017).

Company shares

Among the top ten companies, Snyder's-Lance Inc had the highest compound annual growth rate of 9.7% from 2013 to 2017, followed by Utz Quality Foods Inc with a compound annual growth rate of 5.0% over the past five years.

The top company, PepsiCo, recorded US$18.2 billion in retail sales in 2017, with a 3.5% compound annual growth rate from 2013 to 2017. Among the top ten companies, Snyder's-Lance Inc had the highest compound annual growth rate of 12.8% over the past five years followed by Utz Quality Foods Inc (CAGR: 8.0%).

Brand shares

Among the top ten brand shares of savoury snacks, PepsiCo Inc dominated with six brands, including the top three (Lay's, Doritos and Cheetos) and three others (Tostitos, Ruffles and Fritos), totalling 32.2% value share in 2017.

In retail sales, among the top ten brand shares of savoury snacks, Lay's recorded the biggest retail sales: US$6 billion in 2017 with a compound annual growth rate of 1.9% from 2013 to 2017. Cheetos had the highest compound annual growth rate of 7.0% from 2013 to 2017, reaching US$2 billion in 2017.

Product launch analysis

This section combines all savoury snack products based on new product launches from January 2013 to December 2017.

According to Mintel, 366 savoury snack products were launched in the U.S. from 2013 to 2017. Of these, 39.6% were new varieties/range extensions, 34.4% were new packaging, and 18.9% were new products.

In addition, 259 (70.8%) of the total launched savoury snacks were branded, while 107 (29.2%) were private-label products.

The top-growing claims in the U.S. in the savoury snacks category are low/no/reduced allergen, gluten-free, and kosher.

Within the last five years of new snack product launches in the U.S., 34.4% of those new products were manufactured in the U.S. and 5.7% in Canada. From 2013 to 2017, the top countries from which the U.S. imported new snack products were Canada (21 products), South Korea (6), Thailand (6) and China (3).

The top flavours are unflavoured/plain (4.9%), salt (sea) (3.3%), hummus (1.6%), peanut butter (1.4%) and salt/salted (1.4%).

Shelf-stable was the leading storage category, accounting for 87.7% of the total, followed by chilled (9.3%) and frozen (3.0%).

Distribution channels

In the snack sector, supermarkets (38.4%), hypermarkets (18.3%), and forecourt retailers (14.7%) are major distribution channels, together accounting for 71.4% of retail sales in 2017. However, other channels are growing, such as convenience stores, whose market share increased from 3.1% in 2013 to 3.5% in 2017.

Internet retailing continued to be a small channel in savoury snacks in 2017, with a value share of 1.3%. This share has been growing, with a compound annual growth rate of 16.7% from 2013 to 2017.

According to Euromonitor International, Internet retailers like Amazon have innovated with their own private-label savoury snacks. For example, in August 2016, Amazon added nuts and trail mixes to its Happy Belly line. In December 2016, the company also launched its new Wickedly Prime range, featuring a variety of snack foods including popcorn, tortilla chips, nuts and vegetable crisps. At the same time, several manufacturers of savoury snacks, including Snyder's-Lance and Link Snacks, have launched their own direct-to-consumer sales sites. Finally, grocery retailers like Wal-Mart and Kroger have dramatically expanded their "buy online, pick up in-store" programs. All of these factors are expected to drive strong growth in Internet retailing in the coming years.

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Resources

• Category Insight, February 2017, Salty Snacks & Fruit Snack Mixes
• Category Insight, March 2014, Salty Snacks, Meat Snacks and Popcorn
• Euromonitor International, 2018
• Euromonitor International, 2017, Savoury snacks in US
• Mintel, 2018
• Mintel, 2015. A snacking nation: 94% of Americans snack daily

Sector Trend Analysis – Savoury snacks in the United States
Global Analysis Report

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