Even as better-for-you products gain popularity, chips and salty snacks remain top-sellers.
By Anne Baye Ericksen, Contributing Editor
Between media reports and industry data, it’s clear that today’s consumers want better-for-you (BFY) choices when it comes to snacking. More and more, Americans are looking to replace sugar and fat with protein and all-natural ingredients.
On the other hand, many of the same consumers also acknowledge indulging in other satisfying noshes, including chips and salty snacks. With the latter, that behavior continues to pay off for convenience stores that remain the leading channel for such snack sales.
STEADY GROWTH
One might think that as the BFY movement grows, chips and salty snacks purchases would fall off, especially in the past few years as the trend has garnered more attention. But research indicates otherwise. The NPD Group Inc., a global market data company, reported earlier this year that consumption of savory snacks, including salty versions, has grown 4% in the U.S. since 2006.
Also, research conducted by market research firm Mintel Group Ltd., indicated U.S. sales of salty snacks have made even bigger gains—up 15% between 2009 and 2014 to more than $5 billion, not including potato chips, which by itself is a multibillion-dollar segment. Most analysts agree the category will continue to make steady gains in the short-term.
“The category is doing better than it did last year. We give a lot of space on our store floors to chips and salty snacks because they do so well,” said Courtney Vercollone, category manager for VERC Enterprises. The Duxbury, Mass.-based company operates 24 locations in Massachusetts and New Hampshire.
What’s happening at VERC reflects an industry trend. The National Association of Convenience Stores’ State of the Industry report noted double-digit margins for the category year over year for January-December 2014. More recently, salty snacks dollar sales posted a gain of 5.3% for a four-week period ending May 16, compared to the same period last year.
Of course, the combined category of chips and salty snacks covers a broad array of products and some fare better than others. Not surprisingly chips still hold the top spot. According to IRI Worldwide, potato chips claim 19% of the market share with tortilla chips close behind at 12%. That performance is improving since potato chips sales increased by more than 5% in 2014 and tortilla chips recorded a 10% increase last year, according to Mintel.
Other subcategories are posting positive numbers, too. Mintel shows popcorn registered the largest growth margin at 21% for the past five years. Analysts also forecast popcorn to continue its upward momentum with at least a 34% growth spike over the next five years.
Pretzels make up the smallest market share, but they, too, experienced growth over the last five years. The fact that these snacks are baked could help them gain share with individuals seeking BFY choices.
“When looking at snack foods in three mega categories of savory, sweet and better-for-you, we are forecasting, by 2018, that better-for-you snack foods will grow the fastest; savory will grow, but not as fast as better-for-you, while sweet snacks will decline slightly. The fact that consumers are moving away from sweet snack foods as an everyday snack might be working to help savory snacks,” said Darren Seifer, executive director of food and beverage industry analysis for the NPD Group. “The question is: how will savory snack food manufacturers position their products in light of these recent developments around sugar.”
STILL INNOVATING
While consumers’ main focus seems to be shifting toward products with health benefits, the data support the fact that, for c-stores, which may not be the case for mass retailers or grocers, traditional chips and salty item purchases have not slacked off. Nor do they show signs of declining.
“We’ve had BFY sections in our stores and we haven’t noticed that they are being shopped more or if people are buying off of that section more than others. People like having the option of healthy snacks, but I think they also like having guilty food,” said Vercollone.
“There remains a need for both types of products, and c-stores should continue to balance the fine line between offering both healthy and indulgent foods,” said Amanda Topper, a food analyst with Mintel. “Nearly two-thirds of consumers would like c-stores to carry more healthy foods; however, more than half of consumers say they allow themselves to indulge in unhealthy food and drinks from c-stores.”
Mintel research reveals that 63% of people admit they sometimes value salty choices over nutritional needs.
“I think, when they stop at a convenience store, they just want something to munch on and are not necessarily trying to be healthy,” Vercollone said.
To seize on that impulse, she positions high-performing products front and center.
THE FLAVOR GAME
“We have them in end caps and in line so it’s one of the first things customers see when they walk in,” Vercollone said. “Salty are near the chips. If customers want something salty, they have chips on one side and items like Cheez-Its and Combos on another side. They help each other out.”
New flavors continue to propel sales. From small, regional producers to nationally recognized names like Frito-Lay, manufacturers seem keen on regularly introducing new profiles to existing brands. In April, Frito-Lay announced Doritos Roulette, which promises extra spicy chips in every handful. This summer, Kettle chips is promoting three new flavors: pepperoncini; thick and bold dill pickle; and thick and bold Carolina barbecue.
Pretzels are added players in the flavor game, as well. Frito-Lay’s Rold Gold came out with Pretzel Cracker Sandwiches as well as Fudge Brownie Pretzel Dippers, highlighting the popular juxtaposition of having sweet and salty in one snack bite. This past February, Snyder’s of Hanover introduced Bowties in original, “everything” and Parmesan garlic flavors.
The manufacturer also has Pretzel Poppers, a puffy salty snack that is available in original, cinnamon sugar and three cheeses.
Vercollone has seen specialty popcorns do well, too. “We have Yolo popcorn and SexyPop Popcorn in a couple of stores, which has different, fun flavors, like Brazilian Coconut. People look for them, but whether or not they stick with the flavors is another question,” she said.
In fact, research suggests unique flavor offerings do entice customers.
“While health is important, flavor appears to trump health, especially as many consumers purchase salty snacks as a treat or to satisfy a craving,” said Topper. “Thirty-four percent say new flavors influence them to buy more chips, while 20% of consumers buy salty snacks to try a new flavor.”
More and more, she said, consumers are finding options in convenience stores.
“Consumers may be more willing to try new flavors in c-stores because we know that more than half of consumers (58%) agree they are more likely to try a new product if it’s in a smaller package,” Topper said. “Smaller packaging and lower price points can encourage consumers to try a new product or flavor with minimal risk.”
Vercollone also relies on store staff to persuade customers to experiment with new products.
“I try to market new items depending on what my managers like because they help push products and get the associates to push them to customers,” Vercollone said.